Tarantino, a multiple Oscar winning and nominated writer and director, is the writer and owner of a screenplay entitled The Hateful Eight. The script was leaked by unknown persons. On January 22, 2014, the website Gawker.com published an article about the leak and Tarantino's reaction, and solicited readers to provide Gawker with a copy of the script. The following day, Gawker.com carried an article on its website with a hyperlink to a website where the document appeared.

Tarantino filed a complaint in the U.S. District Court for the Central District of California against Gawker Media, LLC, Gawker Media Group, Inc., and Gawker Entertainment, LLC (collectively, "Gawker") and Does 1-10, asserting the following claims:

1. Copyright Infringement [17 U.S.C. § 101 et. Seq.] (against Does 1-10)
2. Contributory Copyright Infringement [17 U.S.C. § 101 et. Seq.] (against defendants Gawker and Does 2-10)

The complaint alleges that Doe 1, also named as "AnonFiles.com," provided a full copy of the screenplay for download, which copy was either uploaded by Gawker or uploaded by another Doe defendant with Gawker's encouragement, and that other Does committed direct infringement by accessing the copy. The complaint further alleges that Doe 1 failed to respond timely or effectively to a DMCA takedown notice. The contributory infringement claim against Gawker is based on Gawker's providing a link to AnonFiles.com.

Gawker filed for a motion to dismiss for failure to state a claim upon which relief could be granted. Gawker argued that contributory infringement could not exist in the absence of direct infringement, and that merely accessing the script by clicking on the link provided by Gawker was not copyright infringement. Moreover, Gawker asserted merely encouraging others to read - but not copy, distribute, or otherwise use - the script on another site was not encouragement of copyright infringement. Finally, Gawker argued that publishing links to extant copies of Tarantino's work in the context of a news report was a non-infringing fair use pursuant to 17 U.S.C. § 107. 

Tarantino, in his opposition to Gawker's motion, argued that the complaint's allegations that third parties accessed the screenplay via Gawker's link were sufficient to support a claim of direct infringement to support a claim of contributory infringement against Gawker. Because the screenplay was provided by Doe 1 in PDF format, Tarantino argued, it could not be viewed unless a complete infringing copy was downloaded to the user's computer. Tarantino further argued that Gawker's fair use argument was premature as asserting an affirmative defense, but went on to argue that Gawker's use was not fair because: (1) the primary purpose of the infringing use was commercial, not news reporting; (2) the use was not transformative; (3) the screenplay was unpublished; (4) the screenplay was a creative work, (5) the entire screenplay was made available; and (6) the disclosure of the screenplay undermined the market for the work.

In a subsequent reply brief, Gawker argued (among other things) that the format in which the screenplay was provided was neither relevant nor pleaded in the complaint, and that any allegations that Gawker was responsible for Doe 1's posting of the screenplay were purely speculative.

On April 22, 2014, the court granted Gawker's motion to dismiss, holding that Tarantino had failed to allege a claim of contributory infringement against Gawker because "nowhere in ... the Complaint does Plaintiff allege a single act of direct infringement committed by any member of the general public that would support Plaintiff's claim for contributory infringement. Instead, Plaintiff merely speculates that some direct infringement must have taken place." The court did not address Gawker's fair use arguments, finding that the "arguments, albeit persuasive and potentially dispositive, are premature." The court nevertheless granted Tarantino leave to amend the complaint to attempt to amend the defects in the claim against Gawker.

Tarantino filed a First Amended Complaint on May 1, 2014, dropping the Doe defendants and asserting claims solely against Gawker Media, LLC, for direct and contributory copyright infringement. The new complaint added allegations that Gawker itself downloaded an illegal copy of the screenplay and disseminated portions of the screenplay to others. On May 7, 2014, before Gawker was due to respond, Tarantino voluntarily dismissed the new complaint without prejudice, ending the case.

On November 9, 2012, attorney Richard A. Goren filed a complaint in the Superior Court for Suffolk County against John Doe d/b/a Arabianights-Boston, Massachusetts, and Steven DuPont a/k/a Steven Christian DuPont.

According to the complaint, on January 31, 2012, defendant Doe filed a report entitled "Complaint Review: Richard A. Goren" on the consumer reporting website Ripoff Report. Among other things, the report asserted that "Psycho-Richard Goren" has problems with addiction; commits perjury and fraud; abuses the law; and has a history of child abuse, domestic violence, and bisexuality ("the Report"). The complaint further alleged that an anonymous reply to the Report was posted stating that Steven Christian DuPont was "defaming another person," after which DuPont, under an alias, responded that he was not "guilty of any crimes or 'schemes'" and that the anonymous poster was guilty of many crimes. The complaint stated that Goren had previously represented a plaintiff in a lawsuit filed against DuPont, and that "[u]pon information and belief DuPont is Doe."

The complaint listed three causes of action: libel, equitable and injunctive relief, and intentional interference with prospective contractual relations. Goren claimed that the Report constituted libel per se and was susceptible only of a defamatory meaning, alleging that the defamatory per se publication was first on a Google search for Goren and that he had suffered a loss of income, damage to his reputation, and emotional distress as a direct result of the publication. Under the claim of equitable and injunctive relief, the complaint alleged that the continued republication of the Report on Google, Bing, and other online search engines presented a continuing threat of irreparable harm to Goren, warranting entry of a temporary restraining order, a preliminary injunction, and a permanent injunction enjoining Doe from continuing to publish the Report. The complaint then alleged that Doe's actions constituted intentional interference with Goren's prospective contractual relations and that Goren had suffered damages as a direct and proximate result of this interference.

On November 26, 2012, a justice of the Superior Court entered a preliminary injunction against publishing or republishing the Report. The court held the Report presented a "continuing threat of irreparable harm" to Goren that could not be remedied by an award of damages.

On March 20, 2013, the court entered a default judgment against the defendants and issued a permanent injunction. The judgment noted that Goren had dismissed his claims for libel and intentional interference with prospective contractual relations, leaving only a claim for equitable and injunctive relief. The court permanently enjoined the defendants -- now referred to as Defendant John Doe d/b/a Arabianights-Boston, Massachusetts, n/k/a Christian DuPont, and Defendant Steven DuPont a/k/a Steven Christian DuPont -- from publishing or republishing the Report. The court ordered Doe to "take any and all necessary steps and action necessary or appropriate" to remove, retract, and/or delete the Report from the website. Further, the court appointed Goren as "attorney-in-fact, coupled with an interest, with the power of substitution, in the name and place of" Doe to take all necessary steps to remove the Report.

On March 25, 2013, Goren filed a motion to amend the default judgment and permanent injunction. The motion proposed that the court add an assignment and transfer of the copyright of the Report to Goren "[t]o achieve the purpose of the Default Judgment."

On May 8, 2013, the court entered a judgment and amended permanent injunction. The judgment added to the previous judgment and injunction, explicitly stating that "all rights in and to ownership of the copyright by the author [Doe] of the [Report] is hereby transferred to [Goren], meaning and intending to convey, transfer and assign by this Order and Judgment the full and exclusive ownership of copyright." The order also added that Goren had the power of attorney in his own name, as well as Doe's, to take any action necessary for the Report's removal.

The copyright transfer from this case resulted in a copyright infringement case, Small Justice LLC et al. v. Xcentric Ventures LLC.

Craigslist is a classified advertisements website with one section of its site dedicated to housing. With a simple design that has not been significantly updated since its creation, craiglist allows users to post (among other things) apartment rental listings. In order to make the material on craigslist more user-friendly, PadMapper takes the information from craigslist's apartment listings and plots these on an easily searchable map, adding search filters. 3taps is a startup committed to collecting and distributing public data, which partnered with PadMapper to assist with its access to the apartment information on craigslist.

In response to their use of craigslist's listings, craigslist sent PadMapper a cease and desist letter. After PadMapper refused to comply, craigslist filed a complaint in the U.S. District Court for the Northern District of California on July 20, 2012, against PadMapper and 3Taps. In its complaint, craigslist asserted ten claims for relief, including contract (asserting breaches of craigslist's terms of use), copyright, and trademark/unfair competition claims.

3taps answered the complaint on September 24 and filed a counterclaim, asserting claims of antitrust violations, unfair competition, and interference with economic advantage. Overall, 3taps' defense and counterclaims focused on the premise that the facts drawn from craigslist's website are not craigslist's property, but in public domain, and that craigslist has maintained an unlawful monopoly through sham lawsuits, copyright misuse, improperly restrictive terms of use, and "ghosting." In its answer on October 30, PadMapper raised similar counterclaims alleging anticompetitive conduct by craigslist.

Craigslist filed a first amended complaint on November 20, 2012. In this amended complaint, craigslist added seven additional claims, for a total of 17. The claims were as follows (with new claims in italics)

1. Trespass: Defendants have gained unlawful access to and interfered with craigslist's computer system, servers, and network.
2. Breach of Contract: Defendants affirmatively accepted and agreed to be bound by the Terms of Use, which they willfully, repeatedly and systematically breached by accessing the craiglist website to copy and distribute the content posted therein.
3. Misappropriation: As competitors with craigslist, Defendants wrongfully accessed craigslist's website and computer systems to make craigslist's content available to their customers, constituting free-riding on craigslist's substantial investment of time, effort, and expense.
4. Copyright Infringement: Defendants reproduced and distributed the copyrighted material on the craigslist website without authorization from the copyright holder, craigslist.
5. Contributory Copyright Infringement (against 3taps): 3taps provides its users with copies and derivative works of craigslist's copyrighted works without craigslist's consent, and knowingly permits its users to copy, reproduce, and prepare derivative works from the copyrighted works.
6. Federal Trademark Infringement: Defendants' unauthorized use of the CRAIGSLIST mark in interstate commerce in connection with the sale or advertising of goods is likely to cause consumer confusion.
7. Federal False Designation of Origin: Defendants' unauthorized use of the CRAIGSLIST mark is likely to create the false and misleading impression that Defendants' products or services are provided or sponsored by craigslist.
8. Federal Dilution of a Famous Mark (against 3taps): CRAIGSLIST is a famous and distinctive mark, and 3taps' use of the mark is likely to cause dilution by blurring, particularly depleting the strength of the mark by impairing its distinctiveness.
9. Federal Cyberpiracy Prevention (against 3taps): 3taps' use of CRAIGGERS in the craiggers.com domain is confusingly similar to and dilutive of the famous, registered CRAIGSLIST mark.
10. California Trademark Infringement: Defendants' unauthorized use of the CRAIGSLIST mark in connection with the sale or advertising of goods/services in California is likely to cause confusion as to the source and/or sponsorship of the goods/services.
11. Common Law Trademark Infringement: Defendants' unauthorized use of the CRAIGSLIST mark is likely to cause confusion as to the source and/or sponsorship of the goods/services.
12. California Unfair Competition: Defendants have engaged in unfair business practices, injuring craigslist's business, reputation, and trademarks.
13. Violations of the Computer Fraud and Abuse Act: Defendants accessed craigslist's computers and servers without authorization or in excess of authorization and obtained valuable information in transactions involving interstate or foreign communications.
14. California Comprehensive Computer Data Access and Fraud Act: Defendants accessed and copied data from craigslist's computer systems and servers without authorization.
15. Aiding and Abetting Trespass (against 3taps): 3taps has encouraged and facilitated access to craigslist's computers by supporting the collection, transfer, and storage of craigslist's content.
16. Aiding and Abetting Misappropriation (against 3taps): 3taps has knowledge that the time-sensitive "scraped" craigslist content they provide PadMapper is to compete with craigslist, therefore aiding PadMapper's misappropriation.
17. Accounting: As Defendants have benefited financially as a result of their misconduct at craigslist's expense, craigslist is entitled to a full accounting to determine the amount of money due to craigslist.

In response, PadMapper and 3taps amended their counterclaims on December 21. PadMapper updated its counterclaims to include (attempted) illegal maintenance of a monopoly in violation of the Sherman Act and California unfair business practices, and to seek declaratory relief for noninfringement of craigslist's copyrights. 3taps alleged similar counterclaims, including multiple monopoly and contract claims under the Sherman Act, California unfair competition, and interference with economic advantage.

PadMapper and 3taps also filed motions to dismiss on December 21, 2012. PadMapper, which first filed a motion to dismiss on October 30, 2012, amended this motion to dismiss craigslist's claims for trespass (claim 1), breach of contract (2), federal trademark infringement (6), federal false designation of origin (7), California trademark infringement (10), and common law trademark infringement (11). PadMapper argued that the Copyright Act preempts the breach of contract claim and that craigslist failed to state a trespass claim against PadMapper. PadMapper also argued that the four trademark claims are precluded under the U.S. Supreme Court's decision in Dastar v. Twentieth Century Fox Film, which narrowed the scope of the Lanham Act so not to cover claims where the core issue is a copyright claim, primarily the improper reproduction of copyrighted material.

3taps moved to dismiss craigslist's claims of copyright infringement (claim 4), contributory copyright infringement (5), violations of the Computer Fraud and Abuse Act (13), and California Comprehensive Computer Data Access and Fraud Act (14). With respect to the copyright claims, 3taps argued that craigslist has no standing to assert copyright infringement of user-generated content and its asserted copyright registrations are invalid. 3taps also argued that the statutory elements of the CFAA and California statute could not be satisfied, as establishing unauthorized access requires proof of hacking which craigslist judicially admitted did not occur.

In an opposition filed on January 31, 2013, craigslist reasserted the sufficiency of its pleadings and the validity of its copyrights. PadMapper and 3taps replied in support of their respective motions to dismiss on February 13.

On February 8, 2013, noting the complexity of the lawsuit, craigslist filed a motion to bifurcate and stay Defendants' amended counterclaims pending resolution of craigslist's claims. Craigslist argued that the counterclaims would be made moot or significantly narrowed if craigslist prevailed on its claims, and consideration of the antitrust counterclaims in conjunction with craigslist's claims would increase the legal and factual complexity of the case, delaying the proceedings. PadMapper and 3taps both opposed this motion on March 1. The defendants argued that the claims at issue are intertwined and would not be rendered moot if craigslist prevails, such that bifurcation would be inappropriate. The defendants further argued that a decision on bifurcation would be premature, and a stay of discovery would result in prejudice. In a reply on March 15, craigslist maintained that resolving craigslist's claims would at least streamline the antitrust claims, while the balance of potential prejudice weighs heavily towards bifurcation. Craigslist also argued that the motion was not premature and the bifurcation should occur before the start of discovery.  

On April 29, 2013, Judge Charles Breyer issued an order granting in part and denying in part the defendants' motions to dismiss, and granting craigslist's motion to bifurcate.  The district court denied 3taps' motion to dismiss the Computer Fraud and Abuse Act and California Comprehensive Computer Data Access and Fraud Act claims, noting that the defendant's continued access after clear statements regarding authorization in the cease and desist letters and terms of use sufficiently constitutes unauthorized access under these statutory provisions. The Court also denied PadMapper's motion to dismiss the trespass claim and the breach of contract claim, which it it ruled was not preempted by the Copyright Act. PadMapper's motion to dismiss the trademark claims was also denied, as the Court held that they were not precluded by Dastar. With respect to the copyright claims, the Court held that craigslist sufficiently established the originality of the compilation of the posts to warrant copyright protection, even in the individual posts themselves, and sufficiently registered copyright for this content.

However, the Court ruled that craigslist was the exclusive licensee of this content only from July 16, 2012 through August 8, 2012, during which period users were presented with a notice to click confirming craigslist's position as the exclusive licensee of the post. Outside of those weeks when the exclusive license confirmation statement was in use, the court found that craigslist could not sue for copyright infringement. Accordingly, the Court granted the motions to dismiss the copyright claims with respect to user-created posts submitted before July 16 or after August 8, 2012. Lastly, the Court concluded that "the likelihood of streamlining discovery for and adjudication of the antitrust counterclaims based on the outcome of Craigslist's claims-even if those counterclaims must ultimately proceed-warrants bifurcation," and therefore granted craigslist's motion to bifurcate and stay discovery on the antitrust counterclaims.

On Nov. 14, 2011, a group of musicians and music companies claiming to be the legal owners of copyrighted works available for unlicensed use through various peer-to-peer (P2P) BitTorrent clients filed suit against CBS Interactive, Inc. (CBSI) and CNET Networks, Inc., claiming that the companies were liable for infringement of Plaintiffs' copyrighted works because of their alleged role in distributing and popularizing P2P BitTorrent programs.

CNET is a "network of technology media websites that publishes news articles, blogs, reviews, ratings and podcasts about technology, software, and consumer electronics"; Download.com, a CNET website, "is the world's largest comprehensive software directory and rating service, providing reviews, ratings, and download links" for third-party software. Download.com provides links to sites where users can download P2P BitTorrent software, including uTorrent, Vuze, Frostwire, and BitComet; CNET reports extensively on the software, including the P2P software. CNET and Download.com are owned and operated by CBSI.

Plaintiffs alleged that Defendants have promoted and are promoting a "massive piracy culture" by distributing P2P software that they know is primarily used for copyright infringement and by publishing articles, videos, and reviews encouraging users to download the software and use it to infringe copyrighted material. Plaintiffs also alleged that CBSI profits from users downloading P2P software and using it to infringe. Based on those allegations, Plaintiffs asserted claims for vicarious, contributory, and inducement infringement and requested injunctive relief and actual and statutory damages.

Plaintiffs claimed that Defendants are liable for vicarious infringement because they have the "right and ability to control and/or supervise the infringing conduct of P2P client software publishers and individual users (whether by contract or as a matter of practical control)" and a direct financial interest in the infringing conduct. Specifically, they claimed Defendants could refuse to list and link to P2P software and cease "publishing articles promoting and instructing users on the use of P2P software." Plaintiffs claimed Defendants benefited financially from infringement through "fees and revenues earned from downloads on download.com," "advertising revenues generated from encouraging users to seek out and download clients from download.com," and "cross-promotion on P2P client download pages for other sites."

Plaintiffs alleged Defendants committed contributory infringement by providing tools and instruction for infringement and had actual and constructive "knowledge of the massive infringement that has occurred through P2P software they . . . distributed, and promoted." To demonstrate the Defendants' knowledge, Plaintiffs listed a number of articles and user comments on CNET and Download.com comparing clients currently listed on Download.com to illegally operated systems like Grokster and Napster (which were removed from the Download.com directory after courts found them liable for copyright infringement). They also cited side-by-side comparisons of various BitTorrent clients and videos of product demonstrations by CNET editors in which copyrighted songs appeared in search results.

Plaintiffs claimed that Defendants induced copyright infringement by both distributing P2P software that is used to infringe copyrights and promoting the software's infringing use by "inform[ing] users that the software [i]s optimized for infringement" and instructing users "on how to most effectively use" it. Plaintiffs claimed that Defendants' intent to induce infringement is clear, because the Defendants maintain a "business model to profit directly from the demand for infringing P2P clients," "purposefully target[] and cater[] to the P2P infringement community," and continue to "provide downloads for P2P software that fails to block or diminish access to infringing material even though there are technological means to do so."

Motion to Dismiss

Defendants moved to dismiss the complaint on March 5, 2012, stating that Plaintiffs' theory that "offering truthful descriptions, evaluations, and links to lawful P2P software" could subject them to liability for "violations by end-users of that software," was an "unprecedented attempt to expand the law of copyright infringement." According to Defendants, only "a tiny fraction" of "hundreds of thousands of products listed in the Download.com directory" includes P2P software, and Defendants do not host P2P software but rather provide links to third-party sites where it can be downloaded. Defendants further argued that such an interpretation of copyright law would unconstitutionally restrict speech.

Defendants argued that Plaintiffs failed to state a claim for vicarious infringement because they did not allege facts supporting the claim that Defendants have the right and ability to control direct infringement by P2P client users, or that Defendants "can even identify those who use the service to find infringing content." Based on Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) ("Perfect 10-Amazon") and Perfect 10, Inc. v. Visa, 494 F.3d 788 (9th Cir. 2007) ("Perfect 10-Visa"), they argued that "the law is clear that ability to block or remove links to P2P software altogether is not sufficient control." Because their lack of control was fatal to the claim, defendants argued, they did not need to address whether they received a financial benefit from infringement, but stated that they are not paid per download, and, even if they were, a financial benefit from users downloading the software would not be a benefit from infringement.

Defendants argued that the contributory copyright infringement claim failed because the complaint did not allege that Defendants had actual knowledge of specific infringement. Defendants claimed that "the sale of copying equipment . . . does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes," and BitTorrent technology has numerous advantages that are not related to copyright infringement, including faster downloads, more stable mechanisms, and more efficient data transfer that reduces internet traffic. Defendants noted that educational institutions including Stanford and the TED Conferences use such technology for these benefits and argued that, when a product has such substantial non-infringing uses, "evidence of actual knowledge of specific acts of infringement is required" to show contributory infringement. They stated that Plaintiffs cited no evidence that Defendants knew of "specific instances of infringement of Plaintiffs' works" and that, based on the Supreme Court's decision in Sony Corp. v. Universal City Studios, 464 U.S. 417 (1984), "constructive knowledge predicated on alleged knowledge of pervasive general infringement" cannot be a basis for contributory infringement.

Defendants further argued that the inducement claim was inadequately pleaded, because the complaint did not allege "purposeful, culpable expression and conduct," as required under Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 454 U.S. 913 (2005). They argued that a defendant may only be liable for inducement under Grokster if the defendant intended to induce infringement and that Plaintiffs produced no evidence that Defendants "supported or promoted any P2P service that was known to be unlawful at the time, and as such they have not alleged that Defendants knew they were inducing . . . copyright infringement." In fact, Defendants stated that they automatically "warn anyone clicking on a link to P2P software against using it for purposes of copyright infringement." Additionally, Defendants stated that the Ninth Circuit made clear in Perfect 10-Amazon that a defendant must have promoted its own services for purposes of infringement to be liable for inducement, and the Complaint did not allege that. In fact, Defendants stated, CBSI does not create or own any P2P BitTorrent software.

Finally, Defendants argued that imposing liability on them for their "reporting, opinions, [and] descriptions [on] matters of public interest and concern" would violate the First Amendment. The Defendants argued that Plaintiffs sought to impose Grokster inducement liability without Grokster's culpable intent requirement, thereby violating the First Amendment. They noted that they could not be liable for merely linking to P2P software, and therefore a penalty based on linking plus speech would be a penalty for speech. They also said that liability would "compromise legitimate commerce or discourage innovation having a lawful promise" in violation of Grokster.

Opposition to Motion to Dismiss

Plaintiffs opposed the motion to dismiss on June 4, 2012. They argued that the First Amendment was irrelevant to their claims, because the Defendant's speech was not being penalized for its content, but was merely important evidence of CBSI's intent. According to plaintiffs, the case "involves conduct not expression."

Plaintiffs argued that their vicarious liability claim should survive the motion because, based on Fonovisa, Inc. v. Cherry Auction Inc., 76 F.3d 259 (9th Cir. 1996), there are two valid tests for vicarious liability: (1) the "right or ability to control direct infringers" and (2) "pervasive participation" in the "formation and direction" of the direct infringers. They alleged that Defendants did have the right or ability to control infringers, and that the amount of control they had is necessarily "fact specific," and would be filled in by discovery. At the very least, they argued, they had alleged that Defendants were engaged in "pervasive participation" in the "formation and direction" of infringers.

Plaintiffs also argued that their contributory liability claim should stand because they demonstrated constructive knowledge, which, under A&M Records, Inc. v. Napster, 239 F.3d 1004 (9th Cir. 2001), is sufficient. They argued that a device's substantial non-infringing uses only come into play when liability is predicated only on that device's capabilities and that since, "a range of conduct may show constructive or actual knowledge," the conduct cited in the complaint is sufficient to infer knowledge. Additionally, Plaintiffs argued that requiring actual knowledge of specific infringement would "give rise to strategic ignorance of monstrous proportions."

Plaintiffs further argued that their inducement claim was adequately pleaded, because inducement liability does not require that an entity distribute its own product. Plaintiffs also claimed that they had produced sufficient evidence of the Defendants' culpable intent, arguing that, "the defendant's own communications and advertising designs evinced an intent to target . . . a community well-known for infringement," "defendants' business model depended on high-volume use of software which was overwhelmingly infringing," and Defendants failed to take steps to stop infringement. Finally, according to Plaintiffs, generalized knowledge of infringement is sufficient for inducement liability-defendants do not need to have knowledge of the specific songs infringed or "malicious intent." Plaintiffs stated that CBSI "cannot seriously insist that it was unaware of the massive and illegal infringement carried out by the software it distributed."

Reply to the Opposition to the Motion to Dismiss

Defendants replied to the opposition to their motion to dismiss on June 16, 2012. They argued that the correct test for vicarious liability is whether a defendant had the "right or ability to control direct infringers," and that Plaintiffs' argument that "pervasive participation" in the "formation and direction" of infringement is sufficient was incorrect. Citing Perfect 10-Visa, the Defendants argued that the Ninth Circuit had made it clear that control is a necessary element of vicarious liability.

Defendants also argued that Plaintiffs failed to meet the standard for contributory liability laid out in Perfect 10-Amazon, which requires actual knowledge of specific acts of infringement of a plaintiff's works. According to Defendants, Napster did not hold that constructive knowledge was sufficient.

Finally, Defendants argued that their relationship to the infringement is too attenuated to constitute inducement-it is "merely a resource for locating . . . software" and is therefore "distinct from file-sharing software services that existed primarily to promote infringement." Defendants argued that the inducement liability cases Plaintiffs relied on are distinguishable because, in those cases, the defendants encouraged users to download infringing torrent files, whereas here, CBSI merely encouraged users to download a tool with numerous noninfringing uses. Further, Defendants argued that Global-Tech Appliances v. SEB S.A., 131 S.Ct. 2060 (2011), clarified that, to be liable for inducing infringement, a defendant must have knowledge of the specific plaintiff's interests and encourage others to invade those rights. "Linking to peer-to-peer services combined with public statements that the services can be used to copy files is not sufficient."

Order

On July 7, 2012, the court held a hearing on the Defendants' motion, and, on July 13, the court issued an order dismissing the vicarious liability claim and the traditional contributory liability claim, but allowing the inducement liability claim to proceed.

The court dismissed the vicarious liability claim based on Plaintiffs' failure to show that Defendants had a legal right to stop the infringement. Under Grokster, the court stated, vicarious liability requires "more than just an opportunity to control the infringement, [Defendants] must have a legal right to do so." The court noted that, in Perfect 10-Amazon, "the Ninth Circuit affirmed the dismissal of a vicarious copyright infringement claim against an internet search engine because it had neither a contractual nor implied right to ‘stop direct infringement by third-party websites,' despite its ability to control its index, search results, and web pages." In that case, the court noted, the Ninth Circuit recognized that even if a search engine stopped linking to a website that website could continue to infringe copyrights. Similarly, in this case, the court noted, "if Defendants removed the links to P2P software from their site, infringing third-parties would not be prevented from seeking the software out elsewhere and continuing to pirate copyrighted music."

The court dismissed the claim for traditional "material contribution" contributory liability because the complaint did not allege that Defendants' had the requisite knowledge or that Defendants materially contributed to infringement. The court stated that, contrary to Defendant's assertions, constructive knowledge could be sufficient, because Napster "did not discard constructive knowledge as a sufficient basis for contributory liability." However, the court held, Defendants must have knowledge-actual or constructive-of infringement of specific works of the Plaintiffs. The court therefore found that "[a]llegations that Defendants had knowledge that the overarching purpose of the P2P software was piracy are not enough to satisfy the knowledge standard laid out by the Ninth Circuit in Napster." Additionally, the court noted that Defendants did not materially contribute to infringement because no copyrighted material is available through Defendants' website, Defendants' services do not allow for direct infringement, and Defendants could not take simple steps to stop the infringement.

The court allowed the claim for inducement liability to proceed, stating that "[t]his is not a particularly close or challenging case." The court held that, under the "inducement" variation of contributory copyright infringement, Plaintiff must plead that Defendants distributed 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," and "evidence of actual infringement by recipients of the device."

Here, the court stated, Plaintiff alleged sufficient facts to show intent because "Defendants are alleged to have taken the unusual and ill-advised steps of distributing software programs that are capable of widespread copyright infringement while simultaneously demonstrating how to infringe copyrights using that software and evaluating the various programs as to their effectiveness in copying copyrighted material." The court found that it was irrelevant that Plaintiffs had not alleged that specific files had been infringed.

Finally, the court held that the First Amendment was not directly implicated, because Defendants' "behavior" in distributing P2P software and providing "explicit commentary on that software's effectiveness in infringing copyright" "moves beyond opinion into the realm of conduct and does not directly implicate any First Amendment issues."

Amended Complaint and Answer

Plaintiffs filed an amended complaint on July 25, 2012 making only an inducement liability claim. Defendants answered the complaint on August 13, 2012, denying all charges and asserting 24 affirmative defenses, including that the claim is barred "because application of the Copyright Act to impose liability in this case would violate the First Amendment" and "because any alleged injury or loss sustained by Plaintiffs was the fault and responsibility of third parties over whom Defendant had and has no control."

Motion for Preliminary Injunction

On November 9, 2012, Plaintiffs moved for a preliminary injunction, asking the court to enjoin defendants from (1) facilitating, permitting, assisting, soliciting, encouraging, or inducing anyone in downloading P2P BitTorrent software; (2) hosting, linking to or otherwise providing for download P2P BitTorrent software; and, (3) encouraging, soliciting, or inducing the infringement of copyrighted works, directly or indirectly, through the use of P2P software. Plaintiffs asserted that they were entitled to preliminary relief because: (1) they "own registered copyright interests" in specific works available for download through the P2P software at issue; (2) Defendants "continue to provide for free download bittorrent applications capable of illegally downloading Plaintiffs' works in a manner of minutes;" (3) "Defendants know that the bittorrent applications they distribute are being used to infringe musical works on a massive scale;" and (4) Defendants' "websites provide clear instruction on how to use bittorrent applications for purposes of infringement."

Plaintiffs claimed that "[t]hese facts demonstrate a strong likelihood of success on the merits of Plaintiffs' inducement claim," and that "Defendants' conduct evinces a brazen intent to continue their misconduct even after the Court's . . . strong admonishment."

Citing Metropolitan Regional Information Systems, Inc. v. American Home Realty Network, Inc., WL 3715350 at *16 (D. Md. Aug. 27, 2012), Plaintiffs also claimed that they could not practically stop P2P software users from downloading their works, so their only "practical alternative" was to try to stop the distribution of P2P software.

They also argued that their interest in "protecting their copyright interests" outweighed the Defendants' "hypothetical" interest in "maintaining their illegal activity" and that an injunction would serve the public interest because the public is interested in the societal benefits of copyright. They quoted Grokster's language: "In sum, where an article is ‘good for nothing else' but infringement, [citation omitted] there is no legitimate public interest in its unlicensed availability, and there is no injustice in presuming or imputing an intent to infringe," and argued that, "although bittorrent technology potentially has non-infringing uses, Defendants are well-aware that its primary use is for infringing copyrights and it is this use alone which Defendants have promoted, encouraged, instructed and profited from."

Plaintiffs also reiterated their claim that the case does not implicate the First Amendment, because the Defendant's speech is only being used as evidence of the intent to induce.

Opposition to the Motion for Preliminary Injunction

Defendants filed an opposition to the motion for a preliminary injunction on January 25, 2013, stating that Plaintiffs had the burden of establishing all factors for preliminary injunctive relief and had failed to do so.

First, Defendants argued that Plaintiffs were not likely to succeed on the merits because they had not shown ownership of the works at issue, reliable evidence of direct infringement, connection between any infringement and the Defendants, or evidence that the Defendants intended to promote P2P software's use to infringe. Defendants stated that the Plaintiff's motion includes no evidence of ownership other than printouts from the Copyright Office's website, which identify other parties as the copyright owners, and that there is no reliable evidence of direct infringement because there is no evidence that anyone who used Defendants' websites to locate the software used it to download Plaintiffs' works. Defendants also argued that Plaintiffs cannot show that Defendants intended to promote P2P software's use to infringe, because their true purpose is to inform the public, and"[t]heir business model is legitimate, based on creation and aggregation of content, not its infringement." Defendants also pointed out that most of the reviews of P2P BitTorrent protocols that Plaintiffs alleged show intent to induce infringement were written before Grokster introduced the inducement theory of liability in 2005.

Second, Defendants argued that a lack of harm is evidenced by the "years of delay" between Plaintiffs' works becoming available through BitTorrent and their "filing this action, and another full year of delay in bringing this motion after filing suit." Defendants argued that the delay is dispositive.

Third, Defendants argued that Plaintiffs failed to show that the balance of equities tips sharply in their favor. On the contrary, they argued that the injunction Plaintiffs proposed would "substantially damage CBSI's business of providing a comprehensive index of software applications and editorial information about them" and would not stop any individual from downloading P2P BitTorrent software from other sources. This would hurt the public, they argued, because the public would be denied "legitimate and truthful information about pervasive technology."

Fourth, the Defendants contended that the proposed injunction was "unconstitutionally and inequitably vague and overbroad" because it would "require CBSI to cease functions that are not even alleged to constitute inducement." They argued that the "injunction would cover ... content that simply describes [BitTorrent software's] function or use and links to the software itself. This could include news articles" as well as, "not only torrent software, but all P2P software, including products such as Skype or messaging services having nothing to do with Plaintiffs' alleged copyrights." Finally, they claimed that the injunction did not clarify what statements would be prohibited, and that such "[v]ague and broad requests for injunctive relief ... targeting speech or the press raise serious First Amendment issues."

Denial of the Motion for Preliminary Injunction

On February 19, 2013, the district court denied the motion for a preliminary injunction, stating that "Plaintiffs have not shown any likelihood that Defendants will be found liable for their continuing activities," and an injunction is not appropriate when "there is no evidence of any ongoing distribution" of software with the "intent of promoting its use to infringe copyright." Here, the court stated, "Plaintiffs' only solid evidence of possible inducement comes from reviews that were published a decade ago," leading the court to conclude that there was "no reason to believe that Defendants will purposefully encourage copyright infringement now or in the foreseeable future."

Finally, the court concluded that an injunction would not serve the public interest because most of the articles Plaintiffs objected to "are straightforward, legitimate news articles that do not in any way encourage or induce copyright infringement." This suggested to the court that "Plaintiffs' goal goes far beyond stopping actual infringement by Defendants and extends instead to silencing public discussion of P2P technologies."

On February 25, 2013, the court filed another order dismissing CNET Networks, Inc. from the case and amending the case caption to reflect that change as well as the fact that Alkiviades David's claims were previously dismissed. The case caption is now Sugar Hill Music, et al. v. CBS Interactive, Inc.