Tag: aiding and abetting

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Copyright

Court Confirms the Obvious: Aiding and Abetting Criminal Copyright Infringement Is a Crime

Cross-posted from the Law Theories blog.

closeup of a circuit boardIn July of 2016, a criminal complaint was filed in the Northern District of Illinois alleging that Artem Vaulin of the Ukraine was the mastermind behind the popular torrent site, Kickass Torrents (KAT). At the time, KAT was one of the largest pirate sites in the world, with an estimated 50 million unique visitors each month. The complaint charged Vaulin with several crimes, including criminal copyright infringement. The district court issued an arrest warrant for Vaulin and a seizure warrant for the various KAT domain names. Less than two weeks later, Vaulin was arrested in Poland and the KAT website was under the government’s control.

The government then secured an indictment charging Vaulin with sixteen counts, including eleven counts of aiding and abetting criminal copyright infringement for distributing pre-release movies, including The Butler, Deadpool, and X-Men: Apocalypse.[1] There was also one aiding and abetting criminal copyright infringement count for reproducing and distributing “at least ten copies . . . of one or more copyrighted works which had a total retail value of more than $2,500” during “the 180 days leading up to and including July 8, 2016[.]”[2] Two months after the indictment was handed down, Vaulin filed a memorandum in support of his motion to dismiss that made a rather extraordinary claim: Aiding and abetting criminal copyright infringement is not a crime.

The twelve aiding and abetting criminal copyright infringement counts in the indictment all point to Section 2 of Title 18, the federal aiding and abetting statute. Section 2(a) provides: “Whoever commits an offense against the United States or aids, abets, counsels, commands, induces or procures its commission, is punishable as a principal.” The idea behind Section 2(a) is simple: Those who help or encourage another to commit a federal crime, with the intent to aid in its commission, are guilty just as if they had committed the crime themselves. The statute does not create a separate crime; it instead permits someone to be convicted of a crime even if that person did not commit all of the acts constituting the elements of the crime. The indictment charged Vaulin with aiding and abetting because his KAT website merely provided torrent files that helped others to directly commit criminal copyright infringement.

Vaulin argued that “[s]econdary liability in civil copyright law is a common-law creation of judges, but it is not a federal crime enacted by Congress.” Incredibly, Vaulin never once mentioned Section 2(a)—the very statute that makes it a crime to aid and abet the commission of a federal crime and that he was charged with violating a dozen times over—in arguing that aiding and abetting criminal copyright infringement is not a crime. Vaulin also made no mention of binding Seventh Circuit precedent erasing any doubt that Section 2(a) applies to all federal crimes. In the late 1980s, a defendant challenged his aiding and abetting conviction on the ground that Section 2(a) did not apply. The Seventh Circuit, sitting en banc, rejected the argument: “The question is not whether section 2(a) is applicable—it always is.”[3]

The government’s brief in response to Vaulin’s motion to dismiss pointed out this obvious flaw: “And make no mistake, § 2 applies to all violations of the criminal code.” It noted that no court had ever held that aiding and abetting criminal copyright infringement is not a crime, even though “scores of defendants” had been charged and found guilty of that very crime. The government then rebutted the only plausible argument that aiding and abetting criminal copyright infringement is not a crime—despite the fact that Vaulin had not bothered to make it. Under the Copyright Act of 1909, Congress expressly included language criminalizing aiding and abetting criminal copyright infringement.[4] That language was removed in the Copyright Act of 1976, and the argument is that Congress thus decriminalized the act of aiding and abetting criminal copyright infringement.

At first blush, this argument makes some sense. Indeed, one district court suggested in dicta over two decades ago that “Congress revamped the Copyright Act by eliminating the crime of aiding and abetting copyright infringement.”[5] And one scholar recently posited that “the Copyright Act of 1976 eliminated the provisions for aiding and abetting introduced in 1909[.]”[6] Notably, neither the district court nor the scholar mentioned the federal aiding and abetting statute—Section 2(a)—and explained why it would not apply to criminal copyright infringement. Nor did they explain why nothing in the legislative history indicates that Congress intended to make criminal copyright infringement the one-and-only federal crime that people can aid and abet with impunity.

In context, the argument makes no sense. Why would Congress want to decriminalize aiding and abetting criminal copyright infringement, thus making it different from every other federal crime? And why would it make such a drastic change, reversing almost seven decades of precedent, yet say nothing in the legislative history? The trend since copyright infringement was first criminalized one century ago has been to expand both the conduct that constitutes criminal infringement and its sanctions. In the four decades since the 1976 Act was enacted, Congress has systematically enlarged the law of criminal copyright infringement.[7] Why would Congress work so diligently to broaden criminal copyright infringement while at the same time make it the only crime in the entire U.S. Code that one can aid and abet without liability?

As the government noted in its brief, numerous scholars—as well as the venerable Nimmer on Copyright treatise—have concluded that aiding and abetting does apply to criminal copyright infringement.[8] Congress removed the aiding and abetting language with the 1976 Act because it was redundant with Section 2(a). Congress did not make an enormous change to criminal copyright law and then neglect to mention it in the legislative history; Congress removed surplusage and then said nothing because the redundancy was self-evident and unremarkable. Indeed, as Deputy Assistant Attorney General Irwin Goldbloom reported to Congress in 1975: “The provision . . . for aiders and abettors has been removed, but these individuals will be liable to prosecution under 18 U.S.C. 2.”

In his brief replying to the government’s brief, Vaulin finally made the argument—in all-bolded text, no less—that the government had already rebutted: “But aiding and abetting was removed from the Copyright Act by Congress in 1976 thereby eliminating the crime.” Overemphasis notwithstanding, Vaulin’s brief yet again failed to mention Section 2(a), the very aiding and abetting statute he again insisted does not exist. Instead, Vaulin engaged in hand-waving about “inventing new crimes” and the “rule of lenity,” apparently in the hope that the district court would not notice the glaring omission. Curiously, Vaulin even cited the DOJ’s Prosecuting Intellectual Property Crimes manual, despite its hot tip to federal prosecutors that they “may, for strategic reasons, wish to bring accessory charges, such as aiding-and-abetting or inducement, 18 U.S.C. § 2[.]”

Needless to say, District Judge John Z. Lee spent little time rejecting Vaulin’s argument that the crime he had been charged with twelve times over does not exist. In fact, Judge Lee did not need to reach the issue at all since he had already found that Vaulin’s motion could be dismissed under the fugitive disentitlement doctrine. To Vaulin’s claim that secondary liability for copyright infringement only exists in the civil law context, Judge Lee noted that “the indictment does not charge Vaulin with common law secondary liability” and pointed to Section 2(a). To Vaulin’s claim that Congress intended to decriminalize aiding and abetting, Judge Lee stated that Section 2(a) “applies to every criminal offense” and that “there was no need to include language in the Copyright Act itself” criminalizing “aiding and abetting criminal infringement” since it “would have been redundant.”

Vaulin’s self-serving—and ultimately losing—argument that the crime of aiding and abetting criminal copyright infringement disappeared four decades ago despite nobody noticing until now aside, this case raises some interesting questions. The simple fact is that there is very little case law applying criminal copyright law in the internet context, much less cases turning on an aiding and abetting theory. However, what is uninteresting is the fact that aiding and abetting criminal copyright infringement is a crime. It is absurd to think that criminal copyright infringement is the one crime that Congress wants people to be free to aid and abet.

[1] The indictment specified that each count is “[i]n violation of Title 17, United States Code, Section 506(a)(1)(C) and Title 18, United States Code, Sections 2319(d)(1) and 2.” Section 506(a)(1)(C) makes criminal “willfully” infringing a copyright if committed “by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.” Section 2319(d)(1) establishes the crime as a felony, punishable by up to three years imprisonment and a fine.

[2] The indictment specified that this count is “[i]n violation of Title 17, United States Code, Section 506(a)(1)(A) and Title 18, United States Code, Sections 2319(b)(1) and 2.” Section 506(a)(1)(A) makes criminal “willfully” infringing a copyright if committed “for purposes of commercial advantage or private financial gain[.]” Section 2319(b)(1) establishes the crime as a felony, punishable by up to five years imprisonment and a fine.

[3] United States v. Pino-Perez, 870 F.2d 1230, 1233 (7th Cir. 1989).

[4] Section 28 provided: “[A]ny person who willfully and for profit shall infringe any copyright secured by this Act, or who shall knowingly and willfully aid or abet such infringement, shall be deemed guilty of a misdemeanor[.]”

[5] United States v. LaMacchia, 871 F. Supp. 535, 539 (D. Mass. 1994).

[6] Irina D. Manta, The Puzzle of Criminal Sanctions for Intellectual Property Infringement, 24 Harv. J.L. & Tech. 469, 481 (2011); see also Mary Jane Saunders, Criminal Copyright Infringement and the Copyright Felony Act, 71 Denv. U. L. Rev. 671, 674 (1994) (“The 1976 general revision to the Copyright Act continued the offense of criminal copyright infringement, but eliminated the crime of aiding and abetting infringement.”).

[7] See, e.g., Piracy and Counterfeiting Amendments Act of 1982, Pub. L. No. 97-180, 96 Stat. 91 (1982); Sentencing Reform Act of 1984, Pub. L. No. 98-473, 98 Stat. 1987 (1984); Copyright Felony Act of 1992, Pub. L. No. 102-561, 106 Stat. 4233 (1992); Anticounterfeiting Consumer Protection Act of 1996, Pub. L. No. 104-153, 110 Stat. 1386 (1996); No Electronic Theft (NET) Act of 1997, Pub. L. No. 105-147, 111 Stat. 2678 (1997); Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, Pub. L. No. 106-160, 113 Stat. 1774 (1999); Artists’ Rights and Theft Prevention (ART) Act of 2005, Pub. L. No. 109-9, 119 Stat. 218 (2005); Prioritizing Resources and Organization for Intellectual Property (PRO IP) Act of 2008, Pub. L. No 110-403, 122 Stat. 4256 (2008).

[8] See, e.g., 5 Nimmer on Copyright § 15.01[A][2] (2017) (“Persons who knowingly and willfully aid or abet copyright infringement are subject to the same criminal penalties as apply to the principal.”); Benton Martin & Jeremiah Newhall, Criminal Copyright Enforcement Against Filesharing Services, 15 N.C. J. L. & Tech. 101, 108 (2013) (“Aiding and abetting criminal copyright remains a crime under § 2(a).”); James Lincoln Young, Criminal Copyright Infringement and a Step Beyond: 17 U .S.C. § 506 (1976), 60 Neb. L. Rev. 114, 124 (1981) (“The continued inclusion of such a provision in the new section 506(a) would have been merely superfluous[.]”); Note, The Criminalization of Copyright Infringement in the Digital Era, 112 Harv. L. Rev. 1705, 1722 n.39 (1999) (“The new Act removed references to aider and abettor liability. However, because such liability was still possible under the general provision treating aiders and abettors of any federal criminal offense as principals, this change appears to be simply a removal of surplusage.”).

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Copyright Internet Uncategorized

CloudFlare’s Desperate New Strategy to Protect Pirate Sites

a gavel lying on a table in front of booksSan Francisco-based CloudFlare has earned a somewhat dubious reputation in the online world. Website owners can set up CloudFlare in just a few minutes, gaining the performance, security, and privacy benefits the service provides. Traffic routed through CloudFlare’s global content delivery network is cached for faster delivery times and protected from numerous online threats. Pirate sites have flocked to the service because it hides their true identities from copyright owners by default. And it probably doesn’t hurt that CloudFlare CEO Matthew Prince thinks that “censoring the Internet” is “creepy,” even “under a court order.”

Prince practices what he preaches, and CloudFlare has been all-too-ready to lend a helping hand to even the most notorious pirates. When The Pirate Bay rose from the ashes in early 2015, CloudFlare provided the site with services that helped manage its massive server loads. CloudFlare’s encryption technology even made it easy for users in the UK to circumvent the High Court’s ban ordering ISPs to block the pirate site. Amazingly, The Pirate Bay is now back in the United States, using its original thepiratebay.org Virginia-based domain and benefiting from CloudFlare’s robust services to make its criminal enterprise run smoothly worldwide.

Of course, the only reason CloudFlare can get away with supporting the world’s most-visited torrent site is because the DMCA is such a mess. Courts have set the bar so high that CloudFlare wouldn’t likely be found to have red flag knowledge of the massive amounts of infringement it certainly knows its service enables for globally-infamous criminal infringers like The Pirate Bay. Rather than taking the high road and refusing to work with obvious pirate sites, CloudFlare lawyers up when pushed and denies the supportive role that its service provides.

We saw this last year in the Grooveshark case. After the original Grooveshark site was found liable for willful infringement and agreed to shut down, copycat sites sprung up at different top-level domains such as grooveshark.io and grooveshark.pw. The plaintiffs obtained a temporary restraining order against the copycats, which registrars Namecheap and Dynadot promptly complied with by disabling some of the domains. But when the plaintiffs asked CloudFlare to stop providing services to some of the other copycats, they were met with firm resistance. The plaintiffs had to turn to the court for an order clarifying that the injunction against the copycat sites prevented CloudFlare from providing them services.

With the backing of the Electronic Frontier Foundation, CloudFlare put up a big fight. It denied that it was in “active concert or participation” with the copycats, which under Rule 65 would have made it bound by their existing injunction. CloudFlare argued that its services were merely passive and that the domains would still remain accessible even if its services were cut off. The district court rejected CloudFlare’s self-serving arguments, noting that it was in fact aiding and abetting the copycat sites by operating their authoritative domain name servers and optimizing their traffic worldwide. Since CloudFlare had actual notice of the injunction and was in “active concert or participation” with the enjoined copycats, it was also bound by their injunction under Rule 65.

Hit with what must have been the eye-opening reality that, under penalty of contempt, it couldn’t knowingly help its enjoined customer engage in the very wrong the court had ordered it to stop committing, one might think that CloudFlare would have become more respectful of court orders involving its customers. However, as recent developments in the MP3Skull case show, CloudFlare has decided to again take the low road in shirking its responsibility to the court. And its argument here as to why it’s beyond the court’s reach is even more desperate than before.

In April of 2015, several record label plaintiffs sued MP3Skull for copyright infringement, easily obtaining a default judgment when the defendants failed to respond to the suit. Earlier this year, the plaintiffs were granted a permanent injunction, which the defendants quickly flouted by setting up shop under several different top-level domains. Naturally, the common denominator of these multiple MP3Skull sites was that they used CloudFlare. The plaintiffs’ lawyers sent a copy of the injunction against the pirate sites to CloudFlare, asking it to honor the injunction and stop supplying services to the enjoined domains. But, as with Grooveshark, CloudFlare again refused to comply.

The record label plaintiffs have now gone back to the district court, filing a motion requesting clarification that CloudFlare is bound by the injunction against the MP3Skull sites. They argue that the “law is clear that CloudFlare’s continued provision of services to Defendants, with full knowledge of this Court’s Order, renders CloudFlare ‘in active concert or participation’ with Defendants,” and they point to the opinion in the Grooveshark case in support. According to the plaintiffs, the only issue is whether CloudFlare is aiding and abetting the enjoined defendants by providing them services.

CloudFlare opposes the motion, though it noticeably doesn’t deny that it’s in “active concert or participation” with the enjoined defendants. Instead, CloudFlare argues that, since this is a copyright case, any injunction against it must comply with the DMCA:

Section 512(j) prescribes specific standards and procedures for injunctions against service providers like CloudFlare in copyright cases. It places strict limits on injunctions against eligible service providers. 17 U.S.C. § 512(j)(1). It specifies criteria that courts “shall consider” when evaluating a request for injunctive relief against a service provider. 17 U.S.C. § 512(j)(2). And it requires that a service provider have notice and an opportunity to appear, before a party may bind it with an injunction. 17 U.S.C. § 512(j)(3). Plaintiffs ignored those requirements entirely.

The gist of CloudFlare’s argument is that Section 512(j) controls injunctions against service providers like itself, notwithstanding the fact that Rule 65 binds those in “active concert or participation” with an enjoined party. In other words, CloudFlare says that the DMCA gives service providers unique immunity from having to obey court-issued injunctions under the Federal Rules—a remarkable claim requiring remarkable proof. And the case law cited to back up this claim? None. Zip. Nada. CloudFlare fails to produce one single cite showing that any injunctive-relief statute, whether copyright or otherwise, has ever been deemed to preempt the longstanding rule that it’s contempt of court to aid and abet an enjoined defendant. The desperation is palpable.

The reason the DMCA doesn’t apply to CloudFlare is obvious. Section 512(j) states that it “shall apply in the case of any application for an injunction under section 502 against a service provider” that qualifies for the safe harbors. CloudFlare goes on for pages about how it’s a service provider that would qualify for the safe harbor defense if given the chance, but all of this misses the point: CloudFlare is not being enjoined. The only service provider being enjoined is MP3Skull—and that injunction was issued under Section 502 without the limitations set forth in Section 512(j) because MP3Skull didn’t even bother to show up and attempt to claim the safe harbors. But the plaintiffs have not sought an injunction against CloudFlare, which they could only do by naming CloudFlare as a party to the suit.

Since CloudFlare itself isn’t being enjoined under Section 502, Section 512(j) provides it no limitations. The issue is simply whether, under the Federal Rules, CloudFlare is bound by the injunction that has already been issued against the MP3Skull sites. Perhaps not wanting to get bench-slapped again on the aiding and abetting question under Rule 65, CloudFlare is taking an even lower road with this desperate new argument that it’s magically immune to court orders against its customers under the Federal Rules. The district court has yet to rule on the plaintiffs’ motion, but my guess is that it will make short work in reminding CloudFlare of the court’s true power to hold aiders and abettors in contempt.

Categories
Copyright Internet Uncategorized

Let’s Get Real About Kim Dotcom: The Indictment Clearly Alleges Felony Copyright Infringement

By Devlin Hartline & Terrica Carrington

After countless delays, the extradition hearing against Kim Dotcom began yesterday in New Zealand. Dotcom has been indicted on several charges, including criminal copyright infringement, racketeering, money laundering, and wire fraud, in connection with his notorious Megaupload website. He allegedly reproduced and distributed large amounts of copyrighted works, including movies, songs, TV programs, and computer software. In anticipation of the hearing, we’ve heard much opinion and speculation about the case against Dotcom.

Most recently, Harvard law professor Larry Lessig wrote a puzzling affidavit in which he argues that the superseding indictment and the summary of evidence against Dotcom are insufficient to establish a prima facie case of felony copyright infringement. Lessig has a long history of being on the losing end of things with his novel arguments concerning copyright law, and this affidavit appears to continue that trend. Lessig argues that “the DOJ fails to show direct criminal copyright infringement on the part of Megaupload personnel” and that “there is no showing that any specific Megaupload representative . . . had the requisite mens rea to willfully violate copyright law.”

Lessig is wrong: The superseding indictment and the summary of evidence allege direct criminal copyright infringement by Dotcom and his co-defendants. Looking at just two examples from the indictment, Count Four relates to the pre-release movie “Taken” that was uploaded to Megaupload by one of Dotcom’s co-defendants, and Count Eight concerns the scraping of YouTube done by the co-defendants at Dotcom’s command. There are smoking gun emails establishing that these crimes were done willfully. Remarkably, Lessig makes no mention whatsoever of the movie “Taken,” the scraping of YouTube, or the emails. It’s time to get real about Kim Dotcom.

Sufficiency of the Indictment

As a preliminary matter, it’s important to understand the procedural posture of this case. The case isn’t at trial, and it hasn’t even reached discovery yet—this is merely an indictment. Under federal law, a criminal indictment has two primary purposes: (1) to sufficiently outline the charges so that the accused is on notice and may prepare to defend against those charges, and (2) to enable the defendant to avoid double jeopardy by defining the scope of the charges.[1] At this early stage, courts assume that the prosecution’s alleged facts are true, and the indictment will only be dismissed if the allegations fail to state an offense.[2]

Lessig attacks the indictment’s sufficiency: “Counts Four through Eight allege that respondents themselves committed crimes of copyright infringement. General allegations in such Counts do not find support in specific facts set forth in the Record of the Case.” He further states that “no individual Megaupload defendant is shown to have . . . ‘willfully’ or criminally copied or distributed a copyrighted work.” While it’s true that these things haven’t been proved beyond a reasonable doubt after a trial on the merits, it’s simply not true that the indictment doesn’t allege these things sufficiently to put Dotcom on notice of the crimes he’s accused of committing.

As we’ll see below, Counts Four and Eight in the indictment simply follow the language of the applicable statutes, supported by the alleged facts that establish willfulness. The Supreme Court has stated numerous times that “[i]t is generally sufficient that an indictment set forth the offense in the words of the statute itself, as long as those words of themselves fully, directly, and expressly, without any uncertainty or ambiguity, set forth all the elements necessary to constitute the offence intended to be punished.”[3] The Counts here do just that—they quote the statutes and fully set forth the elements of the crimes.

Count Four: Pre-Release Movie “Taken”

Count Four of the indictment accuses Dotcom of felony copyright infringement for the pre-release distribution of the movie “Taken” in violation of Section 506(a)(1)(C) of the Copyright Act,[4] which provides:

Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed . . . by the distribution of a work being prepared for commercial distribution, by making it available on a computer network accessible to members of the public, if such person knew or should have known that the work was intended for commercial distribution.

Tracking the language of the statute, Count Four states:

On or about October 25, 2008, in the Eastern District of Virginia and elsewhere, the defendants . . . did willfully, and for purposes of commercial advantage and private financial gain, infringe a copyright by distributing a work being prepared for commercial distribution in the United States, to wit, the copyrighted motion picture “Taken ” (which would not be commercially distributed until on or about January 30, 2009) by making it available on a computer network accessible to members of the public, when defendants knew, and should have known, that the work was intended for commercial distribution.

The superseding indictment and summary of evidence clearly allege that this crime was committed willfully. “Taken” was released in the United States in January of 2009, and one of Dotcom’s co-defendants, Bram Van Der Kolk, uploaded it more than three months earlier in October of 2008:

On or about October 25, 2008, VAN DER KOLK uploaded an infringing copy of a copyrighted motion picture entitled “Taken 2008 DVDRip Repack [A Release Lounge H264 By Micky22].mp4” to Megaupload.com and e-mailed the URL link for the file to another individual. An infringing copy of this copyrighted work was still present as of October 27, 2011, on a server in the Eastern District of Virginia controlled by the Mega Conspiracy.

In February of 2009, Van Der Kolk told another co-defendant, Mathias Ortmann, that he had uploaded several movies, and then he sent Ortmann a link to “Taken”:

On or about February 7, 2009, via Skype, VAN DER KOLK told ORTMANN, “I have many old videos in my portfolio.” VAN DER KOLK then said, “I uploaded full dvd rips” and then sent ORTMANN a Mega URL to the copyrighted motion picture Taken and commented, “that was a 1013.05 MB upload :)” ORTMANN responded, “looks good :)” and VAN DER KOLK replied, “yeah.”

Three months later, another of Dotcom’s co-defendants, Finn Batato, emailed Ortmann with a message from a customer who had watched “Taken”:

On or about May 25, 2009, BATATO sent an e-mail to ORTMANN that contained customers’ e-mails. One of the customer e-mails indicated: “We watched Taken successfuly and then tried to watch the “Alphabet Killer ” a day later and got the message to upgrade if we wanted to continue watching.”

The alleged facts show that one of Dotcom’s co-defendants, Van Der Kolk, uploaded “Taken” and that two others, Ortmann and Batato, knew about it. Given his admission that he had “uploaded full dvd rips,” and given that the file was named “Taken 2008 DVDRip Repack [A Release Lounge H264 By Micky22].mp4,” it’s obvious that Van Der Kolk knew that this was infringement. These smoking gun emails establish that this infringement was done willfully, with the approval of two other co-defendants.

But what about Dotcom? Why is he charged with this crime? There is no evidence that Dotcom himself knew about this particular movie—nor does there have to be. Count Four of the indictment also alleges aiding and abetting, and Dotcom can be found guilty for the acts taken by his co-defendants since he’s their accomplice. Under federal criminal law, anyone who “aids, abets, counsels, commands, induces or procures” the commission of a federal crime can be punished as if he committed the crime himself. This “reflects a centuries-old view of culpability: that a person may be responsible for a crime he has not personally carried out if he helps another to complete its commission.”[5]

The test is whether Dotcom “(1) takes an affirmative act in furtherance of that offense, (2) with the intent of facilitating the offense’s commission.”[6] The government here alleges ample facts, including smoking gun emails, to show that Dotcom encouraged his co-defendants to commit copyright infringement on an incredible scale. For example, Dotcom forwarded an email from someone complaining about 130 “illegal links” to Ortmann and Van Der Kolk with the following instruction: “Never delete files from private requests like this.” In another email, Dotcom berated Van Der Kolk and two other co-defendants for deleting thousands of links after rightholders complained: “I told you many times not to delete links that are reported in batches of thousands from insignificant sources. . . . [T]he fact that we lost significant revenue because of it justifies my reaction.”

This evidence paints a picture of Dotcom creating Megaupload from the ground up as a profit-making, piracy-focused machine. To pin this crime on Dotcom, the government will have to prove that Van Der Kolk uploaded “Taken” as part of the venture Dotcom associated with, participated in, and sought by his own actions to make succeed.[7] This task hardly seems insurmountable.

Despite what Lessig would have us believe, Count Four clearly alleges facts sufficient to establish a prima facie case for felony copyright infringement of the pre-release movie “Taken.” The movie was uploaded by Van Der Kolk three months before it was released as part of the criminal enterprise Dotcom and his co-defendants participated in willfully. Remarkably, Lessig never even mentions the movie “Taken” in his affidavit.

Count Eight: Scraping YouTube Videos

A look at Count Eight of the indictment results in a similar conclusion. Count Eight accuses Dotcom of felony copyright infringement for scraping videos from YouTube in violation of Section 506(a)(1)(A) of the Copyright Act,[8] which provides:

Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed . . . for purposes of commercial advantage or private financial gain[.]

Tracking the language of the statute, Count Eight states:

For the 180 days up to and including October 31, 2007, in the Eastern District of Virginia and elsewhere, the defendants . . . did willfully, and for purposes of commercial advantage and private financial gain, infringe copyrights from the Youtube.com platform, by reproducing and distributing by electronic means, during a 180-day period, at least ten copies and phonorecords of one or more copyrighted works which had a total retail value of more than $2,500.

The superseding indictment and summary of evidence also clearly allege that this crime was committed willfully. The relevant 180-day period is from May of 2007 to October of 2007, but the scraping of YouTube started well before that. In April of 2006, Van Der Kolk messaged Ortmann to see if they had enough server space for the scraped YouTube videos that Dotcom himself had asked for:

On or about April 10, 2006, VAN DER KOLK sent an e-mail to ORTMANN asking “Do we have a server available to continue downloading of the Youtube’s vids? … Kim just mentioned again that this has really priority.”

Van Der Kolk also expressed concern that YouTube might detect the scraping:

On or about April 10, 2006, VAN DER KOLK sent an e-mail to ORTMANN indicating “Hope [Youtube.com is] not implementing a fraud detection system now… * praying *”.

Ortmann responded that this might not be a problem:

On or about April 10, 2006, ORTMANN sent an e-mail to VAN DER KOLK in reply to the “fraud detection” message indicating “Even if they did, the usefulness of their non-popular videos as a jumpstart for Megavideo is limited, in my opinion.”

Van Der Kolk then replied that they only had 30% of YouTube’s videos:

On or about April 10, 2006, VAN DER KOLK sent an e-mail to ORTMANN in reply to the “jumpstart for Megavideo ” message indicating that “Well we only have 30% of their videos yet.. In my opinion it’s nice to have everything so we can descide and brainstorm later how we’re going to benefit from it.”

In February of 2007, Van Der Kolk reminded Ortmann that Dotcom wanted every single YouTube video:

On or about February 11, 2007, VAN DER KOLK sent an e-mail to ORTMANN indicating that “Kim really wants to copy Youtube one to one.”

These emails establish that the co-defendants willfully infringed by scraping as many videos from YouTube as they could at Dotcom’s insistence. These scraped YouTube videos were part of their plan to “jumpstart” the popularity of their websites, and the co-defendants were concerned that YouTube would catch on to what they were doing. In order to cover their tracks, the government explains how the scraped YouTube videos would be made to appear under random users’ accounts:

A preliminary investigation of the data bases and associated software code shows that the Mega Conspiracy implemented a software tool to copy videos from Youtube.com. After copying a video from Youtube.com, the tool would import the video into the account of a randomly-selected, already-existing user of the Mega Sites. In addition, the tool would assign the video a random, false “view” count. This is consistent with what is discussed in Paragraph 28(d), which describes an August 12, 2007 e-mail, where a copyright owner complains that a video from his Youtube.com account appeared to have been infringed by a user on Megavideo.com, but that the Megavideo.com user had not logged on during that time period.

This practice of scraping YouTube continued for many years—presumably resulting in millions of intentional infringements. In January of 2011, one of the co-defendants, Sven Echternach, forwarded an email from an employee to Van Der Kolk and another co-defendant, Julius Bencko, acknowledging that YouTube was still a go-to video source:

On or about January 27, 2011, ECHTERNACH forwarded an e-mail to VAN DER KOLK and BENCKO that an employee from the Megateam in the Philippines wrote that asked about access to Youtube. In that e-mail, the employee admits, “Even video resource sites such as Youtube which is our source for videos which we upload to Megavideo.”

The alleged facts show that several of the co-defendants were involved in the scraping of YouTube under Dotcom’s direct command. This wasn’t some one-off fluke—it was deliberate infringement on an incredible scale. Dotcom’s role in the matter is obvious since he was the one who gave the order to the co-defendants to scrape every single YouTube video. And as with Count Four, this makes him guilty of the crime as if he had committed it himself since he’s an aider and abettor.

Remarkably, Lessig makes no mention of any of this evidence either. The years-long scraping of YouTube videos is not discussed anywhere in his affidavit. Despite Lessig’s claims to the contrary, Count Eight of the indictment clearly alleges facts sufficient to establish a prima facie case for felony copyright infringement.

Conclusion

As the Megaupload saga evolves, we’ll surely hear many more claims about the legal and moral implications of the case. Lessig is not the first, and he will certainly not be the last, to argue that Dotcom and his co-defendants should not be punished for their behavior. Nonetheless, it is important to keep in mind what allegedly happened here: Dotcom and his co-defendants made millions of dollars through the rampant theft and dissemination of countless artists’ and creators’ copyrighted works. For the sake of these artists and creators, who worked hard to produce the works that were unmercifully stolen, let us hope that Dotcom and his co-defendants are held accountable for their crimes.

[1] United States v. Williams, 152 F.3d 294, 299 (4th Cir.1998); Russell v. United States, 369 U.S. 749, 763-64 (2013).

[2] United States v. Thomas, 367 F.3d 194, 197 (4th Cir.2004).

[3] Hamling v. United States, 418 U.S. 87, 117 (1974) (quotations and citation omitted); see also Fed. R. Crim. P. 7(c)(1) (“The indictment or information must be a plain, concise, and definite written statement of the essential facts constituting the offense charged . . . . For each count, the indictment . . . must give the official or customary citation of the statute, rule, regulation, or other provision of law that the defendant is alleged to have violated.”).

[4] See also 18 U.S.C. § 2319(d)(2) (“Any person who commits an offense under section 506(a)(1)(C) of title 17 . . . shall be imprisoned not more than 5 years, fined under this title, or both, if the offense was committed for purposes of commercial advantage or private financial gain[.]”).

[5] Rosemond v. United States, 134 S. Ct. 1240, 1245 (2014).

[6] Id.

[7] United States v. Peoni, 100 F.2d 401, 402 (2d Cir. 1938) (L. Hand, J.) (“It will be observed that all these definitions . . . demand that [the defendant] in some sort associate himself with the venture, that he participate in it as in something that he wishes to bring about, that he seek by his action to make it succeed.”).

[8] See also 18 U.S.C. § 2319(b)(1) (“Any person who commits an offense under section 506(a)(1)(A) of title 17 . . . shall be imprisoned not more than 5 years, or fined in the amount set forth in this title, or both, if the offense consists of the reproduction or distribution, including by electronic means, during any 180-day period, of at least 10 copies or phonorecords, of 1 or more copyrighted works, which have a total retail value of more than $2,500[.]”).

Categories
Copyright Injunctions Internet Remedies Trademarks Uncategorized

CloudFlare Enjoined From Aiding Infringers: Internet Unbroken

Just how far does a court’s power to enjoin reach into cyberspace? It’s clear enough that those directly posting or hosting infringing content are subject to an injunction. But what about a company such as CloudFlare that provides content delivery network and domain name server services? Does an injunction under Rule 65 against anyone acting in “active concert or participation” with an online infringer apply to an internet infrastructure company such as CloudFlare? CloudFlare recently argued that its service is “passive” and untouchable, but a district court vehemently—and rightly—disagreed.

The controversy started with the shutdown of the Grooveshark music streaming service pursuant to a settlement agreement with the major record label plaintiffs this past April. Back in September of 2014, Grooveshark and its two founders were found directly and indirectly liable for copyright infringement. After the district court held that their infringement was “willful,” thus subjecting them to potential statutory damages exceeding $736 million for the 4,907 works-in-suit, they consented to paying $50 million in damages and shutting down the grooveshark.com site rather than risk it with a jury.

But the demise of Grooveshark was short-lived, and just days after publicly apologizing for failing “to secure licenses from right holders,” two copycat sites popped up at different top-level domains: grooveshark.io and grooveshark.pw. The record label plaintiffs filed a new complaint and obtained ex parte relief, including a temporary restraining order (TRO), against the new sites. Upon receipt of the TRO, Namecheap, the registrar for both sites, disabled the .io and .pw domain names. When another copycat site was established at grooveshark.vc, the domain name was quickly disabled by Dynadot, the registrar, after it received the TRO.

Undeterred, the defendants publicly taunted the plaintiffs and registered yet another copycat site at grooveshark.li. Rather than continuing this global game of domain name Whac-A-Mole, the plaintiffs served the TRO on CloudFlare, the service utilized by the defendants for each of the infringing domains. And this is where things got interesting. Rather than swiftly complying with the TRO, as the domain name registrars had done, CloudFlare lawyered up and contended that it was beyond the court’s reach.

In its briefing to the court, CloudFlare argued that it played merely a passive role for its customers—including the defendants and their copycat site—by resolving their domain names and making their websites faster and more secure. CloudFlare disavowed the ability to control any content on the copycat site, and it denied that it was in active concert or participation with the defendants:

Active concert requires action, and CloudFlare has taken none. Participation means assisting a defendant in evading an injunction. CloudFlare has not so assisted defendants and, in fact, has no ability to stop the alleged infringement. Even if CloudFlare—and every company in the world that provides similar services—took proactive steps to identify and block the Defendants, the website would remain up and running at its current domain name.

CloudFlare did not deny that the defendants utilized its services; it instead argued that the TRO would not remove the infringing site from the internet. Thus, CloudFlare’s position hinged on its own passivity and on the futility of enjoining it from providing services to the defendants.

A moment’s reflection reveals the superficiality of this position. The fact that CloudFlare had no control over the content of the copycat site was not dispositive. The question was whether CloudFlare aided the defendants, and there was no doubt that it did. It was not only the defendants’ authoritative domain name server, it also optimized and secured their copycat site. That the defendants could have used other services did not erase the fact that they were using CloudFlare’s services. And once CloudFlare was served with the TRO and made aware of the copycat site, its continued provision of services to the defendants constituted active concert or participation.

CloudFlare’s policy arguments were similarly unpersuasive. It suggested that the TRO “would transform a dispute between specific parties into a mandate to third parties to enforce” the plaintiffs’ rights “against the world in perpetuity.” Of course, that is not what happened here. The question was not who else in the world the TRO reached; the question was whether the TRO reached CloudFlare because it aided the defendants.

CloudFlare further argued that it could not be enjoined because “Congress explicitly considered and rejected granting such authority to the courts with respect to Internet infrastructure providers and other intermediaries for the purpose of making a website disappear from the Internet.” To enjoin it, CloudFlare proposed, would be to pretend that the Stop Online Piracy Act (SOPA) “had in fact become law.” This argument, however, completely ignored the fact that courts have long been empowered to enjoin those in active concert or participation with infringers.

In reply, the record label plaintiffs rebuffed CloudFlare’s claim that it was not aiding the defendants: “CloudFlare’s steadfast refusal to discontinue providing its services to Defendants – who even CloudFlare acknowledges are openly in contempt of this Court’s TRO – is nothing short of breathtaking.” They pointed to how CloudFlare continued to aid the defendants, even after being on notice of the TRO: “[T]he failure of an Internet service provider to stop connecting users to an enjoined website, once on notice of the injunction, readily can constitute aiding and abetting for purposes of Rule 65.”

In the real world, CloudFlare markets the benefits of its services to its customers. It touts its content delivery network as delivering “the fastest page load times and best performance” through its “34 data centers around the world.” It boasts having “web content optimization features that take performance to the next level.” It offers robust “security protection” and “visitor analytics” to its customers. And its authoritative domain name server proudly serves “43 billion DNS queries per day.” But when it came to the defendants’ copycat site, it claimed to be a “passive conduit” that in no way helped them accomplish their illicit goals. This disingenuousness is, to borrow the plaintiffs’ term, “breathtaking.”

District Judge Alison J. Nathan (S.D.N.Y.) made short work in rejecting CloudFlare’s shallow denials. She noted that there was no factual question that CloudFlare operated the defendants’ authoritative domain name server and optimized the performance and security of their copycat site. The question was whether these acts were passive such that CloudFlare was not in “active concert or participation” with the defendants. Judge Nathan held that the services CloudFlare provided to the defendants were anything but passive:

CloudFlare’s authoritative domain name server translates grooveshark.li as entered in a search browser into the correct IP address associated with that site, thus allowing the user to connect to the site. Connecting internet users to grooveshark.li in this manner benefits Defendants and quite fundamentally assists them in violating the injunction because, without it, users would not be able to connect to Defendants’ site unless they knew the specific IP address for the site. Beyond the authoritative domain name server, CloudFlare also provides additional services that it describes as improving the performance of the grooveshark.li site.

Furthermore, Judge Nathan dismissed CloudFlare’s argument that it was not helping the defendants since they could simply use other services: “[J]ust because another third party could aid and abet the Defendants in violating the injunction does not mean that CloudFlare is not doing so.” And to CloudFlare’s concern that the TRO was overly broad, Judge Nathan reasoned that the issue before her was CloudFlare’s own actions, not those of other, possibly more attenuated, third parties: “[T]he Court is addressing the facts before it, which involve a service that is directly engaged in facilitating access to Defendants’ sites with knowledge of the specific infringing names of those sites.”

This TRO wasn’t about the “world at large,” and it wasn’t about turning the companies that provide internet infrastructure into the “trademark and copyright police.” It was about CloudFlare knowingly helping the enjoined defendants to continue violating the plaintiffs’ intellectual property rights. Thankfully, Judge Nathan was able to see past CloudFlare’s empty and hyperbolic position. Protecting intellectual property in the digital age is difficult enough, but it’s even more challenging when services such as CloudFlare shirk their responsibilities. In the end, reason trumped rhetoric, and, best of all, the internet remains unbroken. In fact, it’s now even better than before.

Further reading: Leo Lichtman, Copyright Alliance, Bringing Accountability to the Internet: Web Services Aiding and Abetting Rogue Sites Must Comply With Injunctions