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IP/Entertainment Case Law Updates

Columbia Pictures Industries, Inc., et al. v. Fung, et al.

In a case arising out of the infringing use of BitTorrent technology, the court grants plaintiff copyright holders a permanent injunction against defendants, finding that plaintiffs met all of the factors for a permanent injunction under eBay.

After winning their motion for summary judgment on inducement of copyright infringement, plaintiff copyright holders, various motion picture studios, brought a motion for a permanent injunction against defendants Gary Fung and Isohunt Web Technologies, Inc. Defendants operate an Internet-based system for downloading copyright-protected material using BitTorrent technology. Finding that plaintiffs satisfied their burden under the Supreme Court’s decision in eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388 (2006),the court granted their motion for a permanent injunction. eBay requires plaintiffs to show “(1) that [they have] suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that injury; (3) that, considering the balance of hardships between the plaintiff[s] and defendant[s], a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.”

First analyzing irreparable harm, the court found this requirement satisfied, “in three independent ways.” The court found that, given the tens of millions of acts of infringement at issue, it is “extremely unlikely” that defendants could monetarily compensate for the infringements they had induced in the past, or those they could induce in the future. The court also found irreparable harm in the way that defendants’ system causes end-users to automatically copy and distribute plaintiffs’ works numerous times as part of downloading.

At this point in its analysis, the court expressly rejected defendants’ argument that the Supreme Court’s holding in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913 (2005), was limited solely to “devices” that induce infringement and, therefore, defendants are immune from an injunction against their “activities.” On this issue, the court stated that “the clear import of the Supreme Court’s opinion was that a defendant may be secondarily liable for his conduct and activities, separate and apart from any products, devices, or tools he distributes.” Further, the court pointed to the undermining effect on plaintiffs’ legitimate market for consumers caused by the availability of free infringing copies of plaintiffs’ works through defendants’ websites as a third independent basis for finding irreparable harm.

Moving to the second eBay requirement – inadequate remedy at law – the court focused on the enormous scale of infringement at issue and defendants’ inability to redress that harm with money damages. The court relied on its earlier findings in its summary judgment order that as many as 2.5 million U.S. citizens visited defendants’ websites each month and that those websites were accessed as many as 50 million times in a single month. The court also credited evidence submitted by plaintiffs that over 90% of the downloads from defendants’ websites involved copyright-infringing materials. Given the massive volume of infringement, and plaintiffs’ inability to recover in damages from the millions of infringing end-users implicated, the court found that a permanent injunction was the “only realistic method for remedying” future harm from defendants’ inducement.

Regarding the balance of hardships, the third eBay requirement, the court again found that the evidence weighed strongly in plaintiffs’ favor. On one hand, the plaintiffs faced the prospect of continuing injury on a massive scale in the absence of an injunction halting defendants’ inducement of infringement. On the other hand, “the injunction being ordered by the Court would not pose a corresponding hardship on Defendants.” Having already found the defendants’ websites were overwhelmingly used for infringing purposes, the court concluded that its injunction would not prevent defendants from doing anything they had a right to do. The court was also persuaded that, if not permanently enjoined, defendants would likely continue to induce infringement because of their widespread success in building a lucrative business based on infringement and their failure to take any meaningful steps to mitigate the infringement of plaintiffs’ works.

As to the fourth and final eBay requirement, that the public interest would not be disserved by the injunction, the court again found in plaintiffs’ favor. On this point the court concluded that protecting plaintiffs from continued widespread infringement was in the public interest and that defendants had failed to adduce evidence of any countervailing harm the injunction might cause. The court noted that the injunction is aimed solely at the “unlawful use of BitTorrent and similar technology.” Any lawful use would not be enjoined and, therefore, the public interest will not be harmed by the injunction.

Having found that plaintiffs satisfied the four requirements for such relief under eBay, the court granted plaintiffs’ motion for a permanent injunction, barring defendants from further inducing infringement through the use of BitTorrent and related technology.