Select Page

Porn Movies, Copyright Trolls and Joinder (Yes, Joinder)

In Third Degree Films v. Does 1-47 (D. Mass. October 2, 2012), Judge William Young took on the “copyright trolls” in the adult film industry as best he could, holding that the plaintiff (a publisher of copyright-protected adult films that are being shared on the Internet) cannot join 47 “John Doe” defendants in a single action — it must instead file 47 individual suits.

The issue here is part of a larger controversy, the “porn film copyright shakedown.” The way this works is as follows. Copyright holders file Doe suits, which identify defendants only by IP address (all the plaintiff knows at that point). They then subpoena the ISPs and identify the owner of the IP address.  Having identified the owners, they tell them that, absent a quick settlement (typically under $5,000), they will name them in the suit and serve them.  Most people, rather than suffer the embarrassment (or what Judge Young calls the “reputational cost”) of having court records show that they downloaded films with titles like “Big Butt Oil Orgy 2,” settle out-of-court. Judge Young describes this process as “misusing the subpoena powers of the court, seeking the identities of the Doe defendants solely to facilitate demand letters and coerce settlement, rather than ultimately serve process and litigate the claims.”*

*As one court put it, a defendant – “whether guilty of copyright infringement or not — would then have to decide whether to pay money to retain legal assistance to fight the claim that he or she illegally downloaded sexually explicit materials, or pay the money demanded. This creates great potential for a coercive and unjust ‘settlement.'” SBO Pictures, Inc. v. Does 1-3036

Why do the plaintiffs in these cases name tens, hundreds, sometimes thousands of Doe defendants in one suit?  Money, money, money. By filing claims against multiple John Does, as Third Degree tried to do in this case, the plaintiff avoids a separate filing fee for each defendant (currently $350 per complaint). If Third Degree were required to file 47 separate cases, it would cost $16,450.  Filing one case — $350. Assuming an average settlement of $2,500, joinder results in a gross of $117,500, while separate suits would yield a gross of only $101,050. Some porn film copyright cases name thousands of defendants. At $350 a pop, this can start to add up and the number of defendants climbs. In one case, for example, the plaintiff sought (unsuccessfully) to join 3,036 separate defendants.

No doubt, it’s more profitable for a copyright holder to be able to file a single case against multiple defendants and save money on filing costs, but that begs the legal question: why should this be permissible?  Why shouldn’t porn film plaintiffs be required to file separate cases, like everyone else? The answer lies in the federal rules of civil procedure, which allow multiple defendants to be joined in a single case where the claims arise “out of the same transaction, occurrence, or series of transactions or occurrences.” (Fed. R. Civ. P. 20(a)(1)). How do the copyright plaintiffs claim the benefit of this rule?

The answer lies in a variation of the BitTorrent peer-to-peer file-sharing technology known as “BitTorrent swarm” or segmented file transfer.  Simplified, a BitTorrent swarm distributes parts of a file among mutiple users. The file is downloaded from various sources simultaneously and assembled on the destination computer. Because movie files are very large (as compared with mp3 files, for example), this provides a faster, more efficient way to distribute these files.*

* BitTorrent swarms in the context of mass copyright filings are discussed on Slashdot here. For a semi-technical discussion in a court filing see the John Doe filing in  Malibu Media v. John Does 1-5, here.  

Although the 47 alleged downloaders in the Third Degree Films case may never have met each other or know each other’s identities, they all downloaded the same adult film and (according to Third Degree) were part of the same swarm.  Perhaps any given member  of the “swarm” interacts with electronically another participant, perhaps not. The larger the swarm (and a BitTorrent swarm can include thousands of users), the less likely that any one defendant will share part of the file with another. However, unbeknownst to them, using BitTorrent swarm technology made them susceptible to the “swarm joinder theory.”

Whether a plaintiff can name many defendants in a single suit based on swarm joinder is highly controversial. Judge Young issued an opinion on this issue a year ago in Liberty Media Holdings v. Swarm Sharing Hash File.  In that case he permitted the “swarm participants” to be joined in one case, concluding that the Doe defendants’ behavior satisfied the “same transaction or occurrence” requirement.  In the current case Judge Young stands by his reasoning in Liberty Media. He discusses the technological complexities of this issue, and concludes that even indirect interactions between swarm defendants may constitute “shared, overlapping facts” sufficient to establish a “series of transactions or occurrences.”*

*Judge Young noted it gave him “pause that district courts are so divided over whether file sharing via the BitTorrent protocol constitutes a series of transactions or occurrences . . . The inquiry is so fact intensive, and the BitTorrent protocol so technologically complex, that no principled conclusions have emerged from the abundance of recent case law and this Court is not entirely comfortable hanging its hat on its own understanding of the process.” Indeed, some of the discussion of whether an initial seeder indirectly uploaded pieces of a work to every peer in the swarm  is surprisingly abstruse.

However, judges are not always bound by the letter of the law, and when it comes to multi-defendant joinder, Judge Young decided to take full advantage of his discretion.  In this case, Judge Young expressed “serious concerns regarding the propriety of joinder of tens, hundreds, or thousands of Doe defendants” in adult film mass copyright infringement cases.  He noted that each case would require a mini-trial (for example, one defendant suggested that her tenant, who occupies the other half of her two family house, must be responsible for the download). Combining 47 defendants with different defenses into one case was likely to create a “procedural albatross. Judge Young also took a dim view of the use of joinder to create a “low-cost, low-risk revenue model for the adult film companies.”

There have been many adult film (and conventional film) “copyright troll” cases in the last couple of years, and Judge Young’s decision collects court decisions in many of them.  It appears that this phenomenon may be close to running its course.  Many courts now see the issue the way Judge Young sees it, and are denying joinder in BitTorrent cases. Some plaintiffs have been sanctioned for abusing the joinder process. Bellwether trials are pending to test the extent to which an IP address can be used as the basis for legal wrongdoing, and whether the plaintiffs in these cases are correctly representing the technological properties of BitTorrent.  Class action suits have been filed against Third Degree Films and other adult film companies based on their litigation practices. The easy money has been made, people are getting wise to the risk associated with these downloads and the courts have wised-up. The end may be in sight.

 

Online Agreements – Easy To Get Right, Easy To Get Wrong

Online Agreements – Easy To Get Right, Easy To Get Wrong

It’s easy to create an enforceable online “click-wrap” agreement.  But, as two recent cases remind us, it’s also easy to do it wrong.  Two recent cases are a reminder of this.

In the first case, In re Zappos.com Security Breach Litigation, Zappos was sued in connection with a large data security breach. Responding to the predictable class action lawsuit, Zappos argued that the plaintiffs were required to arbitrate under Zappos’ online user agreement. However, Zappos didn’t have a ‘user agreement,” it only had terms and conditions.  And, it did not require purchasers to “click through” to indicate acceptance of those terms.  The terms, which included the arbitration requirement, were under a link users were not even required to access while making a purchase, much less consent to. Quoting the court:

we cannot conclude that Plaintiffs ever viewed, let alone manifested assent to, the Terms of Use. The Terms of Use is inconspicuous, buried in the middle to bottom of every Zappos.com webpage among many other links, and the website never directs a user to the Terms of Use. No reasonable user would have reason to click on the Terms of Use, . . .

. . . The arbitration provision found in the Zappos.com Terms of Use purportedly binds all users of the website by virtue of their browsing. However, the advent of the Internet has not changed the basic requirements of a contract, and there is no agreement where there is no acceptance, no meeting of the minds, and no manifestation of assent. A party cannot assent to terms of which it has no knowledge or constructive notice, and a highly inconspicuous hyperlink buried among a sea of links does not provide such notice. Because Plaintiffs did not assent to the terms, no contract exists, and they cannot be compelled to arbitrate.

To make those terms enforceable Zappos needed to require purchasers to affirmatively signal their assent by “clicking” their agreement to be bound.  It failed to do this, and therefore the terms were not binding.  Zappos might have been better off in arbitration, but it’s stuck in court.

The second case, Schnabel v. Trilegiant  (2d Cir.,  Sept. 7, 2012), is not an online license case per se, but it makes the same point.  In this case the web site, a membership organization, emailed (or, if the email bounced, snail-mailed) terms and conditions to new members after they had already joined.  The terms contained an arbitration clause.  Could the plaintiff be required to arbitrate based on this “after the fact” mailing?  Not under the circumstances in this case.  The Second Circuit held:

a reasonable person would not be expected to connect an email that the recipient may not actually see until long after enrolling in a service (if ever) with the contractual relationship he or she may have with the service provider, especially where the enrollment required as little effort as it did for the plaintiffs here. In this context the email would not have raised a red flag vivid enough to cause a reasonable person to anticipate the imposition of a legally significant alteration to the terms of conditions of the relationship with [the defendant].

Much of the case law on online contract formation between vendors and purchasers comes from the Second Circuit.  See: Specht v. Netscape Communications Corp., 306 F. 3d 17 (2nd Cir. 2002); Register. com, Inc. v. Verio, Inc., 356 F. 3d 393 (2nd Cir. 2004).

You might not know it from these two cases, but this is not rocket science: require customers to affirmatively consent to online terms before they perform the transaction, and the agreement likely will be enforceable.

Oh, one more thing – don’t state that the terms can be changed at any time, at the whim of the site owner, without obtaining new assent by the customer.  A lot of terms contain a provision to this effect, but as the court noted in the Zappos case, where the site owner reserves the unilateral right to revise the online terms the contract becomes “illusory, and therefore unenforceable.”  The district court in Zappos cites many of the cases applying this principle to online agreements.  For a 2009 blog post discussing this aspect of online agreements, see here.