Wednesday, September 15, 2010

DMCA defense, lack of secondary liability not suitable for motion to dismiss

Williams v. Scribd, Inc., NO. 09cv1836-LAB (WMc) (S.D. Cal. 2010)

Williams writes books on commodities trading. Scribd allows people to upload written content. Williams alleged that a Scribd member, GalaxiaMia Guy, uploaded hundreds of pages of Williams’s copyrighted material onto Scribd, amounting to at least of 6 of Williams’s books. He also alleged that Scribd was slow to remove the material on request. He sued for direct, contributory, and vicarious copyright infringement, and misappropriation of the right of publicity. His complaint wasn’t “a model of lucidity,” failing to explain clearly which works were allegedly infringed. “Williams also omits to mention that his counsel and a ‘Copyright Agent’ for Scribd were in continual touch with respect to uploaded, copyrighted works that Scribd was attempting to be diligent in removing.”

The court believed that three works were at issue: Williams alleged that he discovered The Secret of Selecting Stocks for Immediate and Substantial Gains in March 2009 and, though he demanded that it be taken down, it appeared again twice more and was still allegedly available as of May 7, 2009. Similar allegations covered The Right Stock at the Right Time (once with a different title) and Long Term Secrets to Short Term Trading. He also alleged distribution of other copyrighted works, but didn’t specify when he discovered them or when, if ever, he demanded their removal.

Williams risked “denting his credibility” by omitting some facts. Scribd submitted “a good amount” of evidence that it was immediately responsive to many of Williams’s requests. “The impression one gets reading Williams’s complaint is that infringing material was uploaded to Scribd’s website and then lingered there; the truth is more likely that Williams and Scribd were together playing a game of Whac-A-Mole, with Williams monitoring Scribd for the presence of his copyrighted material and Scribd removing it from the website as expeditiously as possible upon a request from Williams — although Williams alleges that it sometimes took multiple requests to get Scribd to act.”

Scribd argued that the court could resolve the DMCA safe harbor defense on a motion to dismiss. The court held that that could be true where the answer is “nearly obvious,” but wasn’t here. There were open questions about the extent to which Scribd benefited financially from the uploads at issue, whether Scribd had actual knowledge of the uploads, whether Scribd was expeditious in removing Williams’s materials from the site, and indeed whether Scribd was a service provider in the first instance. (That last one, really? After Iqbal, I don’t see how a complaint could sufficiently allege facts that would deny Scribd DMCA eligibility because it wasn’t a service provider. I would appreciate anyone who could explain this to me.)

Likewise, the court couldn’t consider Scribd’s extrinsic evidence that each time Williams gave proper notice, Scribd promptly removed access to the allegedly infringing works. Scribd argued that considering the emails was proper because Williams “relied on omitting them” to allege knowledge of infringement and failure to qualify for the safe harbor. But that’s stretching the rule that the court can consider vital documents extrinsic to the complaint too far.

The court expressed some sympathy for Scribd’s position because of the “glaring omission” (something that I would think would factor into the possibility of a fee award for Scribd should Scribd ultimately prevail). Nonetheless, this is what summary judgment is for. Anyway, it wasn’t obvious that the emails submitted by Scribd exhaustively covered every instance of alleged infringement; the complaint was successfully vague.

One slightly unusual fact: Williams alleged that the individual defendant, GalaxiaMia Guy, had Scribd’s CEO Trip Adler as his only “friend” on Scribd’s site, and Adler’s picture appeared on GalaxiaMia’s page, thus giving Scribd access and knowledge of GalaxiaMia’s infringing activity. (Is this like on MySpace, where everyone starts out “friends” with the founder? Inquiring minds want to know.)

Direct copyright infringement requires volitional conduct by the defendant. Williams argued that being friends with GalaxiaMia was enough to show that Scribd’s CEO must have been in communication with him and helping/encouraging his activities. The court found this “quite thin,” since “it’s no secret that the ‘friend’ label means less in cyberspace than it does in the neighborhood, or in the workplace, or on the schoolyard, or anywhere else that humans interact as real people.” Specifically, it was too thin to survive a motion to dismiss. The actual relationship between GalaxiaMia and Adler was wholly speculative.

Here’s a weird statement: “At best, Williams has succeeded in raising the possibility that Scribd is liable for direct copyright infringement, given that Adler and GalaxiaMia Guy may know one another, and that Adler may have been aware of GalaxiaMia Guy’s infringing uploads to the Scribd website, but Iqbal requires more than the ‘sheer possibility’ that this is the case.” The weird part is the word “direct”: what’s described is potentially relevant to contributory liability, but how is it relevant to whether Scribd engaged in volitional conduct that produced a copy as opposed to wholly automated conduct?

Contributory copyright infringement: this requires actual or constructive knowledge and a material contribution to the infringing activities. Online, this knowledge must be specific, not generalized knowledge that infringement is occurring somewhere on the defendant’s site. Williams sufficiently alleged direct infringement and actual knowledge by Scribd because he alleged that he notified Scribd and asked that the materials be removed. As for material contribution, failure to remove an infringing item suffices, as does the fact that the website provides the site and facilities for infringement. But the friend allegation didn’t matter.

Vicarious infringement: this requires the right and ability to supervise the infringing conduct and financial benefit from the infringement. Scribd argued that Williams couldn’t plausibly allege financial benefit, and the court disagreed because financial benefit exists where the availability of infringing material acts as a draw for customers. The draw need not be substantial. If the presence of infringing material compels more people to visit the website than otherwise would, making it more attractive to advertisers, Scribd can be said to benefit. (I have yet to understand why this reasoning doesn’t always produce a loss for defendants. Even the Protocols of the Elders of Zion are a draw to someone. If a single person viewed the relevant page, does Williams win?) Williams alleged enough when he alleged that Scribd’s value to advertisers has a direct relationship to the amount of viewers and uploaders of content and that Scribd monetized the visits to its site that consisted of visitors reading, downloading, and/or viewing the books. Scribd’s argument that Williams only alleged prospective financial gain, and didn’t allege that his own work was monetized by Scribd, was “fair” but not appropriate on a motion to dismiss. If Scribd “only has the capability of monetizing documents by embedding advertisements in them, but didn’t generate ad revenues directly or even tangentially from the works of Williams that were uploaded to its site,” that will come out in discovery. Williams alleged to the contrary.

The court held that the Ellison case wasn’t much help for Scribd, for one thing because the district court waited for summary judgment to rule on financial benefit. But also, AOL didn’t host the infringing materials; it only provided access to internet news groups where Ellison’s works had been uploaded. (There is a potentially strange set of assumptions about the “space” where infringement takes place here, probably worth unpacking.) There was no evidence that AOL customers subscribed because of the infringing material or cancelled subscriptions because it was no longer available, especially since AOL offered a “vast array” of products and services, most importantly internet access. Moreover, Congress found that receiving a one-time set-up fee and flat periodic payments for service wouldn’t ordinarily constitute a financial benefit directly attributable to infringing activity. “Given that Scribd offers nothing to its users other than content, some copyrighted, some not, it’s far easier to presume that infringing content boosts its subscriber base, and with that, its advertising revenues — even if the gains are marginal.” Okay, what? The access AOL offered was only useful in order to access content, “some copyrighted, some not” (but mostly copyrighted, since all fixed works of expression are now born copyrighted). AOL subscribers weren’t paying for empty air.

The court then went back to procedure: an unauthorized prerelease copy of Harry Potter would clearly have driven traffic to the site, and the motion to dismiss stage isn’t the time to conclude that books about commodities are different. (I don’t disagree, but I think this is why Iqbal increases uncertainty and penalizes people whose experiences are different from those of federal judges, by encouraging them to engage in probability testing before the submission of evidence.) Summary judgment was the right time to assess this argument.

As for right and ability to control the infringement, Scribd relied on Io Group, Inc. v. Veoh Networks, Inc., 586 F.Supp.2d 1132 (N.D. Cal. 2008), which held that the key question was not right and ability to control one’s own system but right and ability to control the infringing activity. There must be some antecedent ability to limit or filter copyrighted materials. But the court again pointed to the posture of Veoh: summary judgment (and the discussion was intertwined with the DMCA safe harbor issue). There was no evidence Veoh failed to police to the fullest extent permitted by its architecture. Williams here alleged that Scribd didn’t respond to his takedown notices expeditiously and knowingly allowed copies of his materials to remain at other locations even when he sent notices about one location. His allegations were sufficiently similar to those in Napster, where Napster provided users with tools to enable easy infringement and to search out and identify infringing material. This “thin” claim, too, survived, though the court suggested that Scribd was “teed up” for summary judgment.

Misappropriation/right of publicity: Scribd argued that this was taken out by §230. Eric Goldman will hate this one: “Because there are open questions in this case about the extent to which Scribd participated in the alleged infringement — and wasn’t just ‘provided’ with Williams’s works by GalaxiaMia Guy — it is inappropriate to make an immunity determination at this time.” But conduct sufficient for copyright contributory/vicarious liability should often not be sufficient for publisher liability; I’m not sure which allegations of Williams’s complaint can fairly be read to say that Scribd provided the conduct or was in an agency relationship with the person who did.

The court concluded with a warning to Williams about whether he really wanted to go forward (again not mentioning fees, but one has to think they’re in play), and a note that minimal and expedited discovery would be sufficient to inform a summary judgment motion.

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