Web Host Defeats Copyright Liability Despite Mishandled Takedown Notice–Hydrenta v. Luchian

The plaintiff produces pornography and distributes it through paid membership sites. The defendants run ad-supported websites that allow users to upload videos, a total of 475,000 user-submitted videos. Moderators screen user submissions to confirm they do not contain “child pornography, animal pornography [or] spam, and to ensure that the video constitutes adult entertainment.” (Note the difference from the typical user content policy, which would *restrict* adult content, not require it). The websites have a 3-copyright-strikes-in-6-months policy, and collectively 1,000 users have been terminated for repeat infringement. Third parties uploaded plaintiff’s videos to the defendants’ websites. The plaintiff identified “thirty-seven (37) Plaintiff-produced videos on Playvid.com, two (2) videos on Feedvid.com, five (5) videos on Peekvids.com, and twenty-eight (28) videos on Playvids.com.”

For unexplained reasons, the website operator outsourced the receipt of DMCA notifications to a third party service called IncorporateNow. I don’t understand how that was an advantageous move. The opinion indicates IncorporateNow simply scans the mail/faxes and then emails them to the website operator, who turns around and manually enters the information into their normal takedown process. By introducing a third party into the equation, it increases costs, the turnaround time, and–importantly to this case–the risk of lost communications.

The plaintiff’s third party enforcement service mailed a package of takedown notices to IncorporateNow, which itself uses “virtual office space” provided by Regus. “A woman named Carmen Jusino signed for the package on behalf of IncorporateNow, Inc.” (We don’t learn anything more about Carmen from the opinion). Something went wrong in the handoff between Jusino and IncorporateNow’s principal, who claims he never got possession of the package. Ruh-roh. This sounds like every website’s nightmare; the takedown notices may be deemed legally received but weren’t acted upon because of administrative mishandling. The court doesn’t know how to handle the situation:

While there is no dispute as to the package being delivered and received, there is a dispute as to whether Defendants had knowledge of the package’s content. Defendants vehemently dispute that they had knowledge of its contents. Neither party has cited cases, nor has the Court been able to locate cases, where a DMCA Designated Agent lost take-down notices, causing an internet service provider to incur liability for copyright infringement based upon constructive knowledge. Whether Defendants had constructive knowledge of the infringement turns on Luchian’s credibility, an assessment that cannot be made in resolving a motion for summary judgment.

With this ominous backdrop, the court marches through the plaintiff’s claims:

Direct Copyright Infringement. Following CoStar/Netcom, the court requires the plaintiff to show that web hosts engaged in volitional conduct. The defendants’ prescreening doesn’t constitute volitional conduct:

The Court finds that the conduct complained of in this case is similar to the conduct complained of in CoStar, where the internet service provider merely acted as a gatekeeper in prohibiting certain material from being posted on its site. It is undisputed that Defendants employ an independent contractor who prohibits certain videos from being posted based upon their content; however, there is no record evidence that Defendants engaged in any affirmative conduct to cause the copying of Plaintiff’s copyrighted videos, which would be necessary to allow Plaintiff to meet the volitional conduct prong of the direct infringement claim.

The court distinguishes Arista v. Usenet.com because “there is no record evidence that Defendants took active measures to create servers dedicated to certain videos and/or attracted traffic to the specific copyrighted files at issue in this case.”

The plaintiff’s enforcement agent claimed that some of the infringing videos were uploaded by defendants’ employees because the uploading IP address was 0.0, which ordinarily would be assigned only to internal servers. The court disregards the evidence because the agent wasn’t qualified as an expert; and the opinions were too speculative.

Contributory Copyright Infringement. Although the court can’t determine if the defendants had the requisite knowledge due to the takedown notice mishandling, embracing the Sony test from over three decades ago, the court says the “Plaintiff can only succeed on its contributory infringement claim if Plaintiff establishes that the Websites in question are not capable of ‘substantial noninfringing uses.'” This is a decidedly defense-favorable move. However, it’s at best a minority approach in light of the Grokster Supreme Court ruling, which vacated the Ninth Circuit opinion which made the same move. The court acknowledges the Supreme Court-Ninth Circuit interaction but doesn’t seem to care. The court says:

Unlike Grokster, there is no record evidence that Defendants derived any revenue from Plaintiff’s copyrighted videos. Defendants have demonstrated that their Websites are capable of substantial noninfringing uses, notwithstanding that copyrighted material is, at times, located on their Websites. The Court is satisfied that Defendants have met their burden in establishing that its Websites are capable of substantial, noninfringing purposes, which are legitimate and unobjectionable.

I don’t know how to sort through these non-sequiturs. Maybe you can figure that one out.

Vicarious Copyright Infringement. Although the websites were ad-supported, there was not a *direct* financial benefit because the plaintiff didn’t show that the infringing videos boosted the defendants’ revenues.

Inducement. There is no evidence the defendants induced users to upload infringing videos, and “Defendants operated as passive internet service providers.”

Publicity Rights. The court says the defendants didn’t use the models’ personality rights “for trade, commercial, or advertising purposes,” and there’s no evidence the defendants generated ad revenues from the videos in question.

Trademark Claims. The trademark claim is based on the alleged inclusion of the plaintiff’s trademarks in metatags, which the plaintiff says constitutes initial interest confusion. (Ugh and double-ugh). The court questions whether there is a “use in commerce” and whether the initial interest confusion doctrine is recognized in the 11th Circuit, but the court for now concludes the plaintiff didn’t produce any evidence of consumer confusion. No summary judgment for plaintiff.

Implications. Did you catch this? The defendants got summary judgment on all of the different copyright claims **without relying on the DMCA safe harbor and with the cloud hanging over the DMCA safe harbor due to the mishandled notice.** We don’t often see a defendant get such a clean win when the DMCA safe harbor isn’t available. But to get there, the court has to cut a few analytical corners, most notably applying the Sony rule for contributory copyright infringement. I wonder if the plaintiff will appeal and how the 11th Circuit would receive this opinion.

Case citation: Hydentra HLP Ltd. v. Luchian, 1:15-cv-22134-UU (S.D. Fla. June 2, 2016)