Dissecting a Remarkable Ruling

* The blog title is a reference to this Order of the Stick comic. (It’s safe for work, so long as you don’t read it out loud.)

Last time we surveyed the forces that lead to this recent extraordinary magistrate’s opinion. It was handed down May 1, but already it’s become notorious for its almost gleeful taking down of the four porn-industry rights-holding plaintiffs. The key is to read the snerk-inducing footnotes. Highlights include these gems:

Footnote 7, in which the concept of “moral high ground” is discussed:

Plaintiff K-Beech’s rambling motion papers often lapse into the farcical. In its papers, counsel for K-Beech equate its difficulties with alleged piracy of its adult films with those faced by the producers of the Harry Potter books, Beatles songs and Microsoft software, and compare its efforts to collect from alleged infringers of its rights to the efforts of the FBI to combat child pornography. In an ironic turn, the purveyors of such works as Gang Bang Virgins, explain how its efforts in this matter will help empower parents to prevent minors from watching “movies that are not age appropriate” by ensuring that viewers must pay for plaintiffs products, and thereby effectively notify parents of such activity because “many parents would surely notice if they showed up on billing statements.” It is difficult to accord the plaintiff, which features “Teen” pornography on its website, the moral high-ground in this regard.

(Citations omitted.) Burn! Maybe the plaintiffs shouldn’t have been so defensive. Why not just say, “Our works are protected by copyright, same as the Harry Potter novels, Beatles songs and Microsoft Word. Our rights in our works should be accorded the same dignity as those works.”?

Footnote 8, in which the Magistrate questions whether pornography may be accorded copyright protection. Actually, he says the issue is “unsettled” in the Second Circuit and other circuits, which I suppose it technically true. And, once upon a time, courts actually used assume that obscene works were ineligible for copyright protection. That changed in 1979*, when the Fifth Circuit (the one that covers Texas, Louisiana and Mississippi!) held in Mitchell Bros. Film Group v. Cinema Adult Theater, 604 F.2d 852 (5th Cir. 1979) (the notorious Behind the Green Door case) thoroughly dismantled the concept of an obscenity defense.** In Devils Films, Inc. v. Nectar Video, 29 F. Supp. 2d 174 (S.D.N.Y. 1998), a judge did refuse to preliminarily enjoin the infringing distribution of the plaintiff’s pornographic films, and he did say (sua sponte and in dicta, as far as I can tell) that he thought the plaintiff’s films were illegal, but the court was clear that it wasn’t deciding that obscenity was a defense to copyright infringement. Rather, he refused to expend judicial resources lifting a finger to help what he regarded as an illegal enterprise. That decision was not appealed.

* It had to be in the 70’s, didn’t it? To quote swinging-bachelor Steve Dallas, “By God, we have got to get Carter back in the White House!”

** Technically, the defense was brought under the equitable rubric of “unclean hands.” No, I didn’t just make that up.

Footnote 9: The court did a little digging and discovered that the principal of one of the plaintiffs has a colorful criminal history:

As K-Beech put its reputation into issue, it is worth noting that the owner of K-Beech Inc. (and the apparent inspiration for the K-Beech mark) is Kevin Beechum. See “Porn studios raided to ensure adult-only casts,” 1/12/07, LA Times at 1. It appears that this is the same Kevin Beechum who testified in federal prosecutions about his experience vandalizing retail adult video stores to help extort protection payments from their owners. See U.S. v. Feinberg, 89 F.3d 333, 335 (7th Cir. 1996); U.S. v. Sturman, 49 F.3d 1275, 1278 (7th Cir. 1995). In those cases, Beechum described how he hired associates to use hammers and baseball bats to inflict $10,000 in damage on a Phoenix adult shop, and negotiated over a “few more jobs” in Cleveland. Other evidence established that, following Beechum’s introduction, these same associates, on behalf of the extortionists, planned to plant remote control bombs at eight stores in Chicago in furtherance of the scheme, but that plan failed when, after successfully attacking one store, a bomb accidentally went off, killing one of the co-conspirators.

The thing to bear in mind here is that the court wasn’t addressing a copyright claim but a hastily thrown-together claim for trademark infringement (because the plaintiff, incredibly, hadn’t registered the copyright in the work and was scrambling to come up with a different claim). Now, it’s true that the trademark claim was pretty lame, but these are two different kinds of “reputation” being discussed. Personal (bad) reputation isn’t the same thing as brand “reputation.” The plaintiff mixed those up, and the Magistrate pounced.

Schadenfreude Isn’t Policy

Well, it’s fun to read the footnotes, but they don’t really serve as the basis for the Magistrate’s harsh opinion. Specifically, the Magistrate (1) placed severe limitations on the plaintiff’s ability to identify the defendants, and (2) severed all but one of the anonymous defendants from the case. We’ll look at the severance ruling next time.

With respect to the limitations on discovery, the Magistrate ordered the following procedure:

  • As to the one remaining defendant in each case, the plaintiff may serve a subpoena to the ISP seeking only the name, address and MAC address for the subscriber associated with IP address in question. The magistrate specifically forbade seeking the telephone number or email address of the subscriber because (1) they aren’t necessary to serve process, and (2) they’ll just be used to harass the subscriber.
  • The ISP was then ordered either (1) to send a copy of the subpoena (and the order) to the subscriber, or (2), if the subscriber can’t be identified “to a reasonable degree of technical certainty,” to tell the plaintiff so. In the latter case, the ISP would presumably be released from the subpoena. The ISP and the subscriber then have a certain period of time to object to the subpoena.
  • If there is no objection or the objection is overruled, the ISP will comply with the subpoena, but instead of giving the information to the plaintiff, it is to give the information to the court, under seal, with no copy to the plaintiff. The court will reveal the information to the plaintiff at a subsequent status conference. And the plaintiff is forbidden from using the information in any way except to serve process on the putative defendant.

Technically, the magistrate granted the motion to expedite discovery, but practically, the limitations eviscerated the settlement-forcing power of the discovery. The subscriber’s contact information can be used only to serve the summons and complaint on the subscriber. The rights holders can’t first give the subscriber a chance to settle before being publicly “outed” as a porn consumer.

How did the Magistrate decide that these restrictions were necessary? Structurally, the Magistrate followed the five-factor test in Sony Music, which is still the decision of choice when dealing with anonymous defendants accused of copyright infringement. Thematically, however, the Magistrate’s decision boils down to two things: (1) Wi-Fi changes everything (or, at least, changes things enough), and (2) the plaintiffs aren’t serious about litigating their claims.

Wi-Fi Screws Everything Up

The Magistrate creates what I think is a bit of a fiction. Once upon a time, IP addresses (when combined with the exact time of the download) were reliable identifiers of anonymous defendants. But Wi-Fi changes all that. With the widespread adoption of Wi-Fi by consumers, we can no longer rely on IP addresses any more. Since most people don’t secure their Wi-Fi networks, you just don’t even know if someone in the household performed the download, let alone which household member (or guest) did it.

This strikes me as a bit of revisionist history. For one thing, IP addresses have always been unreliable identifiers. It’s just they’re the best identifiers we have. Plaintiffs often have to make educated guesses about whom to sue, and they bear the burden of proving that, more likely than not, they’ve identified the correct defendant.

While unsecured Wi-Fi networks allow strangers to steal bandwidth, they don’t introduce that much more uncertainty, in real terms, than ordinary routers—or even direct connections—so long as they are more than one member of the household, and everyone has access to the family computer. If, say, four people had access to the family computer*, and none admits to downloading the movie, can it truly be said that one of the potential defendants is more likely than not the culprit, assuming no other evidence?

* Five, if you include the cat.

Still, the popularity of household Wi-Fi networks does change the game. The mere possibility that a complete stranger to the lawsuit—someone who cannot be identified, no matter how hard you try—I think is causing courts to reassess their assumptions about the reliability of IP addresses. Before, we could narrow the potential defendants to the household, known guests of the household, friends, boyfriends, girlfriends, and so forth. It seemed at least theoretically possible that we could account for everyone and find enough evidence to point the finger at the correct one. When they all said they didn’t do it, you could feel confident in knowing that one of them was lying. Now, there’s a small but non-trivial chance that none of the likely suspects did it.*

*  Note, by the way, that the Plaintiffs argued that, if the subscribers can’t be shown to have performed the download, they should be found liable for negligence for leaving their networks unsecured. The Magistrate laughs this off, and rightly so. It’s a lot different from, say, a supermarket’s duty to guard against crime in its parking lots. Still, in a few years, this idea will start to sound less ridiculous.

Your Bluff: I Just Called It

The killer fact in this case was that one of the defendants reached out to the rights holder’s “Negotiator” and offered “unfettered access” to the defendant’s computer, records or anything else that might exculpate him or her. The Negotiator refused but only reiterated the demand for settlement money. This really sets the Magistrate off. For the Magistrate, this cements his suspicion that the rights holders aren’t really interested in using the courts for their intended purpose—to resolve lawsuits—but as a protection racket.

To be fair, recall that rights holders can’t go after the conduits of illegal downloading because they’re protected by the DMCA safe harbors. If they are to enforce their rights, they must be enforced against the actual end users. But to do that in any meaningful way, one must sue quite a number of them. So it shouldn’t come as that much of a surprise that the plaintiffs may be ill-prepared to actually investigate their own claims when given the chance.

But maybe they should have been prepared. All jurisdictions will punish a lawyer, and sometimes a client, for signing a “pleading” (such as a complaint, or, more pertinently, an amended complaint) without an adequate legal and factual basis.* Ordinarily, a lawyer is expected to conduct a reasonable investigation into the facts before signing off on a complaint. Often, of course, certain facts are completely hidden from the investigating lawyer, and courts don’t expect lawyers to do the impossible. Proving such facts is what discovery is for.

* In most jurisdictions, this is known as “Rule 11.”

In the BitTorrent cases, there’s only so much the plaintiffs can do to investigate the identities of the defendants, so the complaint is fine. But what happened here was that a defendant gave the plaintiff a chance to conduct that reasonable investigation before signing an amended complaint.* If the plaintiff doesn’t take the defendant up on the offer, can the plaintiff’s lawyer sign the amended complaint naming the defendant?

* To be clear, they never got to this point.

Is There a Balance to Get Right?

It seems to me that the Magistrate is actively trying to discourage mass-defendant BitTorrent cases. The procedure he orders is so cumbersome, and such a burden on judicial resources, that it’s not very likely to be adopted elsewhere. It’s clear he finds them distasteful, but that’s not a good basis for raising the difficulty level to the point where it’s no longer worthwhile to bring a lawsuit.

If the Magistrate were protecting the First Amendment right to free speech, that’d be something. The Magistrate did follow Sony Music, which is a case about balancing the right of anonymous expression—even one as “thin” as one’s selection of a movie or song—against copyright. But anonymous expression isn’t what’s at issue here. If that were the case, the argument would be, “I have a right to have my entertainment choices remain anonymous, even from the copyright holders in the works I choose” (and argument that went down in flames in Sony Music). Here, the argument is: “I didn’t do it, and you can’t prove I did.”

There are procedures for dismissing meritless claims* and for punishing those who bring them. Where the Constitutional right of free speech is at issue, we will require an early showing of liability, and we will sometimes say that the right of free speech is strong enough to overcome the right to seek judicial redress. But the right of free speech isn’t at issue here.

* What if courts made rights holders pay the attorney’s fees of those who were wrongfully identified and named as a defendant? There’s support for that in the Copyright Act. It would just be part of the cost of doing business for the rights holder, and it would make the victim whole, while encouraging the rights holder to investigate better and to dismiss defendants as early as possible to minimize costs.

So what interest is strong enough to justify the Magistrate’s discovery limitations? Freedom from harassing and/or embarrassing lawsuits? Conservation of judicial resources? Just plain embarrassment? Judges have a great deal of leeway in how they manage their dockets. The rules of civil procedure permit courts to limit discovery to avoid, among other things, embarrassment and harassment. Those are pretty important interests and pretty potent powers, but they don’t quite rise to the level of protecting Constitutional rights. And what about the rights holders? Don’t they have a right to have their grievances heard in court?

To the extent the Magistrate was trying to spare potentially innocent parties from public ridicule and embarrassment, the better to address that would be to let the defendants proceed anonymously. True, there is a presumption against anonymous parties in lawsuits because we’re distrustful of secrecy in court proceedings—with good reason—but isn’t there enough a showing under the circumstances?

Perhaps the Magistrate’s order can be justified on grounds that the plaintiffs have shown themselves insufficiently serious about their lawsuits. Courts probably do have a reasonable expectation that plaintiffs initiate lawsuits with the intent of vindicating their rights. Unlike most rights, the right to redress of grievances does put a significant burden on public resources—i.e., the court system—and no right, not even the right of free speech, is completely unfettered. Courts are free to place some barriers to entry to their systems. Where the burden being placed on the system is great, perhaps courts should be permitted to heighten those barriers.

If that’s the basis for the Magistrate’s limiting of discovery, then the holding is a narrow one. It’s going to be immediately influential—indeed, it already has been influential—because there are so many cases like this pending. But once that’s run its course, the narrowness of its holding will become evident. It’s not going to be be very often that a plaintiff will all but admit that they’re not serious about the huge lawsuit it just filed.

Lawsuits can serve business interests—indeed, business would be seriously hindered if there were no reliable court system—but they must not become a business model in and of themselves.* The difference might sound semantic, but to the courts, it’s important that everyone believe that they’re there for the justice. Even patent-holding companies (“trolls”) get this. It’s only a matter of time before copyright holders catch on. They’re just going to have to invest more money and thought into how they go about it.

* I’d argue that foolishly implemented statutory-damages schemes rather encourages this because it suggests you can make a profit above and beyond the harm you actually suffered.

Next Time: Severance

Next time, we’ll drill down on where the real action is: the decision to sever the defendants from the case.

Thanks for reading!

Rick Sanders

Rick is an intellectual-property litigator. He handles lawsuits, arbitrations, emergency injunctions and temporary restraining orders, opposition and cancellation proceedings, uniform dispute resolution proceedings (UDRPs), pre-litigation counseling, litigation avoidance, and other disputes, relating to copyrights, trademarks, trade secrets, domain names, technology and intellectual-property licenses, and various privacy rights. He has taught Copyright Law at Vanderbilt University Law School. He co-founded Aaron | Sanders with Tara Aaron-Stelluto in 2011.