Columbia Pictures Industries v. Fung
D.C. No. 2:06-cv-05578-SVW-JC (2013)
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Rule of Law:
One who distributes a device or provides a service with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.
Facts:
- Gary Fung, through his company isoHunt Web Technologies, Inc., operated several websites, including isohunt.com, torrentbox.com, and podtropolis.com.
- These websites functioned as 'torrent sites,' which collected, indexed, and organized '.torrent' files that enabled users to download content, primarily copyrighted movies and television shows, via the BitTorrent peer-to-peer protocol.
- The websites did not host the copyrighted content itself, but provided the necessary .torrent files and tracker services to facilitate users' direct downloads from other peers.
- Fung's site, isoHunt, automatically modified user-submitted torrent files by adding backup trackers to them, increasing the reliability of the downloads.
- Fung personally engaged in activities to encourage infringement, such as posting messages on his site's forums requesting users to upload torrents for specific copyrighted films and providing technical assistance to users trying to locate and play pirated content.
- Fung's websites also featured lists such as 'Top 20 Movies' and 'Top Searches,' which corresponded to popular copyrighted works.
- Fung's business model relied on advertising revenue, which was directly tied to the volume of user traffic on his websites, the vast majority of which was for infringing content.
Procedural Posture:
- Columbia Pictures Industries, Inc. and other film studios sued Gary Fung and his company in the U.S. District Court for the Southern District of New York.
- On Fung's motion, the case was transferred to the U.S. District Court for the Central District of California.
- The plaintiffs filed an amended complaint alleging contributory and vicarious copyright infringement.
- The district court (trial court) granted the plaintiffs' motion for summary judgment on liability, finding Fung liable for inducing copyright infringement.
- The district court also ruled as a matter of law that Fung was not entitled to protection under any of the DMCA's safe harbor provisions.
- Following the liability ruling, the district court entered a permanent injunction against Fung.
- Fung (appellant) appealed the summary judgment ruling on liability and the scope of the injunction to the U.S. Court of Appeals for the Ninth Circuit, with Columbia Pictures (appellees) defending the district court's decision.
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Issue:
Does an operator of a BitTorrent indexing website induce third-party copyright infringement when the operator takes affirmative steps to foster infringement, and does such conduct disqualify the operator from the Digital Millennium Copyright Act's (DMCA) safe harbor provisions?
Opinions:
Majority - Berzon, Circuit Judge
Yes, an operator of a BitTorrent indexing website induces third-party copyright infringement when they take affirmative steps to foster infringement, and such conduct disqualifies them from DMCA safe harbor protections. The court found Fung liable for inducement under the test established in MGM Studios, Inc. v. Grokster, Ltd. ('Grokster III'). The court held that the inducement rule applies not just to the distribution of a 'device' but also to the provision of a 'service' like Fung's websites. There was overwhelming evidence of direct infringement by users of the sites. Most importantly, Fung demonstrated the requisite unlawful object by taking 'affirmative steps to foster infringement,' such as personally soliciting torrents for copyrighted works, providing technical assistance for infringement, and designing his sites to attract users seeking pirated content. Furthermore, Fung is not entitled to protection under the DMCA's safe harbors. He is ineligible for the § 512(a) 'transitory communications' safe harbor because his trackers do more than act as a mere 'conduit' by actively selecting the peers for a user's connection. He is ineligible for the § 512(c) and § 512(d) safe harbors because he had 'red flag' knowledge of infringing activity (evidenced by his own inducing conduct) and because he received a direct financial benefit from the rampant infringement while having the right and ability to control it.
Analysis:
This case clarifies the application of the Grokster inducement theory to online service providers, confirming that liability is not limited to those who distribute software but extends to those who operate services with the manifest intent to promote infringement. The decision is significant for its detailed analysis of the DMCA safe harbors, establishing that a service provider's own inducing conduct can constitute 'red flag' knowledge of infringement and satisfy the 'right and ability to control' prong of the disqualification test. By linking advertising revenue directly to the high volume of infringing activity, the court provided a clear framework for finding a 'direct financial benefit' in ad-supported business models, thereby limiting the availability of safe harbor protection for sites that actively cultivate and profit from infringement.
