columbia pictures industries inc v fung

Columbia Pictures Industries, Inc. v. Fung, 710 F.3d 1020 (2013)2013 Copr.L.Dec. P 30,400, 85 Fed.R.Serv.3d 103, 106 U.S.P.Q.2d 1602...

2014 Thomson Reuters. No claim to original U.S. Government Works. 1

710 F.3d 1020United States Court of Appeals,

Ninth Circuit.

COLUMBIA PICTURES INDUSTRIES, INC.; DisneyEnterprises, Inc.; Paramount Pictures Corporation;

Tristar Pictures, Inc.; Twentieth Century FoxFilm Corporation; Universal City Studios LLLP;

Universal City Studios Productions, LLLP; WarnerBros Entertainment, Inc., PlaintiffsAppellees,

v.Gary FUNG; isoHunt Web Technologies,

Inc., DefendantsAppellants.

No. 1055946. | Argued May6, 2011. | Submitted March 21,2013. | Filed March 21, 2013.

SynopsisBackground: Various film studios brought action allegingthat the services offered and websites maintained bydistributor induced third parties to download infringingcopies of the studios' copyrighted works through use ofhybrid peer-to-peer file sharing protocol. The United StatesDistrict Court for the Central District of California, StephenV. Wilson, J., 2009 WL 6355911, found distributor liablefor contributory copyright infringement, and issued aninjunction, and distributor appealed.

Holdings: The Court of Appeals, Berzon, Circuit Judge, heldthat:

[1] distributor offered his services with the object ofpromoting their use to infringe copyrighted material as shownby clear expression or other affirmative steps taken to fosterinfringement;

[2] distributor was not eligible for Digital MillenniumCopyright Act's (DMCA) safe harbor; and

[3] injunction was too vague, and was more burdensome thannecessary to provide studios relief.

Affirmed in part, vacated in part, injunction modified in part.

West Headnotes (17)

[1] Copyrights and Intellectual PropertyPersons liable

Liability for inducement of copyrightinfringement has four elements: (1) thedistribution of a device or product, (2) acts ofinfringement, (3) an object of promoting its useto infringe copyright, and (4) causation.

4 Cases that cite this headnote

[2] Copyrights and Intellectual PropertySubjects of Copyright

Copyrights and Intellectual PropertyPersons liable

Copyrights protect expression, not products ordevices, and inducement liability is not limited tothose who distribute a device; as a result, onecan infringe a copyright through culpable actionsresulting in the impermissible reproduction ofcopyrighted expression, whether those actionsinvolve making available a device or product orproviding some service used in accomplishingthe infringement.

Cases that cite this headnote


Inducement copyright doctrine applies toservices available on the Internet as well as todevices or products.


[4] Copyrights and Intellectual PropertyActs Constituting Infringement

Both uploading and downloading copyrightedmaterial are infringing acts. 17 U.S.C.A. 106(1,3).


[5] Copyrights and Intellectual Property



Persons liableClear expression or other affirmative steps isnot a separate requirement to establish copyrightinfringement on an inducement theory, but,rather, an explanation of how the improperobject of promoting use of device to infringecopyrighted material must be proven.



Distributor, whose websites induced thirdparties to download infringing copies of filmstudios' copyrighted works, offered his serviceswith the object of promoting their use toinfringe copyrighted material as shown byclear expression or other affirmative stepstaken to foster infringement, and therefore wasliable for contributory copyright infringementon an inducement theory; distributor's postswere explicitly designed to stimulate others tocommit copyright violations, and so were highlyprobative of an unlawful intent, and distributorcommunicated a clear message by respondingaffirmatively to requests for help in locating andplaying copyrighted materials.



If one provides a service that could be used toinfringe copyrights, with the manifested intentthat the service actually be used in that manner,that person is liable for the infringement thatoccurs through the use of the service.



Only causation requirement for liability forcopyright infringement on an inducement theoryis that the product or service was used toinfringe the plaintiff's copyrights; however, mereknowledge of infringing potential or of actual

infringing uses does not subject a productdistributor or service provider to liability.


[9] Copyrights and Intellectual PropertyDefenses

Digital Millennium Copyright Act (DMCA)safe harbors are affirmative defenses on whichdefendant has burden of establishing that hemeets the statutory requirements. 17 U.S.C.A. 512(a, c, d).



Because they selected which users wouldcommunicate with each other, trackers ofdistributor's websites, which induced thirdparties to download infringing copies of thestudios' copyrighted works through use of hybridpeer-to-peer file sharing protocol, served asmore than conduits between computer users,were not service providers within meaning ofDigital Millennium Copyright Act (DMCA), andwere not eligible for DMCA's conduit safeharbor. 17 U.S.C.A. 512(a), (k)(1)(A).



Distributor, whose websites induced third partiesto download infringing copies of film studios'copyrighted works through use of hybridpeer-to-peer file sharing protocol, was noteligible for Digital Millennium Copyright Act's(DMCA) safe harbor; record was replete withinstances of distributor actively encouraginginfringement, by urging his users to bothupload and download particular copyrightedworks, providing assistance to those seeking towatch copyrighted films, and helping his usersburn copyrighted material onto DVDs, and thematerial was sufficiently current and well-knownthat it would have been objectively obvious to areasonable person that the material solicited and



assisted was both copyrighted and not licensedto random members of the public, and thatthe induced use was therefore infringing. 17U.S.C.A. 512(c).



Where a service provider obtains revenuefrom subscribers, the relevant inquiry indetermining eligibility for Digital MillenniumCopyright Act's (DMCA) safe harbor is whetherthe infringing activity constitutes a draw forsubscribers, not just an added benefit; lack ofdirect financial benefit prong of the safe harborrequirement is central, rather than peripheral. 17U.S.C.A. 512(c)(1)(B).



Distributor, whose websites induced third partiesto download infringing copies of film studios'copyrighted works through use of hybridpeer-to-peer file sharing protocol, was noteligible for Digital Millennium Copyright Act's(DMCA) safe harbor as distributor derivedfinancial benefit directly attributable to theinfringing activity, and had right and abilityto control the infringing activities of users;connection between the infringing activityand distributor's income stream derived fromadvertising was sufficiently direct to meet thedirect financial benefit prong as distributorpromoted advertising by pointing to infringingactivity, obtained advertising revenue thatdepended on the number of visitors to his sites,attracted primarily visitors who were seeking toengage in infringing activity, and encouragedthat infringing activity, and distributor wasbroadly aware of facts or circumstances fromwhich infringing activity was apparent. 17U.S.C.A. 512(c)(1)(B), (d).


[14] InjunctionSpecificity, vagueness, overbreadth, and

narrowly-tailored reliefThose against whom an injunction is issuedshould receive fair and precisely drawn notice ofwhat the injunction actually prohibits. Fed.RulesCiv.Proc.Rule 65, 28 U.S.C.A.


[15] Copyrights and Intellectual PropertyPermanent relief

Definition of infringementrelated terms usedin injunction issued against distributor, whosewebsites induced third parties to downloadinfringing copies of film studios' copyrightedworks through use of hybrid peer-to-peerfile sharing protocol, was vague, and had tobe therefore modified to state simply thatthe phrase included specifically named terms;additionally, it was unclear whether the insubstantial part referred to the user base,the generally understood phrase, or theengaging in infringement phrase. Fed.RulesCiv.Proc.Rule 65, 28 U.S.C.A.


[16] InjunctionSpecificity, vagueness, overbreadth, and

narrowly-tailored reliefInjunctive relief should be no more burdensometo the defendant than necessary to providecomplete relief to the plaintiffs' before the court.


[17] Copyrights and Intellectual PropertyPermanent relief

Insofar as injunction issued against distributor,whose websites induced third parties todownload infringing copies of film studios'copyrighted works through use of hybrid peer-to-peer file sharing protocol could be interpretedto prohibit distributor from seeking legitimateemployment, it was more burdensome than



necessary to provide studios relief. Fed.RulesCiv.Proc.Rule 65, 28 U.S.C.A.


Attorneys and Law Firms

*1023 Ira P. Rothken, Esq. (argued), Robert L. Kovsky,Esq., and Jared R. Smith, Esq. of Rothken Law Firm, Novato,CA, for DefendantAppellants.

Paul M. Smith (argued), Steven B. Fabrizio, William M.Hohengarten, Duane C. Pozza, Garret A. Levin, CarolineD. Lopez, Jenner & Block LLP, Washington, D.C.; KarenR. Thorland, Motion Picture Association of America, Inc.,Sherman Oaks, CA; Gianni P. Servodidio, Jenner & BlockLLP, New York, NY, for PlaintiffsAppellees.

Andrew H. Schapiro, Mayer Brown LLP, New York, NY, foramicus curiae Google, Inc.

Appeal from the United States District Court for the CentralDistrict of California, Stephen V. Wilson, District Judge,Presiding. D.C. No. 2:06cv05578SVWJC.

Before: HARRY PREGERSON, RAYMOND C. FISHER,and MARSHA S. BERZON, Circuit Judges.

Opinion

OPINION

BERZON, Circuit Judge:

This case is yet another concerning the applicationof established intellectual property concepts to newtechnologies. See, e.g., UMG Recordings, Inc. v. ShelterCapital Partners, LLC, F.3d , 2013 WL 1092793(9th Cir.2013); Perfect 10, Inc. v. Visa Int'l Serv. Ass'n, 494F.3d 788 (9th Cir.2007); Viacom Int'l, Inc. v. YouTube, Inc.,676 F.3d 19 (2d Cir.2012). Various film studios alleged thatthe services offered and websites maintained by AppellantsGary Fung and his company, isoHunt Web Technologies, Inc.(isohunt.com, torrentbox.com, podtropolis.com, and ed2k-it.com, collectively referred to in this opinion as Fungor the Fung sites) induced third parties to downloadinfringing *1024 copies of the studios' copyrighted works. 1

The district court agreed, holding that the undisputed factsestablish that Fung is liable for contributory copyright

infringement. The district court also held as a matter of lawthat Fung is not entitled to protection from damages liabilityunder any of the safe harbor provisions of the DigitalMillennium Copyright Act (DMCA), 17 U.S.C. 512,Congress's foray into mediating the competing interests inprotecting intellectual property interests and in encouragingcreative development of devices for using the Internet tomake information available. By separate order, the districtcourt permanently enjoined Fung from engaging in a numberof activities that ostensibly facilitate the infringement ofPlaintiffs' works.

Fung contests the copyright violation determination as well asthe determination of his ineligibility for safe harbor protectionunder the DMCA. He also argues that the injunction ispunitive and unduly vague, violates his rights to free speech,and exceeds the district court's jurisdiction by requiringfiltering of communications occurring outside of the UnitedStates. We affirm on the liability issues but reverse in partwith regard to the injunctive relief granted.

TECHNOLOGICAL BACKGROUND

This case concerns a peer-to-peer file sharing protocol 2

known as BitTorrent. We begin by providing basicbackground information useful to understanding the role theFung sites play in copyright infringement.

I. Client-server vs. peer-to-peer networksThe traditional method of sharing content over a networkis the relatively straightforward client-server model. In aclient-server network, one or more central computers (calledservers) store the information; upon request from a user(or client), the server sends the requested information tothe client. In other words, the server supplies informationresources to clients, but the clients do not share any oftheir resources with the server. Client-server networks tendto be relatively secure, but they have a few drawbacks: ifthe server goes down, the entire network fails; and if manyclients make requests at the same time, the server can becomeoverwhelmed, increasing the time it takes the server to fulfillrequests from clients. Client-server systems, moreover, tendto be more expensive to set up and operate than other systems.Websites work on a client-server model, with the serverstoring the website's content and delivering it to users upondemand.



Peer-to-peer (P2P) networking is a generic term used torefer to several different types of technology that have onething in common: a decentralized infrastructure wherebyeach participant in the network (typically called a peer,but sometimes called a node) acts as both a supplier andconsumer of information resources. Although less secure,P2P networks are generally more reliable than client-servernetworks and do not suffer from the same bottleneckproblems. See generally *1025 MetroGoldwynMayerStudios, Inc. v. Grokster, Ltd. (Grokster III ), 545 U.S.913, 920 & n. 1, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005).These strengths make P2P networks ideally suited for sharinglarge files, a feature that has led to their adoption by, amongothers, those wanting access to pirated media, includingmusic, movies, and television shows. Id. But there alsoare a great number of non-infringing uses for peer-to-peernetworks; copyright infringement is in no sense intrinsic tothe technology, any more than making unauthorized copiesof television shows was to the video tape recorder. CompareA & M Records v. Napster, Inc., 239 F.3d 1004, 1021 (9thCir.2001) with Sony Corp. of Am. v. Universal City Studios,Inc., 464 U.S. 417, 456, 104 S.Ct. 774, 78 L.Ed.2d 574 (1984).

II. Architecture of P2P networksIn a client-server network, clients can easily learn what filesthe server has available for download, because the files are allin one central place. In a P2P network, in contrast, there is nocentralized file repository, so figuring out what informationother peers have available is more challenging. The variousP2P protocols permit indexing in different ways.

A. Pure P2P networksIn pure P2P networks, a user wanting to find out whichpeers have particular content available for download will sendout a search query to several of his neighbor peers. As thoseneighbor peers receive the query, they send a response back tothe requesting user reporting whether they have any contentmatching the search terms, and then pass the query on to someof their neighbors, who repeat the same two steps; this processis known as flooding. In large P2P networks, the querydoes not get to every peer on the network, because permittingthat amount of signaling traffic would either overwhelm theresources of the peers or use up all of the network's bandwidth(or both). See Grokster III, 545 U.S. at 920 n. 1, 125 S.Ct.2764. Therefore, the P2P protocol will usually specify thatqueries should no longer be passed on after a certain amountof time (the so-called time to live) or after they have alreadybeen passed on a certain number of times (the hop count).

Once the querying user has the search results, he can godirectly to a peer that has the content desired to download it.

This search method is an inefficient one for finding content(especially rare content that only a few peers have), andit causes a lot of signaling traffic on the network. Themost popular pure P2P protocol was Gnutella. StreamCast,a Grokster defendant, used Gnutella to power its softwareapplication, Morpheus. See Grokster III, 545 U.S. at 92122,125 S.Ct. 2764. 3

B. Centralized P2P networksCentralized P2P networks, by contrast, use a centralizedserver to index the content available on all the peers: the usersends the query to the indexing server, which tells the userwhich peers have the content available for download. At thesame time the user tells the indexing server what files he hasavailable for others to download. Once the user makes contactwith the indexing server, he knows which specific peers tocontact for the content sought, which reduces search time andsignaling traffic as compared to a pure P2P protocol.

Although a centralized P2P network has similarities with aclient-server network, the key difference is that the indexingserver does not store or transfer the content. It just tells userswhich other peers *1026 have the content they seek. In otherwords, searching is centralized, but file transfers are peer-to-peer. One consequent disadvantage of a centralized P2Pnetwork is that it has a single point of potential failure: theindexing server. If it fails, the entire system fails. Napster wasa centralized P2P network, see generally Napster, 239 F.3d at101113, as, in part, is eDonkey, the technology upon whichone of the Fung sites, ed2k-it.com, is based.

C. Hybrid P2P networksFinally, there are a number of hybrid protocols. Themost common type of hybrid systems use what are calledsupernodes. In these systems, each peer is called a node,and each node is assigned to one supernode. A supernodeis a regular node that has been promoted, usually becauseit has more bandwith available, to perform certain tasks.Each supernode indexes the content available on each of thenodes attached to it, called its descendants. When a nodesends out a search query, it goes just to the supernode towhich it is attached. The supernode responds to the query bytelling the node which of its descendant nodes has the desiredcontent. The supernode may also forward the query on toother supernodes, which may or may not forward the query



on further, depending on the protocol. See generally GroksterIII, 545 U.S. at 921, 125 S.Ct. 2764.

The use of supernodes is meant to broaden the search pool asmuch as possible while limiting redundancy in the search. Aswith centralized P2P systems, supernodes only handle searchqueries, telling the nodes the addresses of the other nodesthat have the content sought; they are not ordinarily involvedin the actual file transfers themselves. Grokster's softwareapplication was based on a P2P protocol, FastTrack, that usessupernodes. See Grokster III, 545 U.S. at 921, 125 S.Ct. 2764.

III. BitTorrent protocolThe BitTorrent protocol, first released in 2001, is a furthervariant on the P2P theme. BitTorrent is a hybrid protocolwith some key differences from supernode systems. Wediscuss those differences after first describing BitTorrent'sdistinguishing feature: how it facilitates file transfers.

A. BitTorrent file transfers.Traditionally, if a user wanted to download a file on a P2Pnetwork, he would locate another peer with the desired fileand download the entire file from that peer. Alternatively,if the download was interruptedif, for example, the peersending the file signed offthe user would find anotherpeer that had the file and resume the download from thatpeer. The reliability and duration of the download dependedon the strength of the connection between those two peers.Additionally, the number of peers sharing a particular file waslimited by the fact that a user could only begin sharing hiscopy of the file with other peers once he had completed thedownload.

With the BitTorrent protocol, however, the file is broken upinto lots of smaller pieces, each of which is usually around256 kilobytes (one-fourth of one megabyte) in size. Whereasunder the older protocols the user would download the entirefile in one large chunk from a single peer at a time, BitTorrentpermits users to download lots of different pieces at the sametime from different peers. Once a user has downloaded all thepieces, the file is automatically reassembled into its originalform.

BitTorrent has several advantages over the traditionaldownloading method. Because *1027 a user can downloaddifferent pieces of the file from many different peers at thesame time, downloading is much faster. Additionally, evenbefore the entire download is complete, a user can begin

sharing the pieces he has already downloaded with otherpeers, making the process faster for others. Generally, at anygiven time, each user is both downloading and uploadingseveral different pieces of a file from and to multiple otherusers; the collection of peers swapping pieces with each otheris known as a swarm.

B. BitTorrent architectureTo describe the structure of BitTorrent further, an example ishelpful. Let us suppose that an individual (the publisher)decides to share via BitTorrent her copy of a particular movie.The movie file, we shall assume, is quite large, and is alreadyon the publisher's computer; the publisher has also alreadydownloaded and installed a BitTorrent client program onher computer. 4

To share her copy of the movie file, the publisher firstcreates a very small file called a torrent or dot-torrentfile, which has the file extension .torrent. The torrent fileis quite small, as it contains none of the actual content thatmay be copyrighted but, instead, a minimal amount of vitalinformation: the size of the (separate) movie file being shared;the number of pieces the movie file is broken into; acryptographic hash 5 that peers will use to authenticate thedownloaded file as a true and complete copy of the original;and the address of one or more trackers. Trackers, discussedmore below, serve many of the functions of an indexingserver; there are many different trackers, and they typicallyare not connected or related to each other. 6

Second, the publisher makes the torrent file available byuploading it to one or more websites (torrent sites) thatcollect, organize, index, and host torrent files. WhereasNapster and Grokster had search functionality built into theirclient programs, the standard BitTorrent client program hasno such capability. 7 BitTorrent users thus rely on torrent sitesto find and share torrent files. There is no central repositoryof torrent files, but torrent sites strive to have the mostcomprehensive torrent collection possible.

The Fung sites have two primary methods of acquiringtorrent files: soliciting them from users, who then upload thefiles; and using several automated processes (called bots,crawlers, or spiders) that collect torrent files from othertorrent sites. Because of this latter route, *1028 which othertorrent sites also routinely use, torrent sites tend to havelargely overlapping collections of torrents. According to adeclaration Fung signed in April 2008, there were then over



400 torrent sites. Because the torrent sites typically containonly torrent files, no copyrighted material resides on thesesites.

Lastly, the publisher leaves her computer on and connectedto the Internet, with her BitTorrent program running. Thepublisher's job is essentially done; her computer will continueto communicate with the tracker assigned to the torrent fileshe uploaded, standing ready to distribute the movie file (or,more accurately, parts thereof) to others upon request.

A user seeking the uploaded movie now goes to the torrentsite to which the torrent file was uploaded and runs a searchfor the movie. The search results then provide the torrent filefor the user to download. Once the user downloads the torrentfile and opens it with his BitTorrent program, the programreads the torrent file, learns the address of the tracker, andcontacts it. The program then informs the tracker that it islooking for the movie associated with the downloaded torrentfile and asks if there are any peers online that have the movieavailable for download. Assuming that publishers of thatmovie are online, the tracker will communicate their addressto the user's BitTorrent program. The user's BitTorrentprogram will then contact the publishers' computers directlyand begin downloading the pieces of the movie. At thispoint, the various publishers are known as seeders, andthe downloading user a leecher. Once the leecher hasdownloaded one or more pieces of the movie, he, too, canbe a seeder by sending other leechers the pieces that he hasdownloaded.

A final few words on trackers. Although no content is storedon or passes through trackers, they serve as a central hubof sorts, managing traffic for their associated torrents. 8 Thetracker's primary purpose is to provide a list of peers that havefiles available for download. Fung avers that this function isthe only one provided by his two trackers, discussed below.

Because trackers are periodically unavailablethey can gooffline for routine maintenance, reach capacity, be shutteredby law enforcement, and so ontorrent files will often listaddresses for more than one tracker. That way, if the first(or primary) tracker is down, the user's client program canproceed to contact the backup tracker(s).

IV. Fung's roleThree of Fung's websitesisohunt.com (isoHunt);torrentbox.com (Torrentbox), and podtropolis.com

(Podtropolis)are torrent sites. As described above, theycollect and organize torrent files and permit users to browse inand search their collections. Searching is done via keyword;users can also browse by category (movies, television shows,music, etc.). 9

IsoHunt, however, which appears to be Fung's flagship site,goes a step beyond merely collecting and organizing torrent*1029 files. Each time a torrent file is added to isoHunt,

the website automatically modifies the torrent file by addingadditional backup trackers to it. That way, if the primarytracker is down, the users' BitTorrent client program willcontact the backup trackers, making it more likely that theuser will be successful in downloading the content sought. Inother words, isoHunt alters the torrent files it hosts, makingthem more reliable than when they are uploaded to the site.

Torrentbox and Podtropolis, in addition to being torrent sites,run associated trackers. 10 Their collections of torrent filesappear to be fairly small. Every torrent file available onTorrentbox and Podtropolis is tracked by the Torrentbox andPodtropolis trackers, respectively, but the Torrentbox andPodtropolis trackers are much busier than the Torrentboxand Podtropolis websites. For example, a torrent filefor the movie Casino Royale was downloaded fromTorrentbox.com 50,000 times, but the Torrentbox trackerregistered approximately 1.5 million downloads of the movie.This disparity indicates that users obtain the torrent filestracked by Torrentbox and Podtropolis from torrent sites otherthan Torrentbox.com and Podtropolis.com. The Torrentboxand Podtropolis websites both have continually-updated listsof, inter alia, the Top 20 TV Shows, the Top 20 Movies,and the Top 20 Most Active Torrents. These rankingsare based on the number of seeders and leechers for eachparticular torrent file, as measured by the Torrentbox andPodtropolis trackers. IsoHunt does not run a tracker, so itcannot measure how frequently the content associated witheach torrent file is downloaded; instead, it keeps a continuallyupdated list of the Top Searches.

IsoHunt also hosts an electronic message board, or forum,where users can post comments, queries, and the like. Inaddition to posting to the forum himself, Fung also had somerole in moderating posts to the forum.

PROCEDURAL HISTORY



This suit, against Fung and several John Does, originallyfiled in the Southern District of New York, was transferred,on Fung's motion, to the Central District of California. SeeColumbia Pictures Indus., Inc. v. Fung, 447 F.Supp.2d 306(S.D.N.Y.2006). Columbia then filed an amended complaint,alleging that Fung was liable for vicarious and contributorycopyright infringement, in violation of 17 U.S.C. 106.

On Columbia's motion for summary judgment on liability, thedistrict court held Fung liable for contributory infringement,for inducing others to infringe Plaintiffs' copyrightedmaterial. 11 See Columbia Pictures Indus., Inc. v. Fung,No. CV 065578, 2009 WL 6355911, at *15 (C.D.Cal.Dec. 21, 2009). Although Fung sought protection in theDMCA safe harbors *1030 for [t]ransitory digital networkcommunications, 17 U.S.C. 512(a), [i]nformationresiding on systems or networks at direction of users, id. 512(c), and [i]nformation location tools, id. 512(d), thedistrict court concluded that none of the safe harbors wereapplicable.

The district court later entered a permanent injunctionthat prohibits, generally speaking, knowingly engagingin any activities having the object or effect of fosteringinfringement of Plaintiffs' Copyrighted Works, includingwithout limitation by engaging in certain specified activities.The injunction applies to a list of titles provided byColumbia. With regard to the initial list of titles provided,Fung was required to comply with the terms of the injunctionmost likely, though not necessarily, by implementing afiltering devicewithin 14 calendar days. Columbia maysupplement the list without restriction; Fung must complywith the terms of the injunction as to the new titles within24 hours of receiving any supplemented list. The injunctionbinds both isoHunt Web Technologies, Inc., and Fungpersonally, wherever they may be found, including, withoutlimitation, in Canada (where Fung is from).

The day after the injunction was entered, Columbia servedFung with an initial list of over 23,000 titles of copyrightedworks. Many of the titles were or contained generic terms,such as 10, 21, Cars, Dave, etc. Other titles wereidentical or substantially similar to titles of works in thepublic domain, including Jungle Book and Miracle on34th Street, or to titles of works to which Columbia doesnot own the copyrights. Citing those features of the initiallist, Fung protested that the permanent injunction was toobroad. In response, the district court modified the injunctionto require that Columbia provide additional information about

the listed copyrighted material, including the date the materialwas issued or reissued and the type of media their copyrightcovers (e.g., film or television show), so that Fung could morereadily identify the material. At the same time, the court alsoadmonished that Fung's concerns were somewhat overblown,as any technical or inadvertent violations would not support acivil contempt finding if all reasonable steps to comply withthe injunction were taken.

Fung timely appealed, targeting both the liabilitydetermination and the scope of the injunction.

DISCUSSION

As always, we review the district court's grant of summaryjudgment de novo, AuTomotive Gold Inc. v. Volkswagenof Am., Inc., 603 F.3d 1133, 1135 (9th Cir.2010), and mayaffirm the district court's holding on any ground raisedbelow and fairly supported by the record, Proctor v. VishayIntertechnology Inc., 584 F.3d 1208, 1226 (9th Cir.2009). Asto the permanent injunction, we review the legal conclusionsde novo, the factual findings for clear error, and the decisionto grant a permanent injunction, as well as its scope, foran abuse of discretion. See Lemons v. Bradbury, 538 F.3d1098, 1102 (9th Cir.2008); Sandpiper Vill. Condo. Ass'n v.LouisianaPacific Corp., 428 F.3d 831, 840 (9th Cir.2005);Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646, 653 (9thCir.2002). To review for abuse of discretion, we first lookto whether the trial court identified and applied the correctlegal rule ... [then] to whether the trial court's resolution ofthe motion resulted from a factual finding that was illogical,implausible, or without support in inferences that may bedrawn from the facts in the record. United States v. Hinkson,585 F.3d 1247, 1263 (9th Cir.2009) (en banc).

*1031 I. Liability

A. Inducement liability under Grokster IIIThe inducement theory, on which the district court'sliability holding was grounded, was spelled out in the Internettechnology context by the Supreme Court in Grokster IIIConsidering how to apply copyright law to file sharing overP2P networks, Grokster III addressed the circumstances inwhich individuals and companies are secondarily liable forthe copyright infringement of others using the Internet todownload protected material.



Grokster III 's inducement holding is best understood byfirst backtracking to Sony Corp. of America v. UniversalCity Studios, Inc., 464 U.S. 417, 104 S.Ct. 774, 78 L.Ed.2d574 (1984), the seminal Supreme Court case concerning theuse of new technologies to reproduce copyrighted material.Sony considered whether secondary liability for infringementcould arise solely from the distribution of a commercialproduct capable of copying copyrighted materialthere, theBetamax video tape recorder, made by Sony. Owners ofcopyrights to television programs maintained that Sony couldbe liable for copyright infringement when its customers usedthe Betamax to unlawfully tape television shows. Therewas no evidence that Sony sought to encourage copyrightinfringement through use of the Betamax or had taken steps toprofit from unlawful taping. See id. at 43738, 104 S.Ct. 774.Instead, the only conceivable basis for secondary liability wasdistribution of the product with constructive knowledge ofthe fact that [Sony's] customers may use that equipment tomake unauthorized copies of copyrighted material. Id. at439, 104 S.Ct. 774.

Finding no precedent in the law of copyright for theimposition of vicarious liability on such a theory, the Courtborrowed from the closest analogy it could find, patentlaw's staple article of commerce doctrine. Id. at 43942, 104 S.Ct. 774. Under that doctrine, distribution of acomponent part of a patented device will not violate the patentif the component is suitable for substantial non-infringinguses. See id. at 440, 104 S.Ct. 774; 35 U.S.C. 271(c).As Sony explained, the staple article of commerce doctrinebalances competing interests,

a copyright holder's legitimate demandfor effectivenot merely symbolicprotection of the statutory monopoly,and the rights of others freely toengage in substantially unrelated areasof commerce. Accordingly, the sale ofcopying equipment, like the sale ofother articles of commerce, does notconstitute contributory infringementif the product is widely used forlegitimate, unobjectionable purposes.Indeed, it need merely be capable ofsubstantial noninfringing uses.

464 U.S. at 442, 104 S.Ct. 774. As the Betamax wascapable of commercially significant noninfringing uses,the Court held Sony not liable for contributory copyrightinfringement. 12 Id.

The other major Supreme Court case addressing the masscopying of copyrighted materialthere, music and films *1032 through technological means, Grokster III,concerned the use of software applications based on pureand hybrid P2P network protocols. The defendants, theproviders of the copying software to the public, arguedfor a contributory liability approach similar to that adoptedin Sony: as their products were indisputably capable ofsubstantial noninfringing uses, they maintained, they couldnot be secondarily liable based on their knowledge thattheir products could be used to infringe copyrights. Instead,the Grokster defendants suggested, they could be liable forcontributory infringement only if they had actual knowledgeof a specific infringement at a time when they were capable ofpreventing it. Accepting this theory and recognizing that therewas no evidence regarding timely knowledge of specific actsof infringement, the district court granted summary judgmentto the defendants, MetroGoldwynMayer Studios, Inc. v.Grokster, Ltd. (Grokster I ), 259 F.Supp.2d 1029, 1046(C.D.Cal.2003), and we affirmed, MetroGoldwynMayerStudios, Inc. v. Grokster, Ltd. (Grokster II ), 380 F.3d 1154,1167 (9th Cir.2004).

The Supreme Court did not see Sony as providing such broadinsulation from copyright liability. Rather, said the Court,Sony

limits imputing culpable intent as amatter of law from the characteristicsor uses of a distributed product. Butnothing in Sony requires courts toignore evidence of intent if there issuch evidence, and the case was nevermeant to foreclose rules of fault-basedliability derived from the commonlaw.

Grokster III, 545 U.S. at 93435, 125 S.Ct. 2764 (emphasisadded). The staple article of commerce doctrine adoptedin Sony, Grokster III explained, absolves the equivocalconduct of selling an item with substantial lawful as wellas unlawful uses, and limits liability to instances of moreacute fault than the mere understanding that some of one'sproducts will be misused. Id. at 93233, 125 S.Ct. 2764(emphasis added). Thus, where evidence goes beyond aproduct's characteristics or the knowledge that it may be putto infringing uses, and shows statements or actions directedto promoting infringement, Sony 's staple-article rule will notpreclude liability. Id. at 935, 125 S.Ct. 2764.



[1] Grokster III went on to enunciate the inducement rule,also borrowed from patent law, providing that one whodistributes a device with the object of promoting its use toinfringe copyright, as shown by clear expression or otheraffirmative steps taken to foster infringement, is liable for theresulting acts of infringement by third parties. Id. at 93637, 125 S.Ct. 2764. This inducement principle, as enunciatedin Grokster III, has four elements: (1) the distribution of adevice or product, (2) acts of infringement, (3) an object ofpromoting its use to infringe copyright, and (4) causation. Seeid.

i. Distribution of a device or product

In describing the inducement liability standard, GroksterIII phrased it as applying to one who distributes adevice, see id., although it also used the word product,seemingly interchangeably, see id. at 93437, 125 S.Ct.2764. The device or product was the softwaredeveloped and distributed by the defendantsfor Grokster,its eponymous software, based on FastTrack technology; andfor StreamCast, also a defendant in Grokster, its softwareapplication, Morpheus, based on Gnutella. See id. at 940, 125S.Ct. 2764 (describing the device as the software in thiscase).

The analogy between Grokster III and this case is not perfect.Here, Fung did not *1033 develop and does not provide theclient programs used to download media products, nor didhe develop the BitTorrent protocol (which is maintained bynonparty BitTorrent, Inc., a privately-held company foundedby the creators of the protocol). Fung argues that becausehe did not develop or distribute any devicethat is, thesoftware or technology used for downloadinghe is notliable under the inducement rule enunciated in Grokster III.

[2] We cannot agree. Unlike patents, copyrights protectexpression, not products or devices. Inducement liability isnot limited, either logically or as articulated in Grokster III,to those who distribute a device. As a result, one caninfringe a copyright through culpable actions resulting inthe impermissible reproduction of copyrighted expression,whether those actions involve making available a device orproduct or providing some service used in accomplishingthe infringement. For example, a retail copying service thataccepts and copies copyrighted material for customers afterbroadly promoting its willingness to do so may be liable for

the resulting infringement although it does not produce anycopying machines or sell them; all it provides is the serviceof copying. Whether the service makes copies using machinesof its own manufacture, machines it owns, or machines insomeone else's shop would not matter, as copyright liabilitydepends on one's purposeful involvement in the process ofreproducing copyrighted material, not the precise nature ofthat involvement.

Grokster III did phrase the rule it applied principally in termsof a device. But that was because it was responding to themain argument made by the defendants in that casethat theywere entitled to protection for commercial products capableof significant non-infringing uses, just as Sony was insulatedfrom liability for infringing use of the Betamax. See GroksterIII, 545 U.S. at 93134, 125 S.Ct. 2764. When explainingthe rationale for permitting secondary infringement liability,Grokster III used more general language:

When a widely shared serviceor product is used to commitinfringement, it may be impossible toenforce rights in the protected workeffectively against all direct infringers,the only practical alternative beingto go against the distributor of thecopying device for secondary liabilityon a theory of contributory or vicariousinfringement.

Id. at 92930, 125 S.Ct. 2764 (emphases added); see also id.at 924, 125 S.Ct. 2764 (describing Napster as a notoriousfile-sharing service); id. at 925, 125 S.Ct. 2764 (describingone defendant's efforts to market its service as the bestNapster alternative); id. at 93738, 125 S.Ct. 2764; id. at939, 125 S.Ct. 2764 (describing the import of defendants'efforts to supply services to former Napster users).

[3] Since Grokster III, we have not considered a claim ofinducement liability on facts closely comparable to thosehere. But we have, in two cases, considered claims ofinducement liability against parties providing services asopposed to products, without suggesting that the differencematters. Perfect 10, Inc. v. Visa Int'l Serv. Ass'n, 494 F.3d788, 80002 (9th Cir.2007); Perfect 10, Inc. v. Amazon.com,Inc., 508 F.3d 1146, 1170 n. 11 (9th Cir.2007). The twoPerfect 10 cases confirm that, as one would expect, theinducement copyright doctrine explicated in Grokster IIIapplies to services available on the Internet as well as todevices or products.



We hold that Columbia has carried its burden on summaryjudgment as to the first element of the Grokster III test forinducement liability.

*1034 ii. Acts of infringement

To prove copyright infringement on an inducementtheory, Columbia also had to adduce evidence of actualinfringement by users of Fung's services. Grokster III, 545U.S. at 940, 125 S.Ct. 2764. This they have done.

[4] Both uploading and downloading copyrighted materialare infringing acts. The former violates the copyright holder'sright to distribution, the latter the right to reproduction. See 17U.S.C. 106(1) & (3); Napster, 239 F.3d at 1014. Based onstatistical sampling, Columbia's expert averred that between90 and 96% of the content associated with the torrent filesavailable on Fung's websites are for confirmed or highlylikely copyright infringing material. Although Fung takesissue with certain aspects of the expert's methodology, hedoes not attempt to rebut the factual assertion that his serviceswere widely used to infringe copyrights. Indeed, even givingFung the benefit of all doubts by tripling the margins oferror in the expert's reports, Columbia would still have suchoverwhelming evidence that any reasonable jury would haveto conclude that the vastly predominant use of Fung's serviceshas been to infringe copyrights.

In sum, as in Grokster III, [a]lthough an exact calculation ofinfringing use, as a basis for a claim of damages, is subjectto dispute, there is no question that Plaintiffs have met theirburden on summary judgment to warrant equitable relief.Grokster III, 545 U.S. at 94041, 125 S.Ct. 2764.

iii. With the object of promotingits use to infringe copyright

The third, usually dispositive, requirement for inducementliability is that the device or service be distributed with theobject of promoting its use to infringe copyright, as shownby clear expression or other affirmative steps taken to fosterinfringement. Id. at 93637, 125 S.Ct. 2764.

[5] As an initial matter, Fung argues that this factorincludes two separate elementsthe improper object andclear expression or other affirmative steps taken to

foster infringement. Not so. [C]lear expression or otheraffirmative steps is not a separate requirement, but, rather,an explanation of how the improper object must be proven.In other words, Grokster III requires a high degree of proofof the improper object. Confirming that understanding ofthe clear expression phrase, Grokster III emphasized, rightafter articulating the inducement factor, that the improperobject must be plain and must be affirmatively communicatedthrough words or actions:

We are, of course, mindful of theneed to keep from trenching onregular commerce or discouragingthe development of technologieswith lawful and unlawful potential.Accordingly, just as Sony did notfind intentional inducement despitethe knowledge of the [Betamax]manufacturer that its device couldbe used to infringe, mere knowledgeof infringing potential or of actualinfringing uses would not be enoughhere to subject a distributor to liability.Nor would ordinary acts incidentto product distribution, such asoffering customers technical supportor product updates, support liabilityin themselves. The inducementrule, instead, premises liability onpurposeful, culpable expression andconduct, and thus does nothing tocompromise legitimate commerce ordiscourage innovation having a lawfulpromise.

Id. at 937, 125 S.Ct. 2764 (citation omitted).

In Grokster III itself, the Court found ample evidence, ofseveral types, to support inducement liability. See id. at 93740, 125 S.Ct. 2764. First, Grokster III *1035 relied in parton advertisements as proof of an impermissible, infringingpurpose, noting that [t]he classic instance of inducement isby advertisement or solicitation that broadcasts a messagedesigned to stimulate others to commit violations. Id. at 937,125 S.Ct. 2764. Both Grokster III defendants had engagedin such affirmative solicitation, advertising their softwareas an alternative to Napsterwhich notoriously facilitatedwide-scale copyright infringementat a time when Napster'sunlawful activities were about to be shuttered. See id. at 93738, 125 S.Ct. 2764.



Second, Grokster III relied for proof of Grokster's infringingpurpose on communications that, while not in haecverba promoting infringing uses, provided informationaffirmatively supporting such uses. [B]oth companies,moreover, communicated a clear message by respondingaffirmatively to requests for help in locating and playingcopyrighted materials. Id. at 938, 125 S.Ct. 2764. Thus,Grokster included as evidence of an infringing purpose anelectronic newsletter distributed by Grokster that linked toarticles promoting Grokster's ability to access copyrightedmusic. See id. at 938, 125 S.Ct. 2764.

A third category of clear expression recognized inGrokster III as pertinent to proof of improper purposewas explicit internal communication to that effect.As to one of the defendants, StreamCast, internalcommunications, including proposed advertising designs,provided unequivocal indications of unlawful purpose. Id.at 938, 125 S.Ct. 2764. The Court explained that [w]hetherthe messages were communicated [to potential customers] isnot ... the point.... The function of the message in the theoryof inducement is to prove by a defendant's own statementsthat his unlawful purpose disqualifies him from claimingprotection. Id. Thus, the Court went on, [p]roving that amessage was sent out ... is the preeminent but not exclusiveway of showing that active steps were taken with the purposeof bringing about infringing acts. Id.

Grokster III also mentioned two sorts of other affirmativesteps as permissible evidence that support an inference ofan intent to induce infringement, while cautioning that suchsorts of circumstantial evidence would not be independentlysufficient. The first was that neither company attempted todevelop filtering tools or other mechanisms to diminish theinfringing activity using their software, which the Courtsaid underscore[d] the defendants' intentional facilitationof their users' infringement. Id. at 939, 125 S.Ct. 2764.The Court was careful to caution that in the absence ofother evidence of intent, a court would be unable to findcontributory infringement liability merely based on a failureto take affirmative steps to prevent infringement. Id. at 939n. 12, 125 S.Ct. 2764.

Similarly, Grokster III pointed to the fact that the defendantsmake money by selling advertising space, by directing adsto the screens of computers employing their software. Id. at940, 125 S.Ct. 2764. Because the extent of the software'suse determines the gain to the distributors, the commercial

sense of their enterprise turns on high-volume use, which therecord shows is infringing. Id. Here again, however, [t]hisevidence alone would not justify an inference of unlawfulintent. Id.

[6] Using these Grokster III evidentiary categories andcautions as templates, we conclude that there is more thanenough unrebutted evidence in the summary judgment recordto prove that Fung offered his services with the object ofpromoting their use to infringe copyrighted material. Noreasonable jury could find otherwise.

As for the necessary clear expression or other affirmativesteps evidence indicative *1036 of unlawful intent, themost important is Fung's active encouragement of theuploading of torrent files concerning copyrighted content.For a time, for example, isoHunt prominently featured a listof Box Office Movies, containing the 20 highest-grossingmovies then playing in U.S. theaters. When a user clicked on alisted title, she would be invited to upload [a] torrent file forthat movie. In other words, she would be asked to upload a filethat, once downloaded by other users, would lead directly totheir obtaining infringing content. Fung also posted numerousmessages to the isoHunt forum requesting that users uploadtorrents for specific copyrighted films; in other posts, heprovided links to torrent files for copyrighted movies, urgingusers to download them. 13 Though not the exclusive meansof proving inducement, we have characterized a distributor'scommunication of an inducing message to its users ascrucial to establishing inducement liability. See Visa, 494F.3d at 801 (quoting Grokster III, 545 U.S. at 937, 125 S.Ct.2764). That crucial requirement was met here. Like Grokster'sadvertisementsindeed, even more soFung's posts wereexplicitly designed to stimulate others to commit [copyright]violations, and so are highly probative of an unlawful intent.Grokster III, 545 U.S. at 937, 125 S.Ct. 2764. 14

As in Grokster, moreover, Fung communicated a clearmessage by responding affirmatively to requests for help inlocating and playing copyrighted materials. Id. at 938, 125S.Ct. 2764. The record is replete with instances of Fungresponding personally to queries for assistance in: uploadingtorrent files corresponding to obviously copyrighted material,finding particular copyrighted movies and television shows,getting pirated material to play properly, and burning theinfringing content onto DVDs for playback on televisions.

Two types of supporting evidence, insufficient in themselveslike the similar evidence in Grokster IIIcorroborate the



conclusion that Fung acted with a purpose to cause copyrightviolations by use of their services. Id. at 938, 125 S.Ct. 2764.First, Fung took no steps to develop filtering tools or othermechanisms to diminish the infringing activity by thoseusing his services. 15 Id. at 939, 125 S.Ct. 2764. Second, Funggenerates revenue almost exclusively by selling advertisingspace on his websites. The more users who visit Fung'swebsites and view the *1037 advertisements supplied byFung's business partners, the greater the revenues to Fung.Because the extent of the [services'] use determines the gainto [Fung], the commercial sense of [his] enterprise turns onhigh-volume use, which the record shows is infringing. Id.at 940, 125 S.Ct. 2764. Given both the clear expression andother affirmative steps and the supporting evidence, Fung'sunlawful objective is unmistakable. Id.

iv. Causation

Grokster III mentions causation only indirectly, by speakingof resulting acts of infringement by third parties. Id.at 937, 125 S.Ct. 2764 (emphasis added). 16 The partieshere advance competing interpretations of the causationrequirement adopted through that locution: Fung and amicuscuriae Google argue that the acts of infringement must becaused by the manifestations of the distributor's improperobjectthat is, by the inducing messages themselves.Columbia, on the other hand, maintains that it need only provethat the acts of infringement by third parties were causedby the product distributed or services provided.

[7] We think Columbia's interpretation of Grokster III is thebetter one. On that view, if one provides a service that couldbe used to infringe copyrights, with the manifested intentthat the service actually be used in that manner, that personis liable for the infringement that occurs through the use ofthe service. See id. at 937, 125 S.Ct. 2764. As Grokster IIIexplained:

It is not only that encouraging aparticular consumer to infringe acopyright can give rise to secondaryliability for the infringement thatresults. Inducement liability goesbeyond that, and the distribution ofa product can itself give rise toliability where evidence shows that thedistributor intended and encouragedthe product to be used to infringe.

In such a case, the culpable actis not merely the encouragement ofinfringement but also the distributionof the tool intended for infringing use.

Id. at 940 n. 13, 125 S.Ct. 2764; see also 312 Melville B.Nimmer & David Nimmer, Nimmer on Copyright 12.04[A][4][b] (Matthew Bender, rev. 2010).

[8] We are mindful, however, of the potential severityof a loose causation theory for inducement liability. Underthis theory of liability, the only causation requirement isthat the product or service at issue was used to infringethe plaintiff's copyrights. The possible reach of liability isenormous, particularly in the digital age.

Copyright law attempts to strike a balance amongst threecompeting interests: those of the copyright holders inbenefitting from their labor; those of entrepreneurs in havingthe latitude to invent new technologies without fear ofbeing held liable if their innovations are used by othersin unintended infringing ways; and those of the public inhaving access both to entertainment options protected bycopyright and to new technologies that enhance productivityand quality of life. See generally Grokster III, 545 U.S. at937, 125 S.Ct. 2764; Sony, 464 U.S. at 42832, 104 S.Ct.774. Because copyright law's ultimate aim is ... to stimulateartistic creativity for the general public good, Sony, 464 U.S.at 432, 104 S.Ct. 774 (quoting Twentieth Century Music Corp.v. Aiken, 422 U.S. 151, 156, 95 S.Ct. 2040, 45 L.Ed.2d 84(1975)), it is important that we *1038 not permit inducementliability's relatively lax causation requirement to enlarge thescope of [copyright's] statutory monopolies to encompasscontrol over an article of commercesuch as technologycapable of substantial non-infringing usesthat is not thesubject of copyright protection. Sony, 464 U.S. at 421, 104S.Ct. 774.

We emphasize a few points in this regard. First, aspreviously discussed, proper proof of the defendant's intentthat its product or service be used to infringe copyrightsis paramount. [M]ere knowledge of infringing potentialor of actual infringing uses does not subject a productdistributor or service provider to liability. Grokster III, 545U.S. at 937, 125 S.Ct. 2764. When dealing with corporateor entity defendants, moreover, the relevant intent must bethat of the entity itself, as defined by traditional agencylaw principles; liability cannot be premised on stray orunauthorized statements that cannot fairly be imputed to the



entity. 17 See id. at 937, 125 S.Ct. 2764 (discussing theevidence that StreamCast and Grokster, each a corporateentity, communicated an inducing message to their softwareusers).

Moreover, proving that an entity had an unlawful purpose ata particular time in providing a product or service does notinfinitely expand its liability in either temporal direction. Ifan entity begins providing a service with infringing potentialat time A, but does not appreciate that potential until laterand so does not develop and exhibit the requisite intent tosupport inducement liability until time B, it would not be heldliable for the infringement that occurred between time A andB. Relatedly, an individual or entity's unlawful objective attime B is not a virus that infects all future actions. People,companies, and technologies must be allowed to rehabilitate,so to speak, through actions actively discouraging theinfringing use of their product, lest the public be deprived ofthe useful good or service they are still capable of producing.See Grokster III, 545 U.S. at 937, 125 S.Ct. 2764; Sony, 464U.S. at 432, 104 S.Ct. 774.

We also note, as Fung points out, that Grokster III seeminglypresupposes a condition that is absent in this case: that thereis but a single producer of the device in question. OnlySony sold the Betamax, and only Grokster and StreamCastdistributed their respective software applications. Assessingcausation was thus a straightforward task. In Sony, forexample, there was no question that some customers wouldpurchase and use the Betamax in ways that infringedcopyright. Thus, in a but-for sense, there was no questionthat Sony caused whatever infringement resulted from the useof Betamax sets; the Court nonetheless held Sony not liableon the ground that even if Sony caused the infringement, itwas not at fault, with fault measured by Sony's intent. Butas Grokster III explained, nothing in Sony requires courtsto ignore evidence of intent if there is such evidence, andthe case was never meant to foreclose rules of fault-basedliability. 545 U.S. at 934, 125 S.Ct. 2764. Grokster III thusheld that where there is sufficient evidence of faultthat is,an unlawful objectivedistributors are liable for causing theinfringement that resulted from use of their products. See id.at 940, 125 S.Ct. 2764. In other words, Grokster III and Sonywere able to assume causation and assess liability (or not)based on fault. In the present case, however, where otherindividuals and entities provide services identical to thoseoffered by Fung, causation, even in the relatively loose sensewe have *1039 delineated, cannot be assumed, even thoughfault is unquestionably present.

Fung argues, on this basis, that some of the acts ofinfringement by third parties relied upon by the district courtmay not have involved his websites at all. He points out, forexample, that by far the largest number of torrents trackedby the Torrentbox tracker are obtained from somewhereother than Torrentbox.com. If a user obtained a torrentfrom a source other than his websites, Fung maintains, hecannot be held liable for the infringement that resulted.Cf. Perfect 10, Inc. v. Google, Inc., 653 F.3d 976, 982(9th Cir.2011) (affirming the district court's denial of apreliminary injunction based on Google's alleged directcopyright infringement because the plaintiff, Perfect 10,failed to show a sufficient causal connection betweenirreparable harm to [its] business and Google's operation ofits search engine); Visa, 494 F.3d at 796802 (affirmingthe district court's dismissal under Federal Rule of CivilProcedure 12(b)(6) in part because the causal chainbetween defendant credit card companies' services andinfringing activity by Internet users was too attenuated).

On the other hand, Fung's services encompass more than theprovision of torrent files. Fung's trackers manage traffic fortorrent files, obtained from Torrentbox and Podtropolis aswell as other torrent sites, which enables users to downloadcopyrighted content. If Plaintiffs can show a sufficient casualconnection between users' infringing activity and the use ofFung's trackers, the fact that torrent files were obtained fromelsewhere may not relieve Fung of liability. See Grokster III,545 U.S. at 940, 125 S.Ct. 2764.

We do not decide the degree to which Fung can be heldliable for having caused infringements by users of his sites ortrackers. The only issue presently before us is the permanentinjunction, which, as in Grokster III, does not in this casedepend on the exact calculation of infringing use[ ] as a basisfor a claim of damages. 545 U.S. at 941, 125 S.Ct. 2764.We therefore need not further entertain Fung's causationarguments at this time, but leave it to the district court toconsider them, in light of the observations we have made,when it calculates damages.

In sum, we affirm the district court's holding that Columbiahas carried its burden of proving, on the basis of undisputedfacts, Fung's liability for inducing others to infringeColumbia's copyrights.

B. DMCA Safe Harbors



[9] Fung asserts affirmative defenses under three of theDMCA's safe harbor provisions, 17 U.S.C. 512(a), (c), and(d). Because the DMCA safe harbors are affirmative defenses,Fung has the burden of establishing that he meets the statutoryrequirements. See Balvage v. Ryderwood Improvement andServ. Ass'n, Inc., 642 F.3d 765, 776 (9th Cir.2011).

Columbia argues, and the district court agreed, thatinducement liability is inherently incompatible withprotection under the DMCA safe harbors. This court hasalready rejected the notion that there can never be a DMCAsafe harbor defense to contributory copyright liability,holding that ... potential liability for contributory andvicarious infringement [does not] render[ ] the [DMCA]inapplicable per se. See A & M Records, Inc. v. Napster,Inc., 239 F.3d 1004, 1025 (9th Cir.2001). We note, in thisconnection, that the DMCA does not in terms exempt fromprotection any mode of copyright liability, including liabilityunder the doctrine of inducement. Moreover, the DMCA'slegislative history confirms that Congress intended to provideprotection for at least some vicarious and contributoryinfringement. See S.Rep. No. 105190, 40 (1998); UMGRecordings, *1040 Inc. v. Shelter Capital Partners, LLC, F.3d , 2013 WL 1092793 (9th Cir.2013) (noting that 512(c) does not exclude from its protection vicarious orcontributory liability).

Nor is there any inherent incompatibility between inducementliability and the requirements that apply to all of the DMCAsafe harbors. For example, a prerequisite for the safe harborsis that the service provider implement a policy of removingrepeat infringers. See 17 U.S.C. 512(f)(1)(A). Although atfirst glance that requirement that might seem impossible toestablish where the requisites for inducing infringement aremet, see In re Aimster Copyright Litig., 334 F.3d 643, 655 (7thCir.2003), on closer examination the appearance of inherentincompatibility dissipates. In some instances, for example,the Grokster standard for inducement might be met evenwhere a service provider has a policy of removing provenrepeat infringers. It is therefore conceivable that a serviceprovider liable for inducement could be entitled to protectionunder the safe harbors.

In light of these considerations, we are not clairvoyant enoughto be sure that there are no instances in which a defendantotherwise liable for contributory copyright infringementcould meet the prerequisites for one or more of the DMCAsafe harbors. We therefore think it best to conduct the twoinquiries independentlyalthough, as will appear, aspects of

the inducing behavior that give rise to liability are relevant tothe operation of some of the DMCA safe harbors and can, insome circumstances, preclude their application.

i. Transitory digital networkcommunications (17 U.S.C. 512(a))

The first safe harbor at issue, which Fung asserts only as tohis trackers, provides as follows:

A service provider shall not be liable for monetary relief,or, except as provided in subsection (j), for injunctive orother equitable relief, for infringement of copyright byreason of the provider's transmitting, routing, or providingconnections for, material through a system or networkcontrolled or operated by or for the service provider, orby reason of the intermediate and transient storage of thatmaterial in the course of such transmitting, routing, orproviding connections, if

(1) the transmission of the material was initiated by or atthe direction of a person other than the service provider;

(2) the transmission, routing, provision of connections,or storage is carried out through an automatic technicalprocess without selection of the material by the serviceprovider;

(3) the service provider does not select the recipients of thematerial except as an automatic response to the request ofanother person;

(4) no copy of the material made by the service providerin the course of such intermediate or transient storage ismaintained on the system or network in a manner ordinarilyaccessible to anyone other than anticipated recipients, andno such copy is maintained on the system or network in amanner ordinarily accessible to such anticipated recipientsfor a longer period than is reasonably necessary for thetransmission, routing, or provision of connections; and

(5) the material is transmitted through the system ornetwork without modification of its content.

17 U.S.C. 512(a). For purposes of this safe harbor only,the term service provider means an entity offering thetransmission, routing, or providing of connections for digitalonline communications, between or among points specifiedby a user, of material of the user's choosing, without*1041 modification to the content of the material as sent



or received. 17 U.S.C. 512(k)(1)(A). The district courtdismissed the application of this safe harbor in a footnote,stating that it did not apply to Fung [b]ecause infringingmaterials do not pass through or reside on [Fung's] system.

The district court should not have rejected this safe harboron the ground it did. Perfect 10, Inc. v. CCBill LLC, 488F.3d 1102 (9th Cir.2007), held that the 512(a) safe harbordoes not require that the service provider transmit or routeinfringing material, explaining that [t]here is no requirementin the statute that the communications must themselvesbe infringing, and we see no reason to import such arequirement. Id. at 1116; see also id. (Service providers areimmune for transmitting all digital online communications,not just those that directly infringe.).

We could, perhaps, end our analysis of the 512(a) safeharbor there. The district court seemingly held Fung liablefor inducement based not on Fung's trackers' routing services,but, instead, on the dot-torrent files Fung collects and indexes.And it is not clear that Columbia is seeking to establishliability based directly on the tracking functions of Fung'strackers.

It appears, however, that Fung's trackers generate informationconcerning the torrent files transmitted that Fung thencompiles and uses to induce further infringing use of hiswebsites and trackers. In that sense, the tracking functionis connected to the basis on which liability was soughtand found. Without determining whether that information-generating use would itself affect the availability of the 512(a) safe harbor, we hold that safe harbor not available forFung's trackers on other grounds.

Unlike a P2P network like Napster, in which users selectparticular files to download from particular users, Fung'strackers manage a swarm of connections that source tinypieces of each file from numerous users; the user seekingto download a file chooses only the file, not the particularusers who will provide it, and the tracker identifies the sourcecomputers to the user seeking to download a work.

[10] Given these characteristics, Fung's trackers do not fitthe definition of service provider that applies to this safeharbor. The definition provides that a service providerprovides connections ... between or among points specifiedby a user. 17 U.S.C. 512(k)(1)(A) (emphasis added). Here,it is Fung's tracker that selects the points to which a user'sclient will connect in order to download a file. The tracker, not

the requesting user, selects the publishers from which chunksof data will be transmitted.

We have held that 512(a) applies to service provides whoact only as conduits for the transmission of information.UMG Recordings, F.3d at & n. 10 (noting that 512(a) applies where the service provider merely acts as aconduit for infringing material without storing, caching, orproviding links to copyrighted material (internal quotationmarks omitted)); Ellison v. Robertson, 357 F.3d 1072,1081 (9th Cir.2004) (discussing the definition of a serviceprovider for purposes of 512(a)); H.R. Rep. 105551(II),63 (1998) (explaining that the 512(a) safe harbor is limitedto service providers performing conduit-only functions).Because they select which users will communicate with eachother, Fung's trackers serve as more than conduits betweencomputer users. Fung's trackers therefore are not serviceproviders for purposes of 512(a), and are not eligible forthe 512(a) safe harbor.

Fung asserts that these functions are automatic technicalprocesses that proceed *1042 without selection of anymaterial by us. Even so, for the tracker to be a serviceprovider for purposes of the 512(a) safe harbor, thetracker, whether its functions are automatic or not, mustmeet the special definition of service provider applicableto this conduit safe harbor. If those functions go beyondthose covered by that definition, then it does not matterwhether they are automatic or humanly controlled. SeeUMG, F.3d at ; Viacom Int'l, Inc. v. YouTube,Inc., 676 F.3d 19, 39 (2d Cir.2012) (discussing conduitonly functions under 512(a)); In re Charter Commc'ns,Inc., Subpoena Enforcement Matter, 393 F.3d 771, 775 (8thCir.2005) (noting that 512(a) limits the liability of [serviceproviders] when they do nothing more than transmit, route, orprovide connections for copyrighted materialthat is, whenthe [provider] is a mere conduit for the transmission).

ii. Information residing on systems or networksat direction of users (17 U.S.C. 512(c))

This safe harbor provides:

(1) In general. A service provider 18 shall not be liable formonetary relief, or, except as provided in subsection (j),for injunctive or other equitable relief, for infringement ofcopyright by reason of the storage at the direction of a userof material that resides on a system or network controlled



or operated by or for the service provider, if the serviceprovider

(A)(i) does not have actual knowledge that the material oran activity using the material on the system or network isinfringing;

(ii) in the absence of such actual knowledge, is not awareof facts or circumstances from which infringing activityis apparent; or

(iii) upon obtaining such knowledge or awareness,acts expeditiously to remove, or disable access to, thematerial;

(B) does not receive a financial benefit directlyattributable to the infringing activity, in a case in whichthe service provider has the right and ability to controlsuch activity; and

(C) upon notification of claimed infringement asdescribed in paragraph (3), responds expeditiously toremove, or disable access to, the material that is claimedto be infringing or to be the subject of infringing activity.

17 U.S.C. 512(c).The district court held that Fung is ineligible for this safeharbor for the same reason it rejected the 512(a) safeharborthat is, because the infringing material does notactually reside on Fung's servers. As with 512(a), thisholding was in error. As CCBill emphasized, we will notread requirements into the safe harbors that are not containedin the text of the statute. See CCBill, 488 F.3d at 1116.Moreover, 512(c) explicitly covers not just the storageof infringing material, but also infringing activit[ies] thatus[e] the material [stored] on the system or network. 17U.S.C. 512(c)(1)(A)(i). Here, as we have explained, theinfringing activity associated with Fungthe peer-to-peertransfer of pirated contentrelies upon torrents stored onFung's websites. According to the record, sometimes thosetorrents are uploaded by users of the sites, while othertorrents are collected for storage *1043 by Fung's websitesthemselves. The former situation would be at least faciallyeligible for the safe harbor, assuming the other criteria aremet.

a. Actual and Red Flag Knowledge (512(c)(1)(A)(i)(ii))

We nonetheless hold that Fung is not eligible for the 512(c)safe harbor, on different grounds. The 512(c) safe harbor isavailable only if the service provider does not have actualknowledge that the material or an activity using the materialon the system or network is infringing, 17 U.S.C. 512(c)(1)(A)(i), or is not aware of facts or circumstances fromwhich infringing activity is apparent, id. 512(c)(1)(A)(ii).In UMG Recordings, F.3d at , this court endorsedthe Second Circuit's interpretation of 512(c)(1)(A), that theactual knowledge provision turns on whether the provideractually or subjectively knew of specific infringement,while the red flag provision turns on whether the provider wassubjectively aware of facts that would have made the specificinfringement objectively obvious to a reasonable person.Viacom Int'l, Inc., 676 F.3d at 31.

Fung maintains that he lacked either type of knowledge,because Columbia failed to provide statutorily compliantnotification of infringement. Under 512(c)(3)(B),notification of infringement that fails to comply with therequirements set forth in 512(c)(3)(A) shall not beconsidered ... in determining whether a service provider hasactual knowledge or is aware of facts or circumstances fromwhich infringing activity is apparent. 17 U.S.C. 512(c)(3)(B)(i). And, as Fung points out, the district court noted thatthere was at least a triable issue of fact as to the adequacy ofthe statutory notice that Plaintiffs provided to [Fung].

We need not determine the adequacy of Columbia'snotification of claimed infringementindeed, as the districtcourt held, it would not be appropriate to do so at this stage.Fung had red flag knowledge of a broad range of infringingactivity for reasons independent of any notifications fromColumbia, and therefore is ineligible for the 512(c) safeharbor.

[11] As noted, the record is replete with instances of Fungactively encouraging infringement, by urging his users toboth upload and download particular copyrighted works,providing assistance to those seeking to watch copyrightedfilms, and helping his users burn copyrighted material ontoDVDs. The material in question was sufficiently current andwell-known that it would have been objectively obvious toa reasonable person that the material solicited and assistedwas both copyrighted and not licensed to random members ofthe public, and that the induced use was therefore infringing.Moreover, Fung does not dispute that he personally used theisoHunt website to download infringing material. Thus, whileFung's inducing actions do not necessarily render him per se



ineligible for protection under 512(c), 19 they are relevantto our determination that Fung had red flag knowledge ofinfringement.

Fung introduced no contrary facts with regard to identifiedtorrents involved in these documented activities, respondingonly with the generalized assertion that he ha[s] arobust copyright compliance system. But conclusoryallegations, standing alone, are insufficient to preventsummary judgment. Newman v. County of Orange, 457 F.3d991, 995 (9th Cir.2006) (internal quotation marks and citationomitted). 20

*1044 As Fung has not carried his burden as the non-movingparty of demonstrating a genuine dispute as to the materialfacts regarding his eligibility for the 512(c) safe harbor, seeNewman, 457 F.3d at 995; see also Fed.R.Civ.P. 56(c)(1)(A),Columbia is entitled to summary judgment as to this issue.Fed.R.Civ.P. 56(e)(3).

b. Financial benefit & the rightand ability to control ( 512(c)(1)(B))

Under 512(c)(1)(B), a service provider loses protectionunder the safe harbor if two conditions are met: (1) theprovider receive[s] a financial benefit directly attributableto the infringing activity; and (2) the service provider hasthe right and ability to control such activity. 17 U.S.C. 512(c)(1)(B). Fung meets both requirements and is thereforeineligible for protection under the 512(c) safe harbor.

[12] As to the first prong of 512(c)(1)(B), we have held, inthe context of service providers who charge for their services,that a service provider receives a direct financial benefitfrom infringing activity where there is a causal relationshipbetween the infringing activity and any financial benefit adefendant reaps, regardless of how substantial the benefit is inproportion to a defendant's overall profits. Ellison, 357 F.3dat 1079; see also Napster, 239 F.3d at 1023; CCBill, 488 F.3dat 111718 (holding that the Ellison direct financial benefitvicarious liability standard applies under 17 U.S.C. 512(c)(1)(B)). Thus, where a service provider obtains revenue fromsubscribers, the relevant inquiry is whether the infringingactivity constitutes a draw for subscribers, not just an addedbenefit. CCBill, 488 F.3d at 1117 (quoting Ellison, 357F.3d at 1079). 21

At the same time, our opinions have not suggested that thefinancial benefit prong of 512(c)(1)(B) is peripheral orlacks teeth. Ellison ultimately concluded that the financialbenefit standard was not met, because there was inadequateproof that customers either subscribed because of theavailable infringing material or cancelled subscriptionsbecause it was no longer available. Ellison, 357 F.3d at1079. And CCBill similarly found that *1045 evidence thatthe service provider hosted, for a fee, websites that containinfringing material inadequate to establish the requisitefinancial benefit. In so holding, CCBill cited to DMCAlegislative history stating that a direct financial benefit cannotbe established showing that a service provider receive[d] aone-time set-up fee and flat, periodic payments for servicefrom a person engaging in infringing activities. 488 F.3d at1118 (quoting H.R. Rep. 105551(II), 54 (1998)).

Moreover, the structure of 512(c)(1)(B) indicates thatthe lack of direct financial benefit prong of the safeharbor requirement is central, rather than peripheral. Thestatute sets out as the requirement that the service providernot receive a financial benefit directly attributable to theinfringing activity. It then states the right and ability tocontrol in a dependent clause, describing a limitation onthe financial benefit requirement to certain circumstances.The grammatical emphasis, then, is on the lack of directfinancial benefit requirement, with the right to control prongsecondary.

Against this background, we note that we have neverspecified what constitutes a financial benefit directlyattributable to the infringing activity, 17 U.S.C. 512(c)(1)(B) (emphasis added), where, as here, the service provider'srevenue is derived from advertising, and not from users. Wedo so now.

[13] Here, the record shows that Fung generated revenueby selling advertising space on his websites. The advertisingrevenue depended on the number of users who viewedand then clicked on the advertisements. Fung marketedadvertising to one advertiser by pointing to the TV andmovies ... at the top of the most frequently searched byour viewers, and provided another with a list of typicaluser search queries, including popular movies and televisionshows. In addition, there was a vast amount of infringingmaterial on his websiteswhether 9096% or somewhatlesssupporting an inference that Fung's revenue stream ispredicated on the broad availability of infringing materials for



his users, thereby attracting advertisers. And, as we have seen,Fung actively induced infringing activity on his sites.

Under these circumstances, we hold the connection betweenthe infringing activity and Fung's income stream derived fromadvertising is sufficiently direct to meet the direct financialbenefit prong of 512(c)(1)(B). Fung promoted advertisingby pointing to infringing activity; obtained advertisingrevenue that depended on the number of visitors to his sites;attracted primarily visitors who were seeking to engage ininfringing activity, as that is mostly what occurred on hissites; and encouraged that infringing activity. Given thisconfluence of circumstances, Fung's revenue stream was tieddirectly to the infringing activity involving his websites, bothas to his ability to attract advertisers and as to the amount ofrevenue he received.

With respect to the second prong of 512(c)(1)(B), werecently explained in UMG that the right and abilityto control infringing activity involves something morethan merely having the general ability to locate infringingmaterial and terminate users' access. UMG, F.3d .Adopting the Second Circuit's interpretation of 512(c)(1)(B), we held that in order to have the right and ability tocontrol, the service provider must [also] exert[ ] substantialinfluence on the activities of users. Id. (quoting ViacomInt'l, Inc., 676 F.3d at 38) (second alteration in original).In doing so, we noted that [s]ubstantial influence mayinclude ... purposeful conduct, as in Grokster. Id. In theabsence of any evidence of inducement or any other reasonto suggest the *1046 defendant exerted substantial influenceover its users' activities, we concluded the defendant was notineligible for protection under this provision. Id.

Here, we are confronted with the opposite situation. Fungunquestionably had the ability to locate infringing materialand terminate users' access. In addition to being able to locatematerial identified in valid DMCA notices, Fung organizedtorrent files on his sites using a program that matches filenames and content with specific search terms describingmaterial likely to be infringing, such as screener or PPV.And when users could not find certain material likely tobe infringing on his sites, Fung personally assisted them inlocating the files. Fung also personally removed fake[ ],infected, or otherwise bad or abusive torrents in order toprotect[ ] the integrity of [his websites'] search index[es].

Crucially, Fung's ability to control infringing activity on hiswebsites went well beyond merely locating and terminating

users' access to infringing material. As noted, there isoverwhelming evidence that Fung engaged in culpable,inducing activity like that in Grokster III. Although Fung'sinducement actions do not categorically remove him fromprotection under 512(c), they demonstrate the substantialinfluence Fung exerted over his users' infringing activities,and thereby supply one essential component of the financialbenefit/right to control exception to the 512(c) safe harbor.

Because he meets both prongs of 512(c)(1)(B), Fung is noteligible for protection under the 512(c) safe harbor.

We have no difficulty concluding that where the 512(c)(1)(B) safe harbor requirements are not met, the serviceprovider loses protection with regard to any infringingactivity using the service. See supra note 20. As we heldin UMG, the 512(c)(1)(B) right and ability to controlrequirement does not depend only upon the ability to removeknown or apparent infringing material. F.3d at .Instead, there must also be substantial influence on theinfringing activities of users, indicating that it is the overallrelationship between the service provider and infringing usersthat matters. Also, to the degree this DMCA provision hadits origin in vicarious liability concepts, see CCBill, 488F.3d at 1117, those concepts rest on the overall relationshipbetween the defendant and the infringers, rather than onspecific instances of infringement. See Napster, 239 F.3d at102324 (discussing Napster's general ability to control[ ]and patrol[ ] content on its system); id. at 1022 (notingthat [v]icarious copyright liability is an outgrowth ofrespondeat superior (quoting Fonovisa, 76 F.3d at 262)). Theterm right and ability to control such activity s

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