Hollywood Studios Win IsoHunt Appeal

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The Ninth Circuit Court of Appeals has given Hollywood studios a big copyright win by affirming the liability of isoHunt, a BitTorrent indexer.

In a ruling on Thursday, the appeals judges also described why isoHunt and its founder Gary Fung are not eligible for safe harbor.

The ruling, following battles over P2P services like Napster and Grokster, represents a reaffirmation that tech services can induce copyright infringement. Additionally, after Hollywood studios suffered a setback last week at the Ninth Circuit in a case concerning user-generated website, Veoh, the latest decision offers hope for copyright owners that courts are ready to punish those who are aware of "red flags."

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IsoHunt was one of the larger BitTorrent indexers, handling several million torrents for some 7.5 million unique visitors at the height of its popularity.

In the ruling today (read in full here), Ninth Circuit judge Marsha Berzon notes that isoHunt did more than merely collect and organize torrent files. "Each time a torrent file is added to isoHunt, the website automatically modifies the torrent file by adding additional backup trackers to it," she notes, adding that the service regularly updated a list of popular movies and TV shows and also had an electronic message board.

The lawsuit was brought by several studios and led by Columbia Pictures. At district court held Fung liable for contributory infringement, for inducing others to infringe plaintiffs’ copyrighted material and issued a broad injunction, telling him to disengage from activities that facilitated copyright infringement of the plaintiff's works -- some 21,000 works including Dave, 21, and Cars.

Fung argued that unlike the Grokster case, he wasn't being accused of distributing a "device" -- software or technology used for downloading -- that his service was really just indexing what was out there. He believed he couldn't be held liable for inducement.

"We cannot agree," responds Judge Berzon. "Unlike patents, copyrights protect expression, not products or devices. Inducement liability is not limited, either logically or as articulated in Grokster III, to those who distribute a 'device.'"

Still, the studios still needed to demonstrate that Fung had intent and took steps to actively induce users to infringe copyrights. The appeals court says that the plaintiffs have met that burden, pointing to its list of the 20 highest-grossing movies then playing in U.S. theaters, which when users clicked on it, would invite a user to “upload [a] torrent” file for that movie. Additionally, Fung's message board postings are also cited.

"Like Grokster’s advertisements -- indeed, even more so -- Fung’s posts were explicitly 'designed to stimulate others to commit [copyright] violations,' and so are highly probative of an unlawful intent," writes the judge.

The judge accepts the studios' view of the precedent of Grokster that "if one provides a service that could be used to infringe copyrights, with the manifested intent that the service actually be used in that manner, that person is liable for the infringement that occurs through the use of the service."

Judge Berzon notes she is mindful "of the potential severity of a loose causation theory for inducement liability," especially in the digital age, but says there are limits because plaintiffs need to show proper proof of the defendant’s intent, and that a defendant who does something at one particular time doesn't necessarily have bad intent for something that happens later on.

Fung is also unable to gain statutory safe harbor from copyright liability because the Ninth Circuit looks at the indexing technology and doesn't believe that trackers fit the definition of a “service provider” under the Digital Millennium Copyright Act.

Perhaps even more encouraging to Hollywood studios, it is determined that Fung had “red flag” knowledge of a broad range of infringing activity. In cases like Viacom v. YouTube, copyright holders have been pushing for recognition of the ways in which website operators can get into copyright trouble without direct notice of infringements.

Here, seemingly connecting red flag knowledge with the inducement actions of the appellant, Judge Berzon notes "the record is replete with instances of Fung actively encouraging infringement, by urging his users to both upload and download particular copyrighted works, providing assistance to those seeking to watch copyrighted films, and helping his users burn copyrighted material onto DVDs. The material in question was sufficiently current and well-known that it would have been objectively obvious to a reasonable person that the material solicited and assisted was both copyrighted and not licensed to random members of the public, and that the induced use was therefore infringing."

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The only victory for Fung comes from his argument that the injunction that was issued was so unduly burdensome as to be "interpreted to prevent Fung from ever working for any technology company whose services others might use to infringe copyright."

The appeals court tells the lower court to modify the breadth so as to rectify that issue.

In reaction to the ruling, Henry Hoberman, global general counsel for the Motion Picture Association of America, says, "This ruling affirms a core principle of copyright law: Those who build businesses around encouraging, enabling and helping others to commit copyright infringement are themselves infringers, and will be held accountable for their illegal actions. It also strikes an important blow in the fight to preserve the jobs of millions of workers in the creative industries, whose hard work and investments are exploited by rogue websites for their own profit."

E-mail: eriq.gardner@thr.com; Twitter: @eriqgardner