IP Law Daily Registered subscriber not liable for pirating traced to his IP address; attorney fee award upheld
Tuesday, August 28, 2018

Registered subscriber not liable for pirating traced to his IP address; attorney fee award upheld

By Pamela C. Maloney, J.D.

The dismissal of direct and contributory copyright infringement claims brought against the registered subscriber of an Internet protocol address that was associated with the unauthorized downloading and distribution of a film through peer-to-peer BitTorrent networks was affirmed by the U.S Court of Appeals in San Francisco. The bare allegations that the defendant was the registered subscriber and that he failed to secure his Internet connection, without more, were insufficient to support those claims. The Ninth Circuit also affirmed the district court’s award of $17,222.40 in attorney fees and $252.20 in costs to the registered subscriber (Cobbler Nevada, LLC v. Gonzales, August 27, 2018, McKeown, M.).

Cobbler Nevada, LLC, holds the copyrights in the film The Cobbler, a magic realism film. After tracing over 10,000 instances of unauthorized downloading and distributing (i.e., pirating) of the film through BitTorrent networks to Oregon alone, the company identified a single IP address in Portland that had pirated the file multiple times without authorization. Cobbler Nevada filed direct and contributory copyright infringement claims against the unknown IP address holder who was later identified as Thomas Gonzales. In its complaint, Cobbler Nevada alleged that Gonzales, as the registered subscriber, had copied and distributed The Cobbler or, in the alternative, that he had facilitated and promoted the use of the Internet to infringe Cobbler Nevada’s copyrights in the film by failing to reasonably secure, police, and protect the use of his Internet service. Cobbler Nevada also claimed that it had sent the registered subscriber more than 400 notices of infringing activity, but that the registered subscriber had failed and refused to take any action to prevent the infringing activity.

The district court dismissed both claims based on a finding that the allegations insufficient to state a claim. Cobbler Nevada was granted leave to amend in order to cure the deficiencies; however, instead of amending the allegations, Cobbler Nevada chose to name the DOE IP address as the sole defendant. After a second challenge to the sufficiency of the complaint, Cobbler Nevada filed a notice of voluntary dismissal. The district court then dismissed the action and awarded the registered subscriber $17,222.40 in attorney fees and $252.20 in costs. Cobbler Nevada appealed.

Direct infringement. In order to succeed on its direct infringement claim against the registered subscriber, Cobbler Nevada was required to establish that the registered subscriber himself had infringed Cobbler Nevada’s exclusive rights in the film. However, the only connection Cobbler Nevada had established between Gonzales and the alleged infringement was that he was the registered Internet subscriber and that he had been sent infringement notices. Cobbler Nevada’s own investigation led it to conclude that because the Internet service was accessible to both residents and visitors at an adult care home, it was not likely that the registered subscriber was a regular occupant of the residence or the likely infringer. Thus, there were no facts connecting the registered subscriber to the infringing activity. Therefore, the Ninth Circuit affirmed the district court’s dismissal of Cobbler Nevada’s direct infringement claim.

Contributory infringement. Cobbler Nevada’s contributory infringement claim was premised on the allegation that the registered subscriber had failed to police his Internet service. However, liability for contributory infringement required a showing that Gonzalez had actively encouraged or induced infringement through specific acts or that he had distributed a product which "distributees" used to infringe copyrights. There was nothing in the complaint that alleged or even suggested that the registered subscriber had actively induced or materially contributed to the infringement or that he had taken any affirmative steps to foster the infringement. The only allegation was that the registered subscriber had failed to take steps to "secure, police, and protect" the connection. According to the Ninth Circuit, the failure to take affirmative steps, to prevent infringement, without more, could not trigger liability for contributory infringement.

Likewise, providing Internet access did not amount to the distribution of a product or service that was capable of being used to commit the alleged infringement. The Ninth Circuit refused to adopt Cobbler Nevada’s theory of contributory infringement, explaining that it would unjustly create an affirmative duty on the part of private Internet subscribers to actively monitor their Internet for infringement, which would put any purchaser of Internet service who shares access with a family member or roommate at risk of liability. Concluding that the allegations failed to establish that the registered subscriber had encouraged or induced others to infringe on Cobbler Nevada’s copyrights in the film, the Ninth Circuit affirmed the dismissal of the contributory infringement claims.

Attorney fees. In affirming the district court’s award of attorney fees to the registered subscriber, the appellate court concluded that the lower court had properly weighed the conduct of both parties against the Fogerty factors outlined by the U.S. Supreme Court in reaching its conclusion that an award was appropriate. Specifically, the lower court had determined that Cobbler Nevada’s decision to name the registered subscriber as the defendant, even after concluding that he was not a regular occupant of the residence or the likely infringer, was unreasonable. In addition, in considering the deterrence factor, the lower court explained that awarding fees would deter Cobbler Nevada from the overaggressive pursuit of alleged infringers without a reasonable factual basis, while encouraging defendants with valid defenses to defend their rights.

The case is No. 17-35041.

Attorneys: John Mansfield (Harris Bricken) and Carl D. Crowell (Crowell Law) for Cobbler Nevada, LLC. David Hamlin Madden (Mersenne Law) for Thomas Gonzales.

Companies: Cobbler Nevada, LLC

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