Rojadirecta seeks refuge in First Amendment

By , September 21, 2011.

 

Puerto 80 Projects has filed its opening brief in its appeal of the Southern District Court of New York’s denial of its petition to release its Rojadirecta domain names — which had been seized by ICE as property used to facilitate criminal copyright infringement — prior to the completion of the civil forfeiture proceeding. It separately has a motion to dismiss before the court in that proceeding, which I wrote about last week.

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Puerto 80 spends considerable time explaining why prior restraints are bad and what procedures are required under the Constitution. This point is indisputable and uncontroversial — preventing prior restraints is considered the “chief purpose” of the First Amendment. 1Near v. Minnesota, 283 US 697, 713 (1931). But what they don’t do is spend much time explaining why this particular seizure is a prior restraint.

In fact, they don’t explain why at all — they just flat-out state, “The government’s ex parte seizure of Puerto 80’s domain name constituted a prior restraint on speech.” Later, they repeat, “The government’s seizure of the subject domain names constitutes an unlawful prior restraint on speech that suppresses Puerto 80’s users’ and readers’ protected First Amendment activities.”

But calling something a prior restraint doesn’t make it a prior restraint. As the Supreme Court pointed out over 50 years ago, “The phrase ‘prior restraint’ is not a self-wielding sword.” 2Kingsley Books v. Brown, 354 US 436, 441 (1957).

The Defining Characteristics of a Prior Restraint

Ironically, Puerto 80 cites to Alexander v. US to support its first statement that this seizure is a prior restraint. It quotes the Court’s statement that “Temporary restraining orders and permanent injunctions — i.e., court orders that actually forbid speech activities — are classic examples of prior restraints.” But that doesn’t mean all restraining orders or injunctions are prior restraints — like the forfeiture of Alexander’s bookstores in this case, which the Supreme Court held constitutional.

More importantly, the Court later notes the reason to be careful with the “prior restraint” label. It said, “Because we have interpreted the First Amendment as providing greater protection from prior restraints than from subsequent punishments, see it is important for us to delineate with some precision the defining characteristics of a prior restraint.”

The second case Puerto 80 cites to for its self-defining statement provides a clue as to one of these defining characteristics: “An order that prohibits the utterance or publication of particular information or commentary imposes a ‘prior restraint’ on speech” (Emphasis added).

A prior restraint does not refer to any and all suppression of First Amendment activities; the suppression must reference specific subject matter or viewpoint. Although the Supreme Court has never fully defined “prior restraint”, it has been clear that only content-based injunctions can constitute prior restraints. 3DVD Copy Control Ass’n v. Bunner, 75 P.3d 1 (Cali Sup. 2003), citing Thomas v. Chicago Park Dist., 534 US 316 (2002).

For Puerto 80 to succeed in its prior restraint argument, then, it must show that this seizure was content-based. But how can this be? The First Amendment activities that it claims were suppressed revolve around the “forum discussions on the Rojadirecta.com and Rojadirecta.org sites”, which included “political discussions, commentary, and criticism by the site’s users.”  Surely Puerto 80 isn’t claiming that the government seized the domain names because of the content of those discussions — that it perhaps wanted to restrain certain opinions about baseball games.

Now, if the government did want to suppress a site because of the message it conveyed and used the Copyright Act — or any other generally applicable statute — as a pretext, then that likely would be an impermissible prior restraint. But no one is seriously suggesting that anything of that sort has occurred here.

The only way this seizure could be characterized as a prior restraint is if Puerto 80 can convince the court that the restraint of the copyright-protected material on the site is content-based. It attempts to do so, in an argument confined to a footnote. The only legal support for its claim comes from a law review article — co-written by Mark Lemley, one of the attorneys for Puerto 80.

The article hardly counts as legal support: it makes the argument that copyright injunctions should be treated more as prior restraints because currently, and historically, they have not. Indeed, preliminary injunctions in copyright are common, as are pretrial seizures of infringing materials and tools.

Admittedly, the seizure of a domain name to be forfeited as property facilitating copyright infringement is only a recent development. But Puerto 80 makes no attempt to distinguish this action from other copyright injunctions and sanctions.

Prior Restraint in Napster

Puerto 80’s argument is reminiscent of the prior restraint argument made by Napster.

Like Puerto 80, Napster stood in the shoes of its users and argued against a proposed preliminary injunction because it “would silence the entire Napster community, violating not only Napster’s free speech rights, but those of its users as well.” This injunction would be “particularly egregious because it would silence the Napster community in advance of any ruling by the Court confirming that Napster’s directory is protected by the First Amendment. Courts have uniformly viewed any injunction that could act as a prior restraint on free speech as presumptively invalid.”

The District Court disagreed with Napster — noting that in the realm of copyright injunctions, “free speech concerns ‘are protected by and coextensive with the fair use doctrine.'” The court addressed the injunction’s reach to non-infringing portions of Napster’s service, like its message boards and chat rooms. Napster could continue to operate those with the injunction, but

In the event that Napster, Inc. cannot separate the infringing and non-infringing aspects of its service, its First Amendment argument still fails. Courts will not sustain a First Amendment challenge where the defendant entraps itself in an “all-or-nothing predicament.” Even if it is technologically impossible for Napster, Inc. to offer such functions as its directory without facilitating infringement, the court still must take action to protect plaintiffs’ copyrights.

Napster appealed the grant of the preliminary injunction to the Ninth Circuit on a number of grounds, among them its continued belief that the injunction was an impermissible prior restraint. The court, however, recognized this as a frivolous argument, saying only that it would “briefly address Napster’s First Amendment argument so that it is not reasserted on remand.”

We note that First Amendment concerns in copyright are allayed by the presence of the fair use doctrine. There was a preliminary determination here that Napster users are not fair users. Uses of copyrighted material that are not fair uses are rightfully enjoined. 4A&M Records v. Napster, 239 F.3d 1004, 1028 (9th Cir. 2001).

Copyright and First Amendment Challenges

The fact that the domain name seizure isn’t a prior restraint doesn’t mean there’s no First Amendment issue. The Supreme Court has said that “content-neutral time, place, and manner restrictions can be applied in such a manner as to stifle free expression” 5Thomas v. Chicago Park at 323. and also that criminal and civil sanctions having some incidental effect on First Amendment activities are subject to First Amendment scrutiny “where it was conduct with a significant expressive element that drew the legal remedy in the first place … or where a statute based on a nonexpressive activity has the inevitable effect of singling out those engaged in expressive activity.” 6Alexander v. US at 557, quoting Arcara v. Cloud Books, 478 US 697, 706-07 (1986). But these are distinct arguments that Puerto 80 does not raise in its opening brief.

Nevertheless, it should be remembered that there’s good reason why prior restraint is rarely found in cases involving copyright. Copyright is “the engine of free expression”, and infringement causes harm to a copyright holder’s free speech rights. 7See Salinger v. Colting, 607 F.3d 68, 81 (2nd Cir. 2010); Speech interests of creators; and The chilling effect of copyright infringement. What’s more, copyright has “built-in free speech safeguards” that reduce the need for relying on First Amendment doctrines like prior restraint.

We’ve even seen courts explicitly resolve infringement cases on fair use grounds which had earlier been resolved on First Amendment grounds. In Triangle Publications v. Knight-Ridder Newspapers, the appellate court began, “For years, Courts and commentators have recognized a potential conflict between copyright and the First Amendment. However, until the District Court’s opinion in the case now before us, no Court had ever held that a copyright suit could be defeated by a First Amendment defense. We affirm the result reached by the District Court, but disagree with the Court’s rationale. Contrary to the District Court, we hold that fair use constitutes a valid defense to the copyright infringement suit involved in this case.” 8Compare this to Suntrust Bank v. Houghton Mifflin, 252 F.3d 1165 (11th Cir. 2001), where the court vacated a preliminary injunction against the author of The Wind Done Gone, a parody of Gone With the Wind. Although it used the term “prior restraint” in its opinion, the injunction was vacated since the defendant’s strong fair use defense made it unlikely the plaintiff would succeed on the merits of the case.

In most cases concerning infringement, free speech is raised only as a “self-wielding sword” — “the last refuge of an infringing scoundrel”. 9L. Ray Patterson, Free Speech, Copyright, and Fair Use, 40 Vanderbilt Law Review 1, 36 n.110 (1987). When a case doesn’t involve some question of legitimate appropriation of a copyrighted work, “few courts” allow defendants “to hide behind the first amendment.” 10Sid & Marty Krofft TV v. McDonalds, 562 F.2d 1157, 1170-71 (9th Cir. 1977). Based on the court filings so far, it’s my opinion that there’s no legitimate appropriation here, only a web site that seems keen on raising every defense it can to avoid responsibility for facilitating infringement.

A CAMP Conference is scheduled for October 3rd; the reply brief from the US is due November 15th.

 

References

References
↑1 Near v. Minnesota, 283 US 697, 713 (1931).
↑2 Kingsley Books v. Brown, 354 US 436, 441 (1957).
↑3 DVD Copy Control Ass’n v. Bunner, 75 P.3d 1 (Cali Sup. 2003), citing Thomas v. Chicago Park Dist., 534 US 316 (2002).
↑4 A&M Records v. Napster, 239 F.3d 1004, 1028 (9th Cir. 2001).
↑5 Thomas v. Chicago Park at 323.
↑6 Alexander v. US at 557, quoting Arcara v. Cloud Books, 478 US 697, 706-07 (1986).
↑7 See Salinger v. Colting, 607 F.3d 68, 81 (2nd Cir. 2010); Speech interests of creators; and The chilling effect of copyright infringement.
↑8 Compare this to Suntrust Bank v. Houghton Mifflin, 252 F.3d 1165 (11th Cir. 2001), where the court vacated a preliminary injunction against the author of The Wind Done Gone, a parody of Gone With the Wind. Although it used the term “prior restraint” in its opinion, the injunction was vacated since the defendant’s strong fair use defense made it unlikely the plaintiff would succeed on the merits of the case.
↑9 L. Ray Patterson, Free Speech, Copyright, and Fair Use, 40 Vanderbilt Law Review 1, 36 n.110 (1987).
↑10 Sid & Marty Krofft TV v. McDonalds, 562 F.2d 1157, 1170-71 (9th Cir. 1977).

Sony BMG v Tenenbaum: District Court Erred in Reducing Jury Verdict

By , September 19, 2011.

It’s not about the money.

Friday’s First Circuit opinion in Sony BMG v. Tenenbaum is about a lot of things, but what it’s not about — and what will nevertheless get the most attention — is the $675,000 a jury awarded against Joel Tenenbaum for downloading and distributing 30 songs, which the District Court reduced to $67,500, and which the appellate court reinstated.

It’s a lot of money, of course. I think it’s highly unlikely any of the jurors who awarded the damages really expect Tenenbaum to be able to pay it all in a lifetime, and certainly Sony and the other record labels aren’t expecting to receive a check for anywhere near that amount.

Instead, this case has taken on constitutional dimensions, concerning due process, the right to a jury trial, and the boundaries and roles of different institutions — courts, juries, and Congress — in our legal system.

It’s about whether disagreement over the effects of laws can justify bypassing bedrock legal principles — whether we can sacrifice the processes that make democracy work for expediency.

In that respect, the First Circuit should be commended for saying “no”.

This is an interesting decision and worth a read. There’s quite a bit inside it, more than I’ll cover in this post.

What’s most interesting about this case is that the one line by the court that has been noted by those disappointed in the decision as the one positive 1See the EFF, Techdirt, and Ars Technica. may not be as positive as they believe. In the opinion, the court says, “We comment that this case raises concerns about application of the Copyright Act which Congress may wish to examine.” The court is not so much talking to Congress as it is to the lower court. It’s saying, in essence, if you don’t like the results of the Copyright Act’s statutory damages, take it up with Congress, because it’s highly unlikely that we will find a constitutional limitation in cases like this.

Joel Tenenbaum and Jammie Thomas-Rasset

Because Tenenbaum is very similar to Capitol Records v. Thomas-Rasset, the only other major label end user downloading case to make it to trial, it can be easy to confuse the two. To recap:

In Thomas-Rasset, the judge reduced the jury’s award of $1.92 million through the common law process of remittitur. The record labels opted for a new trial, solely on damages, instead of accepting the remitted amount. 2The Seventh Amendment right to a jury trial requires that plaintiffs be given this choice. After a new jury awarded $1.5 million against Thomas-Rasset, the court reduced the award on constitutional grounds, ruling that the award violated due process under the standard set by the Supreme Court in St. Louis IM & S v. Williams.

In Tenenbaum, after the jury returned a verdict of $675,000, the court, noting that the record labels had not accepted the remitted award in Thomas-Rasset, skipped straight to the constitutional ground. As in Thomas-Rasset, the court reduced the award on due process grounds, but unlike Thomas-Rasset, it used a different standard, one developed to address punitive damages (which generally aren’t set by statute) and set out in BMW v. Gore.

The decision

The main holding in this case is fairly narrow. The First Circuit held that the District Court erred when it skipped over the question of remittitur and reduced the damages on constitutional grounds. It reversed the reduction in damages and remanded to the lower court to reconsider the remittitur question.

But the court ruled on a number of other issues brought by Tenenbaum. It held that the Copyright Act is not unconstitutional after the Supreme Court decision in Feltner v. Columbia Pictures Television, so-called “consumer copying” is not exempt from damages, and statutory damages are available without a showing of actual harm.

The harm of P2P piracy

The First Circuit begins by describing how P2P piracy has effected the recording industry. It notes that record labels have never granted blanket licenses for uploading music files to the Internet for public consumption. “Such a license,” said the court, “would deprive the companies of their source of income and profits and essentially drive them out of business.” But the development of digital audio and P2P made such uploading easy and commonplace.

The proliferation of [P2P] networks from 1999 onward and the piracy they enable has had a significant negative impact on the recording industry. Between 1999 and 2008, the recording industry as a whole suffered a fifty percent drop in both sales and revenues, a figure plaintiffs attribute to the rise of illegal downloading. This reduction in revenues has, in turn, diminished recording companies’ capacities to pursue, develop and market new recording artists. It also affected the companies’ employees. The loss in revenues has resulted in a significant loss of industry jobs. Sony BMG Music Entertainment and Warner Music Group, for example, each have suffered a fifty percent reduction in workforce since 2000.

The court then traced the history of the record labels’ response to P2P piracy, beginning with consumer education and legal actions against P2P services and leading to its campaign against individual infringers, including Joel Tenenbaum.

Tenenbaum’s Conduct

The First Circuit devotes over 8 pages in the 65 page opinion to describing Tenenbaum’s actions that led to the trial. The portrait they paint is one of an avid “file-sharer” who downloaded and distributed music continuously for nearly a decade. The court said that “Over the duration of Tenenbaum’s conduct, he intentionally downloaded thousands of songs to his own computers from other network users. He also purposefully made thousands of songs available to other network users.” It also observed that “Tenenbaum regularly looked at the traffic tab, and he admitted it ‘definitely wasn’t uncommon’ for other users to be downloading materials from his computer.”

The court notes too the warnings Tenenbaum received that his conduct was illegal: from his father, his mother, his college, his ISP, and finally from the record labels themselves. Up until the trial, Tenenbaum denied he did anything wrong, shifting the blame to seemingly any individual he could think of. According to the court, “These individuals included a foster child living in his family’s home, burglars who had broken into the home, his family’s house guest, and his own sisters.”

It wasn’t until asked at trial that Tenenbaum finally admitted responsibility for his conduct.

All of Tenenbaum’s arguments rejected

Next the court rejected three of Tenenbaum’s arguments raised on appeal.

The first is that the Supreme Court decision in Feltner rendered the Copyright Act’s statutory damage provisions unconstitutional. Although the court found that Tenenbaum waived this argument because he didn’t clearly make it in the district court, it nevertheless found it wrong. Feltner held that, although the statutory damages provision only refers to “the court”, statutory damages must be determined by a jury (unless a jury trial is not requested by the plaintiff). Tenenbaum’s argument was a stretch — I won’t spend any time on this, so you can read the opinion if you want to see the details.

Next, Tenenbaum argues that the statutory damages provision doesn’t apply to “consumer copiers.” Again, although the court found this argument waived, it took the time to explain why it was wrong.

We start with the inaccuracy of the labels that Tenenbaum’s argument uses. Tenenbaum is not a “consumer-copier,” a term he never clearly defines. He is not a consumer whose infringement was merely that he failed to pay for copies of music recordings which he downloaded for his own personal use. Rather, he widely and repeatedly copied works belonging to Sony and then illegally distributed those works to others, who also did not pay Sony. Further, he received, in turn, other copyrighted works for which he did not pay. Nor can Tenenbaum assert that his was merely a “noncommercial” use and distribution of copyrighted works as those terms are used elsewhere in the Act. His use and distribution was for private gain and involved repeated and exploitative copying.

But even if the court did agree that Tenenbaum was engaged in “consumer copying” it wouldn’t have mattered. The language of the Copyright Act is crystal clear: the distinctions or exceptions that Tenenbaum asks the court to read into the law simply don’t exist. The court continued:

Asking us to ignore the text and the plain meaning of the statute, Tenenbaum argues Congress was unaware that suits like this could be brought and so could not have intended the statute to apply here. The argument is wrong both on the law and on the facts.

The First Circuit observed that Congress “specifically acknowledged that consumer-based noncommercial use of copyrighted materials constituted actionable copyright infringement” when it increased the amounts available under the statutory damage provisions in 1999. Two years before that, it amended the Copyright Act to impose criminal liability even when the infringement is noncommercial. And the fact that the record labels’ pursuit of end-user infringers cuts against Tenenbaum’s argument rather than supporting it:

Even if we assume that copyright owners have historically chosen first to litigate against the providers of new technologies of reproduction and dissemination rather than the users of those new technologies, that may best be explained by the owners using a cost benefit analysis, and says nothing about Congressional intent. Historically, the costs of prosecuting infringement actions against individual users could be thought by owners to have exceeded the benefits. That the copyright owners have turned to litigation against individual infringers only underscores that the balance of the copyright holder’s cost-benefit analysis has been altered as peer-to-peer networks and digital media become more prevalent.

The Circuit also rejected Tenenbaum’s argument that there must be some relation between statutory damages and actual harm. It points to the language of the Copyright Act, which allows a copyright holder to elect to receive statutory damages instead of actual damages — language that the Supreme Court has affirmed means statutory damages are available as an alternative remedy from actual damages, “[e]ven for uninjurious and unprofitable invasions of copyright.” Besides that, Sony had provided “extensive testimony” of the harm caused by Tenenbaum’s conduct during trial.

Finally, Tenenbaum raised a number of arguments that the jury instructions were in error. Even though all but one of these arguments were not preserved for appeal, the First Circuit nevertheless took the time to explain why they are wrong.

Doctrine of Constitutional Avoidance

The First Circuit next held that the district court erred when it bypassed the issue of common law remittitur and reduced the jury verdict on due process grounds. This is the most important portion of the decision in Tenenbaum, and it sheds some light on the future of not only this case, but also Thomas-Rasset.

The court declined to adhere to the doctrine of constitutional avoidance on the ground that it felt resolution of a constitutional due process question was inevitable in the case before it. A decision on a constitutional due process question was not necessary, was not inevitable, had considerable impermissible consequences, and contravened the rule of constitutional avoidance. That rule had more than its usual import in this case because there were a number of difficult constitutional issues which should have been avoided but were engaged.

The court notes two of those issues: first, the proper standard for measuring the due process limitations on awards of statutory damages, and second, whether reducing statutory damages in this fashion, without allowing plaintiffs the option of accepting them or seeking a new trial, violates the Seventh Amendment.

The doctrine of constitutional avoidance, where courts must avoid reaching a constitutional question if it can decide an issue on nonconstitutional grounds, seems counterintuitive to many people at first glance. The Constitution is the “supreme law of the land”, 3US Constitution, Article VI. after all — if something violates the Constitution, why wouldn’t we want judges to put a stop to it?

The answer to that is in the Constitution itself. The power of the Judicial branch is not unlimited — Article III provides that courts may only hear “cases or controversies” and not render advisory opinions. The Constitution also provides for separation of powers. Congress is vested with the power to make laws, and a court that is too active in its efforts to rule laws unconstitutional is essentially encroaching on this power.

From this foundation, along with principles of judicial restraint, the doctrine of constitutional avoidance has developed. Though it is a long-standing doctrine, it received its most famous elaboration by Supreme Court Justice Brandeis in his concurrance to Ashwander v. Tennessee Valley Authority.

Gore vs. Williams

But while the First Circuit declined to rule on the proper standard for analyzing statutory damage awards, it did hint that it is leaning more toward Williams than Gore.

First, it noted that the presumptive standard for statutory damages is Williams and questioned whether courts would have “leeway and reason” to bypass this standard and apply a different one. 4The court hypothesized that this different standard could be “the Gore standard, some combination of Williams and Gore, or some other standard”.

Second, it questioned the applicability of Gore to copyright statutory damages. These damages serve different purposes than punitive damages. In addition, both Gore and Williams involved review of state-authorized awards, not one set by Congress pursuant to one of its specifically enumerated powers.

Finally, Williams remains good precedent, and the Supreme Court has never suggested Gore should extend to constitutional review of statutory damages. The First Circuit rounds out its skepticism by observing that the concerns which led to the standard in Gore aren’t present in a statutory damage context, and the only other circuit court to address an issue like this declined to apply Gore and instead applied Williams. 5That case is Zomba Enterprises v. Panorama Records, 491 F.3d 574 (6th Cir. 2007).

While not overtly endorsing the Williams standard, this decision hints that, should the First Circuit confront this issue in the future, it will go down that road. And, based on its comment noting “concerns about application of the Copyright Act which Congress may wish to examine”, the circuit court judges suggest they are inclined to think such a verdict would survive a due process challenge under Williams.

This saga is far from over — it remains to be seen if the parties settle or continue the litigation, and it remains to be seen how the district court responds if they do continue. The Thomas-Rasset appeal is also waiting in the wings, with the record labels’ opening brief due October 13th.

References

References
↑1 See the EFF, Techdirt, and Ars Technica.
↑2 The Seventh Amendment right to a jury trial requires that plaintiffs be given this choice.
↑3 US Constitution, Article VI.
↑4 The court hypothesized that this different standard could be “the Gore standard, some combination of Williams and Gore, or some other standard”.
↑5 That case is Zomba Enterprises v. Panorama Records, 491 F.3d 574 (6th Cir. 2007).

Rojadirecta pounds on the table

By , September 15, 2011.

Puerto 80 Projects, the owner of the Rojadirecta domain names seized by the US earlier this year, is currently awaiting the Southern District of New York’s ruling on its motion to dismiss. I took a look at its memorandum of law in support of the motion a few weeks ago. On August 26th, the US filed its own memo in response to the motion, and on September 2nd, Puerto 80 filed its reply to the US response, embedded below.

Separately, Puerto 80 has appealed the court’s earlier denial of its petition for pretrial release of the domain names under 18 USC § 983(f). The Second Circuit granted its request for an expedited appeal. Puerto 80’s appellate brief is due tomorrow.

Puerto 80’s reply memorandum:

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Puerto 80 sets the tone of its entire memo from the very start:

The government’s view of its powers under the civil forfeiture law, articulated for the first time in its opposition to Puerto 80’s motion to dismiss, is breathtaking. In the government’s view, it doesn’t need to allege that Puerto 80 violated any law, or even engaged in any civil wrong, in order to seize and shut down its Internet domain name. As long as the government thinks that someone, somewhere in the world, is engaged in copyright infringement, it believes it is entitled to seize any asset that might be connected to that infringement, whether or not the owner engaged in any wrongdoing, and whether or not that asset in fact “facilitated” the commission of any crime. And it further believes it is entitled to seize Internet domain names and shut down protected speech without ever having to prove that the speech was, in fact, unlawful, much less that the owner of the asset was responsible for any crime.

On the government’s view of its powers, it is entitled to seize the Google, Bing, or Yahoo web site, because someone, somewhere, has used those sites’ search engines to find infringing content. It is entitled to seize Verizon’s telephone network for the same reason. It is entitled to seize the power company, since numerous crimes are “facilitated” by the use of electricity. And the only reason the government lost the Pentagon Papers case, New York Times Co. v. United States, 403 U.S. 713 (1971), is that it asserted the wrong statute. Had the government simply seized the New York Times’ printing presses, pointing out that they were being used to “facilitate” the disclosure of government secrets, it would have been able to block the disclosure of Daniel Ellsberg’s secrets.

This cannot be the law. The government’s effort to disaggregate seizure from any allegation of wrongdoing on the part of the property owner flies in the face of the purpose and history of the civil forfeiture statute. It is inconsistent with the way the statute itself is drafted. And it is unconstitutional.

There’s a couple of interesting statements made here that I want to look at.

“The government’s effort to disaggregate seizure from any allegation of wrongdoing on the part of the property owner flies in the face of the purpose and history of the civil forfeiture statute.”

I’m not sure what history Puerto 80 is referring to. Contrary to its assertions, civil forfeiture quite clearly and plainly does not require wrongdoing on the part of the property owner and has not required wrongdoing throughout its history.

In Bennis v. Michigan, the Supreme Court said “a long and unbroken line of cases holds that an owner’s interest in property may be forfeited by reason of the use to which the property is put even though the owner did not know that it was to be put to such use.” It then laid out this long and unbroken line of cases, beginning in 1827 with The Palmyra, which held that it is the thing that is the offender in an in rem forfeiture proceeding. Subsequent cases include:

  • Harmony v. United States, 2 How. 210, 234 (1844): “whether he be innocent or guilty; and he impliedly submits to whatever the law denounces as a forfeiture attached to the ship by reason of their unlawful or wanton wrongs.”
  • Dobbins’s Distillery v. United States, 96 U. S. 395, 401 (1878): “Cases often arise where the property of the owner is forfeited on account of the fraud, neglect, or misconduct of those intrusted with its possession, care, and custody, even when the owner is otherwise without fault . . . and it has always been held . . . that the acts of [the possessors] bind the interest of the owner . . . whether he be innocent or guilty.”
  • J. W. Goldsmith, Jr.-Grant Co. v. United States, 254 U. S. 505 (1921): “It is the illegal use that is the material consideration, it is that which works the forfeiture, the guilt or innocence of its owner being accidental.”
  • Van Oster v. Kansas, 272 U. S. 465 (1926): “It is not unknown or indeed uncommon for the law to visit upon the owner of property the unpleasant consequences of the unauthorized action of one to whom he has entrusted it.”
  • Calero-Toledo v. Pearson Yacht Leasing Co., 416 U. S. 663 (1974): “the innocence of the owner of property subject to forfeiture has almost uniformly been rejected as a defense.”

After reviewing the solid precedent, and noting the punitive and deterrent functions of forfeiture, the Bennis court concluded, as it “concluded 75 years ago, that the cases authorizing actions of the kind at issue are ‘too firmly fixed in the punitive and remedial jurisprudence of the country to be now displaced.'”

Justice Thomas, in his concurrence to Bennis, could very well have been addressing Puerto 80 here when he noted that “One unaware of the history of forfeiture laws and 200 years of this Court’s precedent regarding such laws might well assume that such a scheme is lawless.”

Whether or not Puerto 80 is aware of the history of civil forfeiture law, it is still difficult to see how it can claim that forfeiture without an allegation of wrongdoing on the part of the property owner is “inconsistent with the way the statute itself is drafted.” The statute makes no reference to the culpability of the property owner. All that is required for property to be subjected to forfeiture is that it is “used, or intended to be used, in any manner or part to commit or facilitate the commission of an offense referred to in subparagraph (A).”

What’s more, 18 USC § 983 provides for an “innocent owner” defense — precluding the forfeiture of any property where the owner “did not know of the conduct giving rise to forfeiture; or upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property” — in any proceeding arising from a federal civil forfeiture statute. If forfeiture required wrongdoing on the part of the property owner, there would be no need to provide a specific defense for innocent property owners.

“On the government’s view of its powers, it is entitled to seize the Google, Bing, or Yahoo web site, because someone, somewhere, has used those sites’ search engines to find infringing content. It is entitled to seize Verizon’s telephone network for the same reason. It is entitled to seize the power company, since numerous crimes are “facilitated” by the use of electricity.”

The slippery slope argument Puerto 80 raises is one courts have heard before — and rejected. Said the Supreme Court in 1921:

The changes are rung on the contention, and illustrations are given of what is possible under the law if the contention be rejected. It is said that a Pullman sleeper can be forfeited if a bottle of illicit liquor be taken upon it by a passenger, and that an ocean steamer can be condemned to confiscation if a package of like liquor be innocently received and transported by it. Whether the indicated possibilities under the law are justified we are not called upon to consider. It has been in existence since 1866, and has not yet received such amplitude of application. When such application shall be made it will be time enough to pronounce upon it. 1JW Goldsmith-Grant v. US, 254 US 505, 512 (1921).

And again in 1996:

The dissent also suggests that The Palmyra line of cases “would justify the confiscation of an ocean liner just because one of its passengers sinned while on board.” None of our cases have held that an ocean liner may be confiscated because of the activities of one passenger. We said in Goldsmith-Grant, and we repeat here, that “[w]hen such application shall be made it will be time enough to pronounce upon it.” 2Bennis v. Michigan, 516 US 442, 450-51 (1996).

If Puerto 80 is concerned that this statute could be used to seize “Google, Bing, or Yahoo”, then it should call upon Congress to change the language accordingly. But a court is primarily concerned with the case in front of it, not some hypothetical worst-case scenario. And it’s worth pointing out that despite Puerto 80’s dire warnings, as well as those considered in the cases above, no court has yet to confront such a situation.

“And the only reason the government lost the Pentagon Papers case, New York Times Co. v. United States, 403 U.S. 713 (1971), is that it asserted the wrong statute. Had the government simply seized the New York Times’ printing presses, pointing out that they were being used to “facilitate” the disclosure of government secrets, it would have been able to block the disclosure of Daniel Ellsberg’s secrets.”

This is just a silly argument. Forfeiture of facilitating property can only occur pursuant to statute. The government couldn’t have asserted such a statute that Puerto 80 insinuates since there was no statute in 1971, nor now, that provided for the forfeiture of property that facilitates the disclosure of government secrets. Such an argument, laden with emotion but based on a faulty premise, might play well to the Techdirt crowd, but might not play as well to a judge.

“The Complaint fails to plead the elements of criminal copyright infringement by Puerto 80 or any other actor.”

For all its tough talk, Puerto 80 does very little to actually make its case.

To succeed in a forfeiture action under 18 USC § 2323, the government must prove by a preponderance of the evidence, that (1) the property was used to commit or facilitate the commission of criminal copyright infringement, and (2) there was a “substantial connection” between the property and the offense. The US does not have to show evidence of a particular illegal act. 3In re Seizure of all funds, 68 F.3d 577, 580 (2nd Cir. 1995), citing Marine Midland Bank, N.A. v. United States, 11 F.3d 1119, 1124 (2d Cir.1993); United States v. Ten Thousand Seven Hundred Dollars and No Cents in US Currency, 258 F. 3d 215 (3rd Cir. 2001); United States v. US Currency in Amount of $150,660, 980 F.2d 1200, 1205 (8th Cir. 1992); United States v. $250,000 in United States Currency, 808 F.2d 895, 899-900 (1st Cir.1987); United States v. $4,250,000, 762 F.2d 895, 903-04 (11th Cir.1985). And it may use circumstantial evidence to show the nexus between the property and the predicate act giving rise to forfeiture.

That’s the ultimate burden the US has to meet for property to be forfeited. At this stage in the game, the US need only “state sufficiently detailed facts to support a reasonable belief” that it will be able to meet this burden, 4FRCP, Supplemental Rules G(2). and “state the circumstances from which the claim arises with such particularity that the defendant or claimant will be able, without moving for a more definite statement, to commence an investigation of the facts and to frame a responsive pleading.” 5FRCP, Supplemental Rules E(2)(a).

In other words, the US doesn’t have to prove its case in the forfeiture complaint. It may even, in fact, “use evidence gathered after the filing of a complaint” to meet its ultimate burden.” 618 USC § 983(c)(2). Puerto 80 provides very little support for its argument that the forfeiture complaint is deficient in this regard — the first memorandum supporting its motion to dismiss focused on arguing that the site isn’t personally liable for criminal copyright infringement, and this memo primarily argues that the scope of the §2323 is simply too broad.

No word yet on when Judge Crotty is set to rule on Puerto 80’s motion.

References

PROTECT IP: Support for rogue sites legislation continues to grow

By , September 13, 2011.

Last May, the Senate Judiciary Committee unanimously approved the PROTECT IP Act, which aims to reduce the ability for sites dedicated to infringement to profit from piracy. Now that Congress is back in session, House Judiciary chairman Lamar Smith plans to introduce a House version of the bill.

In July, the Senate Judiciary Committee released its report on the proposed legislation. The report includes the bill’s background and legislative history to date, as well as a section-by-section summary and other housekeeping bits.

What’s notable about PROTECT IP is how broad the support for it is. On the political front, the support is bi-partisan and from every level of government, from local to state to federal.

The bill was originally sponsored by  Patrick Leahy (D-VT), Chuck Grassley (R-IA), Orrin Hatch (R-UT), Christopher Coons (D-DE), Chuck Schumer (D-NY), Sheldon Whitehouse (D-RI), Lindsey Graham (R-SC), Richard Blumenthal (D-CT), Dianne Feinstein (D-CA), Al Franken (D-MN) and Herb Kohl (D-WI).

Since being introduced, it has attracted co-sponsorship from Senators Lamar Alexander (R-TN), Kelly Ayotte (R-NH), Michael Bennet (D-CO), Roy Blunt (R-MO), John Boozman (R-AR), Benjamin Cardin (D-MD), Thad Cochran (R-MS), Bob Corker (R-TN), Richard Durbin (D-IL), Kristen Gillibrand (D-NY), Kay Hagan (D-NC), Amy Klobuchar (D-MN), Joseph Lieberman (I-CT), John McCain (R-AZ), Marco Rubio (R-FL), Jeanne Shaheen (D-NH), and Tom Udall (D-NM).

Private sector support is broad as well; individuals, labor unions, small businesses and large, trade associations, and other organizations have added their voice — including creators and producers in every medium and subject matter covered by copyright.

I’ve put together a list of many of the statements and editorials showing support for PROTECT IP. It’s comprehensive, though I know it’s not complete. And while I certainly want to show the breadth of support for rogue sites legislation, I also think it will be handy for future reference. Many thanks to the MPAA blog for reporting on many of these and providing copies of the letters.

  • 05/12/11 — Joint statement of theAmerican Federation of Musicians (AFM), American Federation of Television and Radio Artists (AFTRA), Directors Guild of America (DGA), International Alliance of Theatrical Stage Employees, Moving Picture Technicians, Artists and Allied Crafts of the United States, Its Territories and Canada (IATSE), Screen Actors Guild (SAG), and International Brotherhood of Teamsters, representing over 400,000 “creators, performers, and craftspeople.”
  • 05/12/11 — Independent Film and Television Alliance, Motion Picture Association of America, and National Association of Theatre Owners. Letter (PDF).
  • 05/12/11 — National Music Publishers Association.
  • 05/12/11 — Nashville Songwriters Association International. Letter (DOC).
  • 05/12/11 — Recording Industry Association of America.
  • 05/12/11 — Graphic Artists Guild.
  • 05/12/11 — Copyright Alliance.
  • 05/12/11 — US Chamber of Commerce.
  • 05/12/11 — Viacom.
  • 05/12/11 — NBCUniversal.
  • 05/16/11 — National Association of Attorneys General, with signatures from 42 state attorneys general. Letter (PDF).
  • 05/20/11 — Kamala Harris, California Attorney General. Letter (PDF).
  • 05/23/11 — Software & Information Industry Association. Letter (PDF).
  • 05/24/11 — Floyd Abrams, noted First Amendment expert. Letter (PDF).
  • 05/25/11 — Cinemark USA (TX). Letter (PDF).
  • 05/25/11 — Cobb Theaters (AL). Letter (PDF).
  • 05/27/11 — Governor Beverly Perdue (NC). Letter (PDF).
  • 06/13/11 — Governor Gary Herbert (UT). Letter (PDF).
  • 06/13/11 — Cinema Centers (PA). Letter (PDF).
  • 06/14/11 — Los Angeles Area Chamber of Commerce.
  • 06/14/11 — Politico editorial from Arts+Labs co-chairman and former White House press secretary for President Bill Clinton Mike McCurry.
  • 06/20/11 — Hallett Cinemas (WA). Letter (PDF).
  • 06/21/11 — Governor Dannel Malloy (CT). Letter (PDF).
  • 06/24/11 — Internet engineer George Ou article DNS Filtering is Essential to the Internet, countering technical criticisms of PROTECT IP.
  • 06/24/11 — Logan Luxury Theatres (SD). Letter (PDF).
  • 07/08/11 — Oregonian editorial from Concord Music Group president Glen Barros in support of PROTECT IP.
  • 07/12/11 — State International Development Organizations, which supports state international trade agencies. Letter (PDF).
  • 07/13/11 — Institute for Policy Innovation.
  • 07/21/11 — California Healthcare Institute. Letter (PDF).
  • 08/02/11 — The National District Attorneys Association, which represents over 39,000 of America’s state and local prosecutors. Letter (PDF).
  • 08/21/11 — Eagles’ songwriter Don Henley editorial in USA Today.
  • 08/23/11 — Washington Post editorial in support of PROTECT IP.

Does Posting on the Internet Trigger US Copyright Registration Requirement?

By , September 08, 2011.

Back in June, I wrote about Kernel Records Oy v. Mosley, where a Norwegian chiptune producer sued hip-hop producer Timbaland for allegedly sampling one of his tracks (“Acid Jazzed Evening”) without permission, using it in the track “Do It” by Nelly Furtado.

In somewhat of a twist, the court granted summary judgment in favor of Timbaland since Kernel Records had not timely registered its copyright. Although foreign copyright owners are generally not required by US law to register their copyright with the US Copyright Office as a prerequisite to filing an infringement suit, the magistrate judge noted that the Copyright Act does require registration when the work is published “simultaneously in the United States and another treaty party” — and since the judge found that Kernel had first published its work on the Internet, this amounted to a simultaneous publication that triggered the registration requirement.

Only one other court had previously confronted the issue of whether first publication on the Internet triggers the registration requirement for foreign copyright holders under this statute, and that court held that it doesn’t. 1Moberg v. 33T LLC, 666 F.Supp.2d 415 (D. Dela 2009).

Kernel Records quickly filed a notice of appeal with the Eleventh Circuit and last week filed its appellate brief with the court, embedded below. (Link).

[scribd id=64219598 key=key-2inkrzrc0dgmemzdv4p3 mode=list]

In the well-argued brief, Kernel says that the court’s interpretation of the Copyright Act’s registration requirement was incorrect. It also raises two other issues. It argues that the district court should not have dismissed its claim so quickly for failure to register its copyright — Kernel eventually did register its copyright on March 31, 2011, but the court denied its motion to amend its claim to reflect this fact. Kernel also argues that the court erred in granting summary judgment since there was a factual dispute over whether the work was even first published on the Internet in the first place.

The last point is interesting, as it seems to involve a faulty reading of a transcription from a deposition where two people are speaking at the same time — one of whom doesn’t speak English as his primary language. Kernel raises some policy issues with its second argument that are worth taking a look at. But it’s the first point that seems to me to be the main attraction in this appeal.

While copyright protection automatically vests in a work as soon as it is in a fixed medium, under the US Copyright Act, “no civil action for infringement of the copyright in any United States work shall be instituted until preregistration or registration of the copyright claim has been made in accordance with this title.” 217 USC § 411(a). The Copyright Act states that

For purposes of section 411, a work is a “United States work” only if—

(1) in the case of a published work, the work is first published—
(A) in the United States;

(B) simultaneously in the United States and another treaty party or parties, whose law grants a term of copyright protection that is the same as or longer than the term provided in the United States;

(C) simultaneously in the United States and a foreign nation that is not a treaty party; or

(D) in a foreign nation that is not a treaty party, and all of the authors of the work are nationals, domiciliaries, or habitual residents of, or in the case of an audiovisual work legal entities with headquarters in, the United States 317 USC § 101.

The lower court held that “publishing AJE [Acid Jazzed Evening] on a website in Australia was an act tantamount to global and simultaneous publication of the work, bringing AJE within the definition of a “United States work” under §101(1)(C) and subject to §411(a)’s registration requirement.”

Kernel Record’s first argument in its appeal is that this holding interprets the statute incorrectly.

The statute specifies four ways a published work qualifies as a United States work, three of which are relevant to the inquiry herein. A work is a United States work under Definition 1(A) if it is first published in the United States; under Definition 1(B) if it is first published simultaneously in the United States and a longer-term party or parties; and under Definition 1(C) if it is published in the United States and a non-treaty party. 17 U.S.C. § 101. Definition 1(D) is inapplicable as it is undisputed the author of AJE, Gallefoss, is not a national, domiciliary, or habitual resident of the United States.

Kernel notes that the statutes use of “only” means that these four definitions are exclusive — it notes the familiar interpretive canon of expressio unius est exclusio alterius (“the mention of one thing implies the exclusion of another”). Thus, a work first published simultaneously in the US and a treaty country with a longer copyright term is a US work under (B), but a work simultaneously published in the US and a treaty country with a shorter term — or a work published in the US, a treaty country with a longer term, and a treaty country with a shorter term — is not.

If posting a work online, then, results in “simultaneous global publication”, it does not fall within this definition of a US work. Posting a work on the Internet amounts to publication in every country with Internet access, as Kernel notes. This would include treaty parties with shorter terms, treaty parties with longer terms, and non-treaty parties, and none of the definitions of a US work includes all of these together.

It’s a strong argument, and one that is bolstered by Kernel’s second argument: this interpretation tracks the Berne Convention’s definition of “country of origin” in Article 5(4). The legislative history of the Berne Convention Implementation Act is explicitly clear that it was Congress’s intent to do so. As Kernel points out, “The District Court‘s interpretation unnecessarily creates a conflict between United States law and the very treaty the United States was attempting to implement.”

Given that Kernel Records has solid arguments for this and the other two issues it has raised, I think it’s likely that the Eleventh Circuit will remand back to the lower court, where the litigation will move forward. Mosley has 30 days to file his reply brief.

References

References
↑1 Moberg v. 33T LLC, 666 F.Supp.2d 415 (D. Dela 2009).
↑2 17 USC § 411(a).
↑3 17 USC § 101.

htmlComics: Domain Name Forfeiture Before Operation in Our Sites

By , September 07, 2011.

Before Operation in Our Sites, there was htmlComics.

Though the US Government’s seizure of over 100 domain names as property facilitating the commission of copyright infringement over the past year has received a lot of attention, the story of htmlComics has mostly stayed out of the limelight (except within the comics community).

The case of htmlComics.com is, as far as I know, the first time a domain name has been forfeited under 18 USC § 2323(a) as property “used, or intended to be used, in any manner or part to commit or facilitate the commission of” criminal copyright infringement. 1I’ve uploaded some of the court filings for this case to Scribd. The rest are available through PACER, or at the RECAP archive. For this reason, it’s worth taking another look at — although the circumstances are very different than the forfeiture case against the Rojadirecta domain names (the only domain name seized during Operation in Our Sites that has been disputed so far).

It’s just like a library

A man by the name of Gregory Hart (no relation) registered the htmlcomics.com domain in December 2008, and shortly after began creating a large library of digitized comic books. The site soon grew to include hundreds of thousands of complete copies of comics, attracting thousands of visitors and plenty of speculation over its legality.

Several online postings by Hart shed some light on his motivations for creating the site. In one, he says he’s never “read even one entire comic book!!!!!!!” and created the site as a sort of proof of concept of a large-scale digitized library project. In another, he asks about legal issues relating to the site, operating under the assumption that his site is no different from any public library.

htmlComics.com quickly attracted the attention of most major comic book publishers. Some sent cease and desist letters, but soon, a consortium of publishers — including Marvel Comics, DC Comics, Dark Horse Comics, Bongo Comics, Archie Comics, Conan Properties Int’l LLC, Mirage Studios Inc., and United Media — enlisted the aid of the FBI.

The Feds Get Involved

The FBI began an investigation of the site and Hart in July 2009. On April 20th, 2010, agents executed a search warrant on Hart’s residence, seizing various paper records and computer equipment. On May 27th, the FBI filed a complaint for forfeiture of the htmlComics.com domain name (along with five related domain names). A warrant for the seizure of the domain names was made the same day.

Like the forfeiture complaints filed against the domain names seized during Operation in Our Sites, 2Along with Rojadirecta, the US has filed a complaint against tvshack.net, movies-link.tv, zml.com, now-movies.com, thepiratecity.org, planetmoviez.com, and filespump.com. the htmlcomics.com complaint alleges that the domain name is subject to forfeiture under 18 USC § 2323(a) because it is property used to facilitate the commission of criminal copyright infringement.

Hart filed a claim as an owner of the domain names and represented himself in the forfeiture proceedings. He filed his answer to the complaint on June 29th, along with several counterclaims against the government. The answer denied any wrongdoing. Hart repeated his assertion that the site was just like any public library:

The presentation of htmlComics.com was not in violation of U.S. Statutory laws. If it is, then so too is every private library within an apartment community, libraries within private clubs, every schoolhouse library, every prison library, and every military base library.

Hart counterclaimed for violations of the First Amendment, Fourth Amendment, Privacy Protection Act (42 USC § 2000AA), and trespass to chattels.

The US moved to dismiss the counterclaims, arguing that they were a “legal nullity” — the defendant in an in rem proceeding is the property, not the claimant, and any claim the claimant may have against the government must be brought in a separate action. As for the constitutional counterclaims, the US further argued that

the only conceivable basis for the Court’s subject matter jurisdiction is Bivens v. Six Unknown Named Agents of the Federal Bureau of Narcotics, 403 U.S. 388 (1971), under which an individual may bring a cause of action “against a federal agent who, while acting under the color of federal law, has violated the constitutional rights of [the] individual. Bivens actions are brought directly under the Constitution, but damages can be obtained only when (1) the plaintiff has no alternative means of obtaining redress, and (2) no “special factors counseling hesitation” are present. In essence, a plaintiff must meet heightened pleading requirements to even pursue a claim under Bivens. Under this standard, the Claimant’s First and Fourth Amendment counterclaims are grossly deficient and must be dismissed.

The court granted the motion to dismiss Hart’s counterclaims. The only success Hart would have came early on, when the court dismissed the claim against one of the six domain names because, unlike the others, it pointed to a blank page.

By January 2011, the US and Hart reached a pretrial settlement agreement, where Hart agreed the remaining five domain names were subject to forfeiture and released any future claims against the US and the FBI. The court entered the final judgment of forfeiture on February 2, 2011.

htmlComics, Operation in Our Sites, and the PROTECT IP Act

The differences between this case and Operation in Our Sites are obvious. This was a singular action, investigated by the FBI, against a specific site while Operation in Our Sites constituted a broader, coordinated enforcement effort by ICE. htmlComics.com hosted infringing content on its own servers while many of the domains seized by ICE, including Rojadirecta, did not host the content themselves — though, under the language of the forfeiture statute, this is not as relevant a distinction as some critics of the operation make it out to be.

It’s the similarities, however, that I find interesting. Both involve the use of 18 USC § 2323 to forfeit the domain names of websites aiding piracy. Both htmlComics and Rojadirecta raised First Amendment arguments against the seizures — though not too much should be read into the failure of the argument in htmlComics since it flopped procedurally, and the outcome of Rojadirecta’s arguments are still pending. This case especially highlights the advantage of the forfeiture provision, added by the PRO-IP Act in 2008 — it gives the federal law enforcement agencies more options to carefully craft efforts to reduce online piracy. The FBI could have brought criminal charges against Hart himself or the comic book publishers could have sued Hart and his company in civil court. Instead, it proceeded in rem against the offending site itself, which is probably the most direct route. In the same way, ICE has targeted the domain names of rogue sites through the forfeiture process, making it more difficult for them to operate and profit.

Congress is back in session this week, and work on the proposed PROTECT IP Act is expected to begin shortly. The bill will give the US an additional option to use against pirate sites. Through a process similar to the in rem forfeiture proceedings used in htmlComics and Operation in Our Sites, the Attorney General will be able to request court orders against the often unwitting partners of pirate sites — advertising and financial service providers. This process is especially useful for taking the profit out of pirate sites where the operators are, unlike Hart and htmlComics, unknown or operating overseas.

References

References
↑1 I’ve uploaded some of the court filings for this case to Scribd. The rest are available through PACER, or at the RECAP archive.
↑2 Along with Rojadirecta, the US has filed a complaint against tvshack.net, movies-link.tv, zml.com, now-movies.com, thepiratecity.org, planetmoviez.com, and filespump.com.

Studios ask SCOTUS if state law can protect uncopyrightable ideas

By , August 29, 2011.

There’s a story of a proposed bike path in Los Angeles that met opposition from NBC Universal, which had a production studio in the area. Several Universal executives apparently feared the path would be used by aspiring screenwriters to toss unsolicited scripts into the studio parking lot. 1Steve Hymon and Andrew Blankstein, Studio poses obstacle to riverfront bike path, LA Times, Feb 27, 2008.

True or not, companies in the creative fields are typically wary of accepting unsolicited ideas. It’s not uncommon for successful projects to be met with claims of “idea theft” — recent examples in the news include Ugly Betty, Alien vs. Predator, and Premium Rush.

That list also includes the Syfy program Ghost Hunters, produced by Pilgrim Films in partnership with NBC Universal. Last May, in Montz v. Pilgrim Films & Television, the 9th Circuit reversed the district court’s decision to dismiss claims that the studio had taken the idea for the show from someone else without compensation. Now, the studios have asked the Supreme Court to reverse.

SCOTUSBlog highlighted the studio’s cert petition in Pilgrim Films & Television v. Montz (PDF) last Wednesday.

Ghost Hunters

This story begins in 1981, when parapsychologist Larry Montz came up with an idea for a TV show that followed paranormal investigators as they looked for evidence of paranormal activity in real-world locations. Montz and his publicist pitched the idea to several studios from 1996 to 2003, including NBC and the Sci-Fi channel. All the studios passed on the idea.

The Sci-Fi channel, however, eventually premiered Ghost Hunters, a TV show that followed a team of paranormal investigators to real-world locations looking for signs of ghosts. Montz sued the producers of Ghost Hunters in 2006, along with NBC Universal (which had partnered with the producers of the show), claiming that they had based the show on his idea.

Montz specifically claimed that he had pitched the idea to the producers under the condition that he would be compensated if they used it. By creating a show based on his idea without paying him, the studios breached an implied-in-fact contract with Montz.

The district court dismissed the state claims on the grounds that they were preempted by federal copyright law. On appeal, the 9th Circuit affirmed. 2Montz v. Pilgrim Films & Television, 606 F.3d 1153 (2010). But then the Circuit ordered a rehearing en banc. It reversed the lower court’s holding, finding that Montz’s implied-in-fact contract and breach of confidence claims were not preempted by the Copyright Act.

It is this decision that is being appealed to the Supreme Court.

Idea/Expression Distinction

Before looking at the details of copyright preemption, I think it’s worthwhile to take a look at one of the broader issues raised by this appeal — the idea-expression distinction.

Copyright protection extends not to physical objects, but to the immaterial aspects conveyed by those objects in the form of words, images, sound, etc. But the scope of copyright protection is limited even further. William Blackstone, describing copyright in his seminal Commentaries on the Laws of England (1765), distinguished between sentiment and language;  today we use the terms idea and expression to make the same distinction. Copyright gives authors exclusive rights in their expression, but the ideas conveyed in any given work are free to all.

The cert petition explains the importance of this distinction:

For more than a century, it has been settled law that “[n]o author may copyright his ideas.” This is, indeed, “[t]he most fundamental axiom of copyright law.” Even before the Copyright Act of 1976, therefore, only an author’s expression could be copyrighted: The “general rule of law” was “that the noblest of human productions” — including “ideas” — “become, after voluntary communication to others, free as the air to common use.”

The Copyright Act of 1976 retained this longheld distinction between ideas and expression: Section 102 expressly declines to “extend [copyright protection] to any idea,” “regardless of the form in which it is … embodied in [a] work.” [Citations removed].

Since the Copyright Act of 1976, the Supreme Court has held that the idea-expression distinction has another important purpose: serving as one of copyright’s “built-in free speech safeguards.” Distinguishing between ideas and expression “strike[s] a definitional balance between the First Amendment and the Copyright Act by permitting free communication of facts while still protecting an author’s expression.” 3Eldred v. Ashcroft, 537 US 186, 219 (2003), quoting Harper & Row v. Nation Enterprises, 471 US 539, 556 (1985).

Federal Preemption of Copyright Claims

By the time the US Constitution was drafted, twelve of the thirteen colonial state governments had copyright laws. 4William Patry, Copyright Law and Practice, chapter 1 (BNA 1994). The Framers, specifically James Madison, gave the new federal Congress exclusive power to enact copyright laws primarily to ensure national unity. “The States cannot separately make effectual provision for” author’s rights, wrote Madison in the Federalist 43 about why the Copyright Clause was needed.

Since then, the federal government and the states shared the power to grant copyrights. In 1973, the Supreme Court noted, “the language of the Constitution neither explicitly precludes the States from granting copyrights nor grants such authority exclusively to the Federal Government.” 5Goldstein v. California, 412 US 546, 560. This dual system of copyright was done away with, however, when Congress passed the Copyright Act of 1976.

Under the Act:

On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright … are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. 617 USC § 301(a).

Courts determine if a state cause of action is preempted by the Copyright Act by looking at whether the work in question is within the subject matter of copyright and whether the state claim protects rights equivalent to those protected by copyright. The state claim isn’t equivalent if it has an “extra element” — one that makes the claim qualitatively different from a copyright claim, changing the nature rather than the scope of the action.

Ideas are certainly not subject matter protected by copyright law; the question always comes down to whether a state claim contains the necessary “extra element” that would preclude it from preemption.

State claims that have been found by courts to be preempted by the Copyright Act include, to name a few, conversion, trespass to chattels, unfair competition, and tortious interference with business expectancy. 7See for example, Globeranger Corp v. Software AG, No. 3:11-CV-0403-B (ND Tex, Aug. 15, 2011); Two Palms Software v. Worldwide Freight Managment, No. 4:10-CV-1045 (ED Miss, Feb. 18, 2011); 78th Infantry Division, WWII Living History Association v. Oprendek, No. 11-165 (RBK/JS) (D.NJ, Aug. 4, 2011).

But Circuit courts are split on cases like Montz. As the studios point out in their cert petition, the Second and Fourth Circuits would have dismissed Montz’s state law claims under their interpretation of the Copyright Act’s preemption provision.

Not so in California and the Ninth Circuit. For over 50 years, California courts have recognized “an implied contractual right to compensation when a writer submits material to a producer with the understanding that the writer will be paid if the producer uses the concept.” 8Desny v. Wilder, 299 P.2d 257 (Cali. 1956). In 2004, the Ninth Circuit held that such claims are not preempted by the Copyright Act. 9Grosso v. Miramax Film Corp., 383 F.3d 965.

Montz v. Pilgrim Films & Television

The decision in Montz reaffirmed what the Circuit judges saw as a long-standing protection of ideas under contract law when there is a “bilateral expectation” of compensation. This promise of payment, said the court, is the “extra element” that makes contractual claims “substantially different” from copyright claims.

The court also believes its decision to protect ideas in this fashion is good policy, considering the nature of the entertainment industry. “Without such legal protection,” it said, “potentially valuable creative sources would be left with very little protection in a dog-eat-dog business.”

Pilgrim Films & Television v. Montz

The studios argue that the Supreme Court should grant its petition because the Ninth Circuit incorrectly interpreted the scope of copyright preemption, the decision further deepens the previously mentioned circuit split on preemption, and the question presented is important to maintaining national unity in copyright law.

They first note the difficulty courts have had applying the “extra element” test in preemption cases. It provides little guidance to courts, and this case is a prime example:

The Ninth Circuit’s analysis began and ended with the fact that, under California law, Montz was required to allege a “promise” to pay for his ideas. But this analysis simply highlights the danger of the “extra element” approach: The “implied agreement of payment for use of a concept” is, at least formally, an extra element, but it does not render Montz’s claims qualitatively different from a copyright infringement claim. Rather, the core of Montz’s allegations is that the defendants copied his ideas and developed derivative works based on his screenplays, videos, and other materials–and the right to prevent them from doing so is protected, if at all, only under the Copyright Act.

The studios next argue that the circuit split on this issue is largely a result of the “extra element” test — the inconsistency of its application illustrates the challenges courts face. This is a particular concern, the studios argue lastly, since the goal of preemption is to ensure consistency and uniformity in copyright law.

The studios also counter the Ninth Circuit’s policy argument, saying that its decision would actually hurt more than help those looking to get their foot in the door of the entertainment industry:

[The decision] has the potential to frustrate the public interest in obtaining fresh ideas and scripts from previously unknown writers. Even before that decision, producers were “already extremely wary about accepting unsolicited idea submissions, leaving only the slightest crack in the door for an aspiring unknown writer to get through.” But to avoid potential liability, producers are now forced to “pull the door shut entirely, leaving unknown writers with even less bargaining power than they had before.” Because of “fear that [they] could unintentionally enter into an implied contract with the screenwriter,” studios have “limit[ed]” their “willingness … to consider unsolicited ideas or pitches.”

Will the Supreme Court grant the petition? Only time will tell. The Court grants only a tiny percentage of all petitions filed. The fact that the Court hasn’t dealt with an issue relating to the Copyright Act’s preemption provision raises the chances, as does the fact that there’s a Circuit split on this question. The petition is also likely to attract a lot of attention — both the MPAA and the major television networks filed amici briefs when the 9th Circuit heard the case.

References

References
↑1 Steve Hymon and Andrew Blankstein, Studio poses obstacle to riverfront bike path, LA Times, Feb 27, 2008.
↑2 Montz v. Pilgrim Films & Television, 606 F.3d 1153 (2010).
↑3 Eldred v. Ashcroft, 537 US 186, 219 (2003), quoting Harper & Row v. Nation Enterprises, 471 US 539, 556 (1985).
↑4 William Patry, Copyright Law and Practice, chapter 1 (BNA 1994).
↑5 Goldstein v. California, 412 US 546, 560.
↑6 17 USC § 301(a).
↑7 See for example, Globeranger Corp v. Software AG, No. 3:11-CV-0403-B (ND Tex, Aug. 15, 2011); Two Palms Software v. Worldwide Freight Managment, No. 4:10-CV-1045 (ED Miss, Feb. 18, 2011); 78th Infantry Division, WWII Living History Association v. Oprendek, No. 11-165 (RBK/JS) (D.NJ, Aug. 4, 2011).
↑8 Desny v. Wilder, 299 P.2d 257 (Cali. 1956).
↑9 Grosso v. Miramax Film Corp., 383 F.3d 965.

Win, Lose, or Draw? Mixed Bag in Capitol v. MP3Tunes Decision

By , August 23, 2011.

Yesterday’s court opinion from the record labels’ lawsuit against “online music entrepreneur familiar with high-stakes copyright litigation” Michael Robertson’s latest venture is a mixed bag — no big win for either side, though plenty of little items of interest. 

Capitol Records v. MP3Tunes, Memorandum and Order, No. 07 Civ. 9931 (SDNY Aug. 22, 2011).

Background on MP3Tunes and this litigation:

Here’s a quick rundown of the court’s holdings on the cross-motions for summary judgment:

  • EMI’s claim against MP3Tunes and Robertson for contributory copyright infringement for songs described in takedown notices but not removed from users’ lockers is granted.
  • MP3Tunes’ DMCA defense for all other infringement arising from its service is granted.
  • EMI’s direct infringement claim against Robertson  for unauthorized songs added to his personal locker is granted.
  • EMI’s direct infringement claims against other employees for unauthorized songs in their lockers remain.
  • EMI’s infringement claim as to MP3Tune’s reproduction of album cover art on its site remains.
  • EMI’s state unfair competition claim remains.

Other observations:

Unsurprisingly, no “red flag” knowledge of infringement was found. As Ben Sheffner noted in last years’ Viacom v. YouTube decision, this level of knowledge triggers a requirement to takedown infringing content in order to qualify for the DMCA safe harbor yet has been narrowed by this court so much as to become almost a “dead letter.” Here, the court rejected EMI’s argument that even keywords like “file-sharing” are not the kinds of facts that should make infringement apparent to MP3Tunes.

MP3Tunes had tried to discount many of the songs at issue by arguing that EMI had registered the copyrights in them as “works for hire” but hadn’t provided proof that they were, in fact, works made for hire. Last week, the NY Times ran several articles about the looming battle over copyright termination. The big issue is whether or not many popular sound recordings are works made for hire; had MP3Tunes successfully made this argument, it could have foreshadowed the outcome of any litigation over terminations. However, a copyright registration creates a presumption of the validity of the facts stated within it. MP3Tunes had the burden to rebut that presumption, so although it raised the argument, it hadn’t provided any evidence to back it up, so the argument fails.

Perhaps MP3Tunes’ most audacious argument was that, since EMI made some songs available for promotional download on some third-party sites, it essentially authorized all downloads of the song from any site: essentially abandoning its copyright in those songs. This argument didn’t convince the court at all. It noted, “Far from proving EMI’s intent to abandon its rights, the record reveals that EMI placed careful restrictions on the use of its promotional songs and required consumers to visit certain websites or provide valuable marketing information before downloading a song.”

Following the court order, Michael Robertson brought up the tired false conflict between the music and tech industries,  remarking, “Few companies have been able to stand up to the record labels attacks and get rulings from the court on key issues relevant to the future of the internet music.”

It’s true that few companies that have operated with reckless disregard for musicians’ copyrights have gotten favorable rulings from courts. But it’s also true that many other companies which respect those rights have become successful. There are currently hundreds of legal online music services that include tracks from the major record labels. 1IFPI Digital Music Report 2011. The success of these services prove that everyone — creators, service providers, and consumers — can win.

Both EMI and MP3Tunes have indicated this litigation is far from over. Several issues remain to be resolved — and either side can appeal this ruling. The Second Circuit’s decision in Viacom v. YouTube is also pending — since that decision will deal with many of the same DMCA issues raised here, parts of this decision may have a short shelf-life.

References

Copyright and Web Fonts: Santorum Web Developer Sued for Typeface Infringement

By , August 18, 2011.

Professional web designers typically know a little about copyright law since infringement is a liability for their business. Most know enough to avoid using images without the proper licensing or copying large amounts of text from another website.

But not as many pay as much attention to making sure they have the proper licenses for the fonts they use.

The company that designed and created US presidential candidate Rick Santorum‘s website has found out the hard way that this is risky.

On Tuesday, Netherlands typeface design company Typotheque filed suit against media consultant RaiseDigital for copyright infringement. Typotheque alleges that RaiseDigital converted one of its typefaces into a webfont for use on Santorum’s site without permission. Neither Santorum, his campaign committee, or the America’s Foundation PAC (which commissioned RaiseDigital to design the site) has been named as a defendant in the suit.

Typotheque is also seeking claims of contributory copyright infringement, federal trademark infringement, trademark dilution, unfair competition, and breach of contract.

Can typefaces be protected by copyright? Like many legal questions, the answer is not a simple yes or no.

Typefaces and Copyright

First, a little background on typefaces themselves.

A typeface, or font, is a designed set of letters, numbers, and other characters — Times New Roman, Helvetica, and Courier, for example. 1While “typeface” and “font” began with distinct meanings, the two terms have largely become interchangeable. See, for example, Derek H. Kiernan-Johnson, Telling Through Type: Typography and Narrative in Legal Briefs, 7 Journal of the Association of Legal Writing Directors 87, 91 (2010). These are contained in digital files for use by computers. Fonts come bundled with operating systems and some software packages; they can also be purchased separately — some developers offer their typefaces for free as well.

For a long time, web designers were hampered in choosing typefaces for a web site. Web browsers render a site using fonts that are local to a user’s computer. So even though a designer could conceivably style a web page with any typeface, if she wanted the site to look consistent on most computers, she would need to choose a typeface common to most computers — a very short list.

That has changed in the last several years, and there are now a number of techniques web designers can use to get custom typefaces that look the same on most computers. One of those techniques, and perhaps the easiest to implement, is the @font-face method in CSS. There are a number of software and online applications that can convert most fonts into the formats the @font-face method needs.

Historically, US copyright protection has not been extended to “typeface as typeface.” 237 C.F.R. 202.1(e). That is, using a typeface in a document, book, or logo is not copyright infringement. The “sole intrinsic function” of a typeface is its utility, and its aesthetic features, though they may be “unique and attractively shaped”, are incapable of “existing independently as a work of art.” 3Eltra v. Ringer, 579 F.2d 294, 297 (4th Cir. 1978). Jacqueline D. Lipton discusses the copyrightability (or noncopyrightability) of typefaces in more detail in her paper To © or Not to ©? Copyright and Innovation in the Digital Typeface Industry — she also looks at whether other IP doctrines, like design patents or trademarks, could be used to protect typefaces.

The wrinkle is that font software — the “digital container” that houses a typeface for use in a computer — likely is protected by copyright. 4See, for example, Adobe Systems v. Southern Software, 45 USPQ 2d 1827 (ND Cali 1998). So while copying or distributing the actual font would not be copyright infringement, copying or distributing the font file would.

That is allegedly what occurred here. The complaint alleges that RaiseDigital, without permission, converted one of Typotheque’s fonts into a webfont format so it could be used through CSS @font-face. That unauthorized derivative work was subsequently reproduced by everyone visiting the site.

Typotheque’s trademark claims are not based on the typeface itself, but on its name. The company has a registered trademark in “FEDRA”, the font at issue here. RaiseDigital didn’t change the name of the file when it converted it — the unauthorized web font still bore the name Fedra. Typotheque alleges that this is a false designation of the source that is likely to cause confusion.

I wouldn’t be surprised to see this lawsuit settled quickly (though some of the remedies Typotheque is seeking might raise some eyebrows). 5It is seeking, among other things, destruction of “all catalogs, packages, boxes, labels, bags, film, goods, computer files, disks, hard drives, CD-Roms, data, DVD’s, videotapes, prints and all other recorded media” containing or using the FEDRA font software; an accounting of “every recipient of” the font software by “name, address, IP address, and telephone number”; actual damages of no less than $2 million or all profits derived from infringing use, plus $2 million statutory damages for trademark infringement under 15 USC § 1117(c), as well as punitive and exemplary damages. No statutory damages for copyright infringement — Typotheque registered its copyright too late to qualify for those. I’m curious how Typotheque came up with the $2 million actual damages estimate; it offers self-hosted webfont licenses for €1,500 (about $2,165). But whatever the outcome, it should serve as a cautionary tale for web developers to pay closer attention to license terms when they use custom fonts.

References

References
↑1 While “typeface” and “font” began with distinct meanings, the two terms have largely become interchangeable. See, for example, Derek H. Kiernan-Johnson, Telling Through Type: Typography and Narrative in Legal Briefs, 7 Journal of the Association of Legal Writing Directors 87, 91 (2010).
↑2 37 C.F.R. 202.1(e).
↑3 Eltra v. Ringer, 579 F.2d 294, 297 (4th Cir. 1978).
↑4 See, for example, Adobe Systems v. Southern Software, 45 USPQ 2d 1827 (ND Cali 1998).
↑5 It is seeking, among other things, destruction of “all catalogs, packages, boxes, labels, bags, film, goods, computer files, disks, hard drives, CD-Roms, data, DVD’s, videotapes, prints and all other recorded media” containing or using the FEDRA font software; an accounting of “every recipient of” the font software by “name, address, IP address, and telephone number”; actual damages of no less than $2 million or all profits derived from infringing use, plus $2 million statutory damages for trademark infringement under 15 USC § 1117(c), as well as punitive and exemplary damages. No statutory damages for copyright infringement — Typotheque registered its copyright too late to qualify for those. I’m curious how Typotheque came up with the $2 million actual damages estimate; it offers self-hosted webfont licenses for €1,500 (about $2,165).

Rojadirecta: Barking up the Wrong Tree?

By , August 09, 2011.

Of the 100+ domain names seized by ICE since it began Operation in Our Sites last summer, only one has raised a challenge. Rojadirecta, which allegedly catalogs hundreds of links, primarily to live sporting events streaming online, has enlisted no less than six lawyers in its effort to prevent its domain names from being forfeited by the US government.

On Friday, Rojadirecta’s petition for release of seized property was denied by the court. 1The petition was actually filed by Puerto 80 Projects, the company that owns the Rojadirecta site. To keep things simple, I’ll refer to both the site and the site’s owners and operators as Rojadirecta for this article. On the same day, it filed its motion to dismiss in the Government’s forfeiture proceeding against its domain name. The Government’s response is due by August 26th, and Rojadirecta’s reply to the response is due September 2nd.

Was the court correct in refusing to release the domain name to Rojadirecta? Will Rojadirecta succeed in getting the Government’s forfeiture complaint dismissed?

The short answer to these questions are, in my opinion, yes and no. For the gory legal details, read on.

Petition to Release Seized Property

Civil forfeiture is based on the idea that property can be “guilty” — a strange idea, but not a new one. 2See Calero-Toledo v. Pearson Yacht Leasing Co., 416 US 663, 680-684 (1974) where the Supreme Court traces the history of forfeiture laws since Biblical times. But other than the defendant being property rather than a person, a civil forfeiture proceeding largely mirrors any other civil lawsuit. It begins with a complaint filed in court, proceeds through motions practice and discovery, and (if it makes it this far) ends in trial and judgment.

In a previous post, I wrote how the petition to release seized property largely mirrors the procedure of a criminal defendant being released on bail pending trial. Viewed this way, it’s easy to see why Rojadirecta didn’t succeed with its petition. Essentially, Rojadirecta’s lawyers made two arguments: “our client should be released on bail because he’s innocent” and “our client should be released on bail because he was wrongfully arrested.”

Those are certainly valid arguments, just not in this context.

As I detailed in my previous post, a petition like this is only granted if a claimant is suffering a substantial hardship due to the seizure. Most deprivations of property will cause some level of hardship, obviously; Congress added this procedure to reach those situations where the seizure would be devastating — situations like “preventing the functioning of a business, preventing an individual from working, or leaving an individual homeless.” 318 USC § 983(f)(1)(C).

Rojadirecta failed to argue any of these.

It did argue, in part, that its users were suffering a substantial hardship due to the seizure because their First Amendment rights had been infringed. The court rejected this argument, causing some to scratch their heads, since it sounds like the court is saying it doesn’t think a loss of First Amendment rights is a substantial hardship.

That’s not what the court is saying, however. Infringement of free speech certainly causes substantial, if not irreparable, hardship. But the definition of “substantial hardship” in this particular statute is far more limited than the general meaning of the phrase. In addition, Congress didn’t intend to include free speech violations under this statute because those rights are already protected.

Claimants can challenge the legality of a seizure during the forfeiture proceeding itself or through existing procedures — for example, a Bivens action or a motion to suppress. 4US v. PlayboyMonthly.com, United States’ Motion to Dismiss Claimant’s Counterclaims, No. 8:10-cv-1214-T-27TBM (MD Fla. 2010); US v. $80,633, 512 F.Supp.2d 1196 (MD Ala. 2007). The 983(f) petition is an additional layer of procedural protection on top of existing procedures, designed for a specific purpose. Rojadirecta simply raised this issue in the wrong place.

Judging by the brevity of the order, the denial of Rojadirecta’s petition was, as I had predicted, an easy call for the court to make.

Rojadirecta’s Motion to Dismiss

A motion to dismiss will be granted if the complaint is insufficient on its face.

Civil forfeiture complaints are governed by the Supplemental Rules in the Federal Rules of Civil Procedure, which state in part that the Government must “state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial.” “However,” as one court explains, “the Government is not required to allege in the complaint all of the facts and evidence at its disposal.”

It is sufficient for the Government to simply plead enough facts for the claimant to understand the theory of forfeiture, to file a responsive pleading, and to undertake an adequate investigation. The issue is one of pleading, not proof at trial. And it is for this reason that “[n]o complaint may be dismissed on the ground that the Government did not have adequate evidence at the time the complaint was filed to establish the forfeitability of the property.” 5US v. $22,173.00 in US Currency, 716 F. Supp. 2d 245, 248-49 (SDNY 2010.

What does the Government have to show to establish the forfeitability of property?

Federal civil forfeiture statutes, including those applying to criminal copyright infringement, are subject to CAFRA, the Civil Asset Forfeiture Reform Act of 2000. Under CAFRA, the Government must show that the defendant property is subject to forfeiture by a preponderance of the evidence. When the defendant property is alleged to be an instrumentality of a crime, the Government must also show that there is a substantial connection between the property and the alleged crime.

If the Government can show both, the only way a claimant can win is by rebutting the showing of a substantial connection or raising an affirmative defense to the forfeiture — the claimant is an “innocent owner” of the property, for example. Under CAFRA, an innocent owner is one who “did not know of the conduct giving rise to forfeiture; or upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property.” 6Van Hofe v. US, 492 F.3d 175, 179-80 (2nd Cir. 2007).

18 USC § 2323(a)(1)(B) subjects the following to forfeiture: “Any property used, or intended to be used, in any manner or part to commit or facilitate the commission of an offense referred to in subparagraph (A).” Subparagraph (A) refers to criminal copyright infringement offenses, including those set out in 17 USC § 506, which states:

(1) In general.— Any person who willfully infringes a copyright shall be punished as provided under section 2319 of title 18, if the infringement was committed—

(A) for purposes of commercial advantage or private financial gain;

(B) by the reproduction or distribution, including by electronic means, during any 180–day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000; or

(C) 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.

Facilitation “occurs when the property makes the prohibited conduct less difficult or more or less free from obstruction or hindrance.” 7In re 650 Fifth Avenue and Related Properties, Memorandum Opinion and Order, No. 1:08-cv-10934-RJH (SDNY March 30, 2011). As one court noted, “It is ‘[i]rrelevant whether the property’s role in the crime is integral, essential or indispensable.’ A single incident of facilitating criminal activity is sufficient to trigger forfeiture.” 8US v. LAM, No. 3:07-CR-374, Memorandum Opinion (ED Va. March 28, 2011).

Notice what is not required in civil forfeiture proceedings.

First, the Government does not have to prosecute or convict anyone of the underlying crime to seek forfeiture of property that facilitates that crime. 9See, for example, Van Hofe at 179, US brought civil in rem forfeiture action against residence used to facilitate commission of drug crime without indicting and prosecuting owners personally; Austin v. US, 509 U.S. 602, 627 (1993) (Scalia, J. concurring in part and concurring in judgment), conviction irrelevant to forfeiture proceeding; The Palmyra, 25 US 1, 15 (1827), “no personal conviction of the offender is necessary to enforce a forfeiture in rem in cases of this nature”; US v. One Parcel of Real Estate Located at 7715 Betsy Bruce Lane Summerfield, 906 F. 2d 110,111-12 (4th Cir. 1990), “In civil forfeiture cases, property is subject to forfeiture ‘even if its owner is acquitted of — or never called to defend against — criminal charges.'”

Second, the forfeiture proceeding is not directed at the site operators of Rojadirecta, but at the domain name itself. 10See Calero-Toledo v. Pearson Yacht Leasing Co., 416 US 663 (1974). The culpability of the site’s owners is irrelevant. 11See US v. Cherry, 330 F.3d 658, n.16 (4th Cir. 2003). In fact, the civil forfeiture has been described as an “essential tool” when the government “can prove that the property was involved in a crime, but cannot prove who the wrongdoer was.” 12Stefan D. Cassella, Overview of Asset Forfeiture Law in the United States, United States Attorneys’ Bulletin, Vol. 55, vol. 6, pg. 17 (November 2007).

With this in mind, let’s turn to Rojadirecta’s general argument supporting its motion to dismiss. It states, “the Complaint, which focuses entirely on Puerto 80’s actions, fails to allege facts that, if proven, would suffice to show that Puerto 80’s operation of the Rojadirecta site constitutes criminal copyright infringement.”

As we’ve just seen, the Government’s forfeiture complaint doesn’t have to allege such facts. In other words, Rojadirecta is barking up the wrong tree with its entire argument. The question of whether or not the operators of Rojadirecta are directly or indirectly liable for criminal copyright infringement — as well as the question of whether or not criminal copyright infringement even allows for indirect liability — is completely unrelated to the question of whether the domain name can be forfeited for facilitating the commission of a criminal copyright offense.

I doubt, then, that Rojadirecta can succeed with its motion to dismiss. Its argument doesn’t apply to the Government’s claim that its property was used to facilitate the commission of criminal copyright infringement.

Limits on Forfeiture

Some have wondered what limits the Government from seizing just about any web site’s domain name, considering the seemingly broad reach of civil forfeiture law. I’ve previously discussed some of the legal limitations preventing a seizure free-for-all; I want to briefly mention one more.

The Eighth Amendment’s prohibition of excessive fines places limits on civil forfeiture. The 2nd Circuit analyzes property forfeiture for excessiveness by considering the following:

(1) the harshness, or gross disproportionality, of the forfeiture in comparison to the gravity of the offense, giving due regard to

(a) the offense committed and its relation to other criminal activity,

(b) whether the claimant falls within the class of persons for whom the statute was designed,

(c) the punishments available, and

(d) the harm caused by the claimant’s conduct;

(2) the nexus between the property and the criminal offenses, including the deliberate nature of the use and the temporal and spatial extent of the use; and

(3) the culpability of each claimant.

It adds, “Determining the excessiveness of a civil in rem forfeiture is necessarily fact-intensive and the ‘quantum, in particular, of pecuniary fines neither can, nor ought to be, ascertained by any invariable law.’ Given the impossibility of establishing a formula for an excessive fine with surgical precision, this framework provides a useful template for the fact-finding process and the ultimate excessiveness inquiry.” 13Van Hofe at 186.

A more detailed look at how this inquiry works in practice is beyond the scope of this article.

References

References
↑1 The petition was actually filed by Puerto 80 Projects, the company that owns the Rojadirecta site. To keep things simple, I’ll refer to both the site and the site’s owners and operators as Rojadirecta for this article.
↑2 See Calero-Toledo v. Pearson Yacht Leasing Co., 416 US 663, 680-684 (1974) where the Supreme Court traces the history of forfeiture laws since Biblical times.
↑3 18 USC § 983(f)(1)(C).
↑4 US v. PlayboyMonthly.com, United States’ Motion to Dismiss Claimant’s Counterclaims, No. 8:10-cv-1214-T-27TBM (MD Fla. 2010); US v. $80,633, 512 F.Supp.2d 1196 (MD Ala. 2007).
↑5 US v. $22,173.00 in US Currency, 716 F. Supp. 2d 245, 248-49 (SDNY 2010.
↑6 Van Hofe v. US, 492 F.3d 175, 179-80 (2nd Cir. 2007).
↑7 In re 650 Fifth Avenue and Related Properties, Memorandum Opinion and Order, No. 1:08-cv-10934-RJH (SDNY March 30, 2011).
↑8 US v. LAM, No. 3:07-CR-374, Memorandum Opinion (ED Va. March 28, 2011).
↑9 See, for example, Van Hofe at 179, US brought civil in rem forfeiture action against residence used to facilitate commission of drug crime without indicting and prosecuting owners personally; Austin v. US, 509 U.S. 602, 627 (1993) (Scalia, J. concurring in part and concurring in judgment), conviction irrelevant to forfeiture proceeding; The Palmyra, 25 US 1, 15 (1827), “no personal conviction of the offender is necessary to enforce a forfeiture in rem in cases of this nature”; US v. One Parcel of Real Estate Located at 7715 Betsy Bruce Lane Summerfield, 906 F. 2d 110,111-12 (4th Cir. 1990), “In civil forfeiture cases, property is subject to forfeiture ‘even if its owner is acquitted of — or never called to defend against — criminal charges.'”
↑10 See Calero-Toledo v. Pearson Yacht Leasing Co., 416 US 663 (1974).
↑11 See US v. Cherry, 330 F.3d 658, n.16 (4th Cir. 2003).
↑12 Stefan D. Cassella, Overview of Asset Forfeiture Law in the United States, United States Attorneys’ Bulletin, Vol. 55, vol. 6, pg. 17 (November 2007).
↑13 Van Hofe at 186.
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