No.

In the Supreme Court of the United States ______________

GARY FUNG, ISOHUNT WEB TECHNOLOGIES, INC., PETITIONERS

v.

COLUMBIA PICTURES INDUSTRIES, INC., DISNEY ENTERPRISES, INC., PARAMOUNT PICTURES

CORPORATION, TRISTAR PICTURES, INC., TWENTIETH CENTURY FOX FILM CORPORATION, UNIVERSAL CITY

STUDIOS LLP, UNIVERSAL CITY STUDIOS PRODUCTIONS, LLP, AND WARNER BROS. ENTERTAINMENT, INC.,

RESPONDENTS ______________

ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

______________ PETITION FOR A WRIT OF CERTIORARI

______________ MICHAEL S. ELKIN THOMAS PATRICK LANE Winston & Strawn LLP 200 Park Avenue New York, NY 10166 (212) 294-6700 IRA P. ROTHKEN JARED R. SMITH Rothken Law Firm 3 Hamilton Landing Suite 280 Novato, CA 94949 (415) 924-4250

LINDA T. COBERLY Counsel of Record Winston & Strawn LLP 35 W. Wacker Drive Chicago, IL 60601 (312) 558-8768 lcoberly@winston.com JENNIFER A. GOLINVEAUX ERIN R. RANAHAN THOMAS J. KEARNEY Winston & Strawn LLP 101 California Street San Francisco, CA 94111 (415) 591-1506

Counsel for Petitioners

QUESTION PRESENTED In Grokster III, this Court set forth the standard

for liability for secondary copyright infringement: if a party “distribute[s] a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement,” he will be liable “for the resulting acts of infringement.” MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 919 (2005) (“Grokster III”) (emphasis added).

The question presented is whether a court assessing secondary liability must determine whether the relevant acts of infringement actually “result[ed]” from the party’s distribution of a device or technology—the element of causation—or whether, as the Ninth Circuit concluded, this analysis may be short-circuited, liability established, and a broad and sweeping permanent injunction imposed where “but for” causation has not yet been proven—a test referred to by the Ninth Circuit as “loose causation.”

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PARTIES TO THE PROCEEDINGS Petitioners are Gary Fung, a resident of Canada,

and his company isoHunt Web Technologies, Inc. Pursuant to Rule 29.6, Petitioners state that Mr. Fung is an individual, and his company isoHunt Web Technologies, Inc. has no parent corporation, nor does any publicly held company own more than 10% of its stock.

Respondents are a series of major motion picture companies: Columbia Pictures Industries, Inc., Disney Enterprises, Inc., Paramount Pictures Corporation, Tristar Pictures, Inc., Twentieth Century Fox Film Corporation, Universal City Studios LLP, Universal City Studios Production, LLP, and Warner Brothers Entertainment, Inc.

The amici curiae submitting briefs in this case in support of Petitioners’ position in the Ninth Circuit were Google, Inc. and the Electronic Frontier Foundation.

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TABLE OF CONTENTS Page

QUESTION PRESENTED ........................................... i PARTIES TO THE PROCEEDINGS .......................... ii TABLE OF CONTENTS ............................................. iii TABLE OF AUTHORITIES ........................................ v INTRODUCTION ........................................................ 1

OPINIONS BELOW .................................................... 2

JURISDICTION .......................................................... 3

STATUTES INVOLVED ............................................. 3

STATEMENT OF THE CASE..................................... 4

I. Factual Background .............................................. 4

A. BitTorrent Technology .................................... 4

B. Torrents, Trackers, and Swarms.................... 5

C. Petitioners’ Business ...................................... 7

II. Procedural History ................................................ 7

A. District Court Proceedings ............................. 7

B. The Ninth Circuit’s Decision .......................... 9

REASONS FOR GRANTING THE WRIT ................ 11

I. The causation requirement in Grokster III has its roots in the common law and serves a critical function, particularly in our current Digital Age. ............................................. 13

iv II. The Ninth Circuit’s “loose causation” test

and willingness to find liability even without proof of “but for” causation is inconsistent with Grokster III. ............................ 15

CONCLUSION .......................................................... 19 APPENDIX A U.S. Court of Appeal for the Ninth Circuit Opinion (March 21, 2013) .......................................... 1a APPENDIX B U.S. District Court Central District of California Order (December 21, 2009) ..................................... 58a APPENDIX C U.S. District Court Central District of California Order (March 23, 2010) ......................................... 106a APPENDIX D U.S. District Court Central District of California Order (August 5, 2013) .......................................... 122a

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TABLE OF AUTHORITIES

Page(s) CASES

Anza v. Ideal Steel Supply Corp., 547 U.S. 451 (2006) .............................................. 14

Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639 (2008) ........................................ 14, 15

Columbia Pictures Industries, Inc., et al. v. Fung, et al., 710 F.3d 1020 (9th Cir. 2013)............ 3

Columbia Pictures Industries, Inc., et al. v. Fung, et al., No. CV 06-5578 SVW/2009 WL 6355911 (C. D. Cal. Dec. 21, 2009) ........................ 3

CSX Transp., Inc. v. McBride, 131 S. Ct. 2630 (2011) .......................................... 13

Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340 (1991) ........................................ 17, 18

MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) ....................................... passim

Sony Corp. of Am. v. Universal Studios Inc., 464 U.S. 417 (1984) .................................. 10, 11, 17

Univ. of Texas Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517 (2013) .......................................... 13

FEDERAL STATUTES 17 U.S.C. § 501 ............................................................. 3 17 U.S.C. § 502(a) ........................................................ 3 17 U.S.C. § 512 ............................................................. 8

vi 28 U.S.C. § 1254(1) ...................................................... 3 28 U.S.C. § 1292(a)(1) .................................................. 9 RULES Supreme Court Rule 13.3 ............................................ 3

INTRODUCTION One of the most important forces behind the

Digital Age has been the development of technology that enables users to search for and share content freely across the Internet. This technology and the information revolution it has produced has changed the world, touching nearly every aspect of human existence. The innovation in this important field continues every day, making access to information faster, better, more cost-effective, and more reliable, for the benefit of both the users of the information and those who seek to distribute it.

To be sure, the unprecedented flow of information in today’s world presents an increased risk that some intellectual property rights will be infringed. But as this Court and Congress have recognized, imposing broad secondary liability for copyright infringement carries risks of its own, in terms of its chilling effect on innovation. An entrepreneur who introduces technology capable of many uses—infringing and non-infringing—does not control the ways in which that technology is used, either on its own or in combination with other providers’ technologies. And while the developers of search engines and similar technologies may be easier for plaintiffs to find than the infringers themselves, forcing the developers of the technology to bear all responsibility for infringement will effectively—and, in the case of permanent injunctions, literally—bring innovation and the flow of information to a halt.

This Court’s decision in Grokster III represented a careful balancing of these countervailing risks. That decision made clear that mere distribution of a device that could be used for infringement is not a

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basis for liability; there must also be evidence that the distributor had the “object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” 545 U.S. at 919. Further, the scope of the secondary liability is limited to the acts of infringement “resulting” from the distributor’s actions. Ibid. Both of these elements—intention and causation—are critical to avoid overburdening the innovators and developers of technology, transforming them into insurers against the bad behavior of the many other actors in the system.

The Ninth Circuit’s decision below disrupts that balance and threatens to undercut basic foundations of causation well established in all areas of law—from the common law, to patent law, and now to the law of copyright. Under this decision, a court may enter a finding of liability and use a permanent injunction to inject itself into an ongoing business—imposing broad new requirements or limitations, or even calling a halt to the entire operation—without a showing that the infringement “result[ed]” from the defendant’s particular device or website, much less from any efforts to foster infringement. The Ninth Circuit’s willingness to short-cut the causation inquiry is in direct conflict with Grokster III and threatens to stifle the very sort of innovation that produced the Information Age. This Court should grant review to ensure fidelity to Grokster III and to avoid a massive expansion of secondary copyright liability.

OPINIONS BELOW The opinion of the Ninth Circuit affirming the

district court’s decision on summary judgment finding liability for inducement of copyright

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infringement is published at Columbia Pictures Industries, Inc., et al. v. Fung, et al., 710 F.3d 1020 (9th Cir. 2013) (the “Ninth Circuit Decision”) and reprinted here as Appendix A. The order of the U.S. District Court for the Central District of California finding Defendants/Petitioners Gary Fung and isoHunt Web Technologies, Inc. (“Petitioners”) liable is available at Columbia Pictures Industries, Inc., et al. v. Fung, et al., No. CV 06-5578 SVW (JCx), 2009 WL 6355911 (C. D. Cal. Dec. 21, 2009), and is also reprinted here as Appendix B. The district court’s order granting a permanent injunction, which was modified in part on August 5, 2013, is available at Docket 551 and is reprinted here in original and modified form as Appendices C and D, respectively.

JURISDICTION The Ninth Circuit issued its decision in this

matter on March 21, 2013. Petitioners timely filed a petition for rehearing en banc, which was denied on May 15, 2013. Under Supreme Court Rule 13.3, the deadline for this petition was 90 days later, or August 13, 2013. Justice Kennedy granted Petitioners’ application for an extension of time, setting a new deadline of September 12, 2013. This Court has jurisdiction to hear this appeal under 28 U.S.C. § 1254(1).

STATUTES INVOLVED 17 U.S.C. § 501 provides that “[a]nyone who

violates any of the exclusive rights of the copyright owner . . . is an infringer of the copyright.”

17 U.S.C. § 502(a) authorizes a district court to grant a final injunction “on such terms as it may

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deem reasonable to prevent or restrain infringement of a copyright.”

STATEMENT OF THE CASE I. Factual Background

Petitioner-Defendant Gary Fung was born in Hong Kong in 1983 and moved to Canada in 1994, where he now resides. Mr. Fung founded, owns, and operates a series of websites that use a peer-to-peer file sharing protocol known as “BitTorrent.” Mr. Fung’s isoHunt Web Technologies websites facilitate user searches and access to information—using a similar type of search engine functionality as Yahoo! or Google—and neither store nor transmit any copyrighted material in the process of servicing user requests for search results. Pet. App. 11a–12a, 39a–40a. The firm of isoHunt Web Technologies, Inc. itself is a Defendant in this suit and joins in this petition.

A. BitTorrent Technology BitTorrent technology is a kind of “peer-to-peer”

technology, enabling one user to find and share material with others over the Internet, rather than providing access to a centralized repository of files. Id. at 10a–11a. This technology is employed by a variety of websites and providers. Users can employ this technology to locate, access, share, and distribute a vast array of content originating from all over the globe. This includes a wide range of non-copyrighted material—including music, films, and other material in the public domain—as well as software, movies, games, music, and other entertainment programming that may be protected by copyright law, for which the

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copyright holders may or may not have authorized or licensed free distribution.

Traditionally, if a user wishes to download a file on a peer-to-peer network, he would use a search function to locate a peer that has the file and then download the entire file from that peer. Id. at 9a. This method of file sharing has some built-in limitations. The download may be interrupted if the peer sending the file goes offline, for example, and the peer downloading the file cannot begin sharing it with others until the download is complete. Ibid.

BitTorrent technology solves these problems by breaking up the file into many smaller pieces or data packets. Accordingly, instead of downloading an entire file from a single user, BitTorrent permits users to download lots of different pieces from different peers at the same time. Ibid. Once all the pieces of a file have been downloaded, the file is automatically assembled into its original form. Ibid. Using BitTorrent technology, therefore, the process of downloading and sharing content is much faster and more stable. Id. at 10a. Further, because the recipients of the materials then become sub-distributors, transferring materials to other recipients, BitTorrent is a cheaper way for the original publisher to distribute the material than a pure client-server system on a website that sends the entire contents directly to each. Ibid.

B. Torrents, Trackers, and Swarms To share copies of games, films, music, and the

like using BitTorrent technology, a publisher first creates very small files called “torrents” or “dot-torrent” files, which have the file extension “.torrent.”

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Torrents are small, special-purpose data packets with metadata describing much larger content files and include instructions for software to initiate download of actual content files off-site. Torrents are not subject to copyright protection.

Then, the publisher makes the torrent files available by uploading them to one or more websites that collect, organize, and index them. Id. at 11a. Torrent files are indexed by a variety of search engines, including Google, Yahoo!, and Bing. General purpose search engines like these are participants in the “multi-actor marketplace” of BitTorrent, along with isoHunt and many others. Indeed, the vast majority (more than 95%) of torrent files searchable on isoHunt are also searchable on Google, Yahoo!, or Bing.

After the torrents are created and made available, participating users trade pieces among themselves. The transient, changing group of participants is called a “swarm,” and it is not associated with any particular device, provider, service, or website. Id. at 10a. The content of files that are published or exchanged is typically identified by the name of the files, but such content is not actually ascertainable except by joining the swarm. Swarm members can include users located domestically and abroad.

The exchange of information through the swarm is facilitated by “trackers,” which act like an index and manage traffic. Id. at 11a. “[N]o content is stored on or passes through trackers.” Id. at 13a. The tracker’s primary purpose is to provide a list of peers that have files associated with a particular torrent file available for download. Ibid.

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C. Petitioners’ Business Three of Petitioner/Defendant Gary Fung’s

websites—isoHunt.com (“isoHunt”), Torrentbox.com, and Podtropolis.com—are torrent sites. They collect and organize torrent files—which, again, are not copyright protected—and permit users to search their collections. Users search these sites by keyword or category (like games, movies, television shows, music, and so on). Ibid. The isoHunt site also has one additional feature: each time a torrent file is added to it, the website automatically adds additional backup trackers to it to make it more reliable. Id. at 14a. As for Torrentbox and Podropolis, these two sites, which have relatively small collections of torrent files, also run trackers that are used by users on other, non-affiliated torrent sites. Id. at 14a–15a. Since 2007, Petitioners have employed blocking technology that prevents U.S. users from using isoHunt trackers. II. Procedural History

A. District Court Proceedings Plaintiffs/Respondents are a group of major

motion picture studios. They filed this action on February 23, 2006, in the Southern District of New York. On Petitioners’ motion, the case was transferred to the Central District of California. Pet. App. 15a. Exhibit A to Respondents’ first amended complaint identified forty-four specific copyrights that had allegedly been infringed. Respondents then moved for summary judgment on liability and sought a permanent injunction.

The district court granted summary judgment on liability, holding Petitioners liable for inducing others to infringe Respondents’ copyrighted material. See

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Pet. App. 80a–95a. The court also concluded that as a factual matter, Petitioners were not entitled to claim any of the safe harbors for “transitory digital network communications” provided in the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512(a), and were not entitled to claim protections for “information residing on systems or networks at direction of users” under § 512(c) or “information location tools” under § 512(d). See Pet. App. 95a–102a and n.26. Nowhere in the district court’s decision did the court mention the element of causation or consider whether there was any causal relationship between any inducement by Petitioners and any infringement of the forty-four works.

Based on that finding of liability, the district court entered a permanent injunction that prohibits Petitioners from “knowingly engaging in any activities having the object or effect of fostering infringement of Respondents’ Copyrighted Works,” referring to a “list of titles” provided by Respondents. Id. at 16a; see also id. at 106a, 122a. The injunction also required Petitioners to take affirmative steps—potentially, though not necessarily, implementing a filtering device—that prevents downloading of any one of the titles on the list, as well as any new titles identified by Respondents. The injunction binds both Mr. Fung and his company, and it has already imposed extremely significant costs on them.

The day after the injunction was entered, Respondents served Petitioners with an initial list of more than 23,000 titles of copyrighted works. Id. at 16a. That list included some works in the public domain and others for which Respondents do not own the copyrights. Ibid. Petitioners protested the

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breadth and vagueness of the injunction, so the district court modified it by requiring more information for each work listed. The court also suggested that Mr. Fung’s concerns were somewhat overblown, as the injunction would not support a finding of civil contempt if Petitioners took reasonable steps to comply with it.

Petitioners took an immediate appeal under 28 U.S.C. § 1292(a)(1), which provides for appellate jurisdiction over interlocutory orders granting injunctive relief. The appeal concerned the finding of liability underlying the injunction, the application of the DMCA safe harbors, and the scope of the injunction itself.

A trial on damages and a proposed schedule going forward is being set in the district court now, which has the potential to expose Mr. Fung to close to a billion dollars in liability for 5,000 works (still as yet unidentified), for a case that assessed liability when only about forty-four works were at issue, the infringements of which were not even identified before liability was found.

B. The Ninth Circuit’s Decision The Ninth Circuit concluded that Respondents

had established both the “inducement” element and the “acts of infringement” element of secondary liability under Grokster III. Pet. App. 21a–25a. The court also found evidence of a “clear expression” and “other affirmative steps” showing an intent by Petitioners to induce infringement. Id. at 25a–30a.

With respect to causation, however, the Ninth Circuit departed from Grokster III’s requirement that a finding of liability requires a showing that the acts

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of infringement “result[ed]” from Petitioners’ acts. Instead, the court held that a “loose causation theory” is enough. Id. at 32a. According to the court, “if one provides a service that could be used to infringe copyrights, with the manifested intent that the service actually be used in that manner, that person is liable for the infringement that occurs through the use of that service.” Id. at 31a. In applying that test, however, the Ninth Circuit made clear that it was willing to entertain a causal theory that was even “looser” than this language would suggest. For purposes of an award of summary judgment on liability—and for purposes of a permanent injunction—the court was willing to shortcut the causation element entirely. The court noted Mr. Fung’s argument that the acts of infringement may not have involved his websites in the first place, and it also noted that it was not yet clear whether plaintiffs could show “a sufficient causal connection” between the user’s infringing activity “and the use of Fung’s trackers.” Id. at 34a–35a. Effectively, then, the Ninth Circuit allowed a finding of liability and a permanent injunction to stand even though it did not believe any finding of “but for” causation had been made at all.

The Ninth Circuit acknowledged that this case does not present the same causal link as in Grokster III. The defendants in that case were the producers of a single “device”—the StreamCast application—which made “[a]ssessing causation * * * a straightforward task.” Id. at 34a (citing Sony Corp. of Am. v. Universal Studios Inc., 464 U.S. 417 (1984)). In that sense, Grokster III followed directly from this Court’s decision in Sony, which involved claims of

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inducing infringement through a physical object, the Betamax device. In Sony, “there was no question that some customers would purchase and use the Betamax in ways that infringed copyright” and thus “in a ‘but-for’ sense, there was no question that Sony caused whatever infringement resulted from the use of Betamax sets.” Pet. App. 34a. Likewise, in Grokster III, identifying infringement that took place through StreamCast was “straightforward.” Ibid. In the present case, however, where Mr. Fung’s websites represent only a part of a multi-actor “BitTorrent” environment, and other individuals and entities provide services identical to those he offers, the Ninth Circuit noted that causation, “even in the relatively loose sense we have delineated, cannot be assumed” and had not been proven. Ibid.

To be sure, the Ninth Circuit made clear that no damages would be assessed without a more detailed finding of causation. The court declined to “further entertain Fung’s causation arguments at this time, but leave it to the district court to consider them, in light of the observations we have made, when it calculates damages.” Id. at 35a–36a. Nevertheless, even without resolving these causation issues—or finding “but for” causation at all—the court affirmed the district court’s award of summary judgment on liability and the entry of the permanent injunction.

REASONS FOR GRANTING THE WRIT The flow of information across the Internet has

changed the world in ways that no one could have imagined a generation or two ago. The printing press made it possible for publishers to share information on a large scale; the “search engine” has magnified that capability exponentially, giving every human

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being with access to a computer the power to produce, publish, distribute, locate, and share a vast array of information all over the globe. The amount of information we produce today is measured in “exabytes” and exceeds, on a yearly basis, the total accumulation of information since the days of chisel and stone. Today’s unprecedented flow of information touches every aspect of our existence—how we live, how we work, what we eat, how we learn, and how we are entertained.

Our current and robust marketplace of digital information is the product of innovation and entrepreneurialism—and, in particular, the efforts of those who offer technologies for locating and sharing information. As discussed below, however, the Ninth Circuit’s approach to causation—that is, its willingness to defer causation entirely at the point of considering liability and imposing broad permanent injunctions—threatens the very same innovation and entrepreneurialism that have created the Digital Age. By creating a new and relaxed standard for secondary liability, the Ninth Circuit has empowered plaintiffs—including the massive entertainment companies that brought this lawsuit—to isolate specific participants in a multi-actor marketplace, threaten them with vast liability for inducing infringement by others, and obtain broad injunctive relief, effectively shutting them down. This is a dangerous and costly power that could have vast ramifications, if the Ninth Circuit’s approach is allowed to stand.

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I. The causation requirement in Grokster III has its roots in the common law and serves a critical function, particularly in our current Digital Age.

Inducement of copyright infringement under Grokster III “premises liability on purposeful, culpable expression and conduct,” when a service provider exerts substantial influence on the activities of users and, effectively, causes their infringement. 545 U.S. at 937. To that end, Grokster III holds that a defendant “who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Id. at 918–19. In other words, a plaintiff seeking to impose liability and injunctive relief for inducement must prove both the “fault” by the defendant—that is, that the defendant acted with the object of promoting infringement, as evidenced by clear expression or affirmative steps—and that the infringing acts at issue occurred as a result of the inducing activity they identify. Under the plain terms of Grokster III, even where there is proof that a defendant is culpable, it can only be found liable for the infringements it actually caused.

This is nothing new; the element of causation is and has always been required for any kind of common-law liability to attach. See, e.g., Univ. of Texas Sw. Med. Ctr. v. Nassar, 133 S. Ct. 2517, 2522 (2013) (“The requisite relation between prohibited conduct and compensable injury is governed by the principles of causation, a subject most often arising in elaborating the law of torts”); CSX Transp., Inc. v.

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McBride, 131 S. Ct. 2630, 2633 (2011) (recognizing the “traditional common-law formulation of “‘proximate causation’”); Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 460–61 (2006) (the connection between the conduct and the injury was not direct enough for the injury to be “by reason of” the violation because “by reason of” language required that “the alleged violation le[ad] directly to the plaintiff’s injuries”); Bridge v. Phoenix Bond & Indem. Co., 553 U.S. 639, 655 (2008) (acknowledging Court’s “reliance on common-law proximate-causation principles”).

The Court’s standard for secondary liability in Grokster III draws upon these very same, basic common-law requirements. Indeed, the Court explicitly contemplated that courts evaluating secondary liability for copyright infringement would apply “rules of fault-based liability derived from the common law.” 545 U.S. at 934–35. Given its common-law roots, it is no surprise that the standard articulated in Grokster III expressly incorporates the element of causation, through its requirement that the court identify and limit liability to the acts of infringement “resulting” from the defendants’ conduct. Id. at 918–19.

In the context of Internet information-sharing in particular, the element of causation plays a vital role. The Supreme Court and Congress have recognized that in assessing claims of copyright infringement in a digitally networked environment, the protections of copyright law must be balanced against the fundamental importance of encouraging technological innovation. As this Court explained in Grokster III, administration of copyright law is “an exercise in

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managing the tradeoff” between “technological innovation” and “artistic protection.” 545 U.S. at 928. Given the tremendous speed and availability of information on the Internet—a pace that would have been inconceivable just a decade ago—a relaxed standard for secondary liability could expose developers of technology to vast, uncontrolled, and crippling liability.

Limiting liability to infringement that actually “result[ed]” from the defendant’s actions provides a critical backstop. Indeed, without this element, the distributor of a service or device would become, effectively, an insurer against infringement by a wide range of other actors. Such liability would amplify the burdens on the very parties who are driving innovation in this field. II. The Ninth Circuit’s “loose causation” test

and willingness to find liability even without proof of “but for” causation is inconsistent with Grokster III. To show a relevant underlying direct

infringement, Respondents must establish that the works at issue were actually downloaded or supplied by at least one United States user. Then, to show secondary liability under Grokster III, they must show that these defendants “distribute[d] a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” 545 U.S. at 936–37. Finally, they must show causation, identifying acts of infringement “resulting” from the defendants’ conduct. Ibid.

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Although the Ninth Circuit’s decision pays lip service to the element of causation, its analysis—and its ultimate decision affirming the entry of summary judgment on liability—short circuits causation entirely. Relying on a footnote in Grokster III, the Ninth Circuit concluded that the causation question is whether infringement flowed from the distribution of the tool or technology itself, rather than the separate acts by the defendant that represent an affirmative inducement to infringe. Pet. App. 31a–32a (citing 545 U.S. at 940 n.13). On that theory, the Ninth Circuit explained, “if one provides a service that could be used to infringe copyrights, with the manifested intent that the service actually be used in that manner, that person is liable for the infringement that occurs through the use of the service.” Id. at 31a. But even assuming that this is the correct standard, the Ninth Circuit’s ultimate decision in this case did not require even that much.

As discussed above, the Ninth Circuit’s decision appears to stand for the proposition that a plaintiff may be entitled to summary judgment on liability—and to the entry of a permanent injunction—based solely on a finding of “fault” or intent to induce, even if there has not been any showing of infringement that was causally linked to any person’s “use of the [Defendant’s] service.” Ibid. In the instant case, for example, the question whether any particular act of infringement “result[ed]” from Petitioners’ actions requires a detailed assessment of exactly how—and why—each act of infringement occurred. There is no dispute that this inquiry did not happen before the award of summary judgment on liability.

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Petitioners here are not the producers of unique and free-standing devices or software programs like those at issue in Grokster III and Sony, where “[a]ssessing causation was thus a straightforward task.” Pet. App. 34a. To the contrary, Petitioners did not develop the BitTorrent protocol and operate only a handful of websites that make up the BitTorrent environment. Id. at 34a–35a. To the extent that Petitioners’ websites host any data at all, that data is in tiny packets that are not themselves subject to copyright protection. See, e.g., Feist Publ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S. 340, 360 (1991) (bits of information failed to meet the requirements for copyright protection). Thus, these Petitioners do not traffic, distribute, or transmit any copyrighted information, and it is by no means clear that they played any role at all in causing an act of inducement by any U.S. user.

A person who ultimately obtains a complete, copyrighted work through BitTorrent technology retrieves only a tiny portion of the relevant data from any one website. Here, for example, “by far the largest number of torrents tracked by [Mr. Fung’s] Torrentbox tracker are obtained from somewhere other than [Mr. Fung’s] Torrentbox.com.” Pet. App. 34a–35a. As for the “trackers” themselves—which serve to direct traffic in the BitTorrent environment—they do not contain and are not tied to any copyrighted information; they merely serve to connect users with one another. Id. at 11a, 13a. And the mere availability of Mr. Fung’s trackers could not have “caused” any particular act of infringement if the very same role could have been played by an

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identical tracker offered by one of the many, many other producers in this environment.

Moreover, Mr. Fung himself is from Canada, and his websites and trackers are used by users all around the world. The fact that someone, somewhere in the world, may have used his trackers as part of an effort to obtain material protected by U.S. copyright does not show that his actions resulted in any infringement actionable under U.S. law. Accordingly, the expert evidence adduced in this case at the summary judgment stage—an analysis of the non-copyright-protected torrent files available on Petitioners’ websites (see id. at 24a)—did nothing to show any particular act of infringement by any U.S. user for which Petitioners’ websites played a substantial causal role.

In light of the injunction already entered here, any assessment of causation at the damages phase will be too little, too late. The injunction has already imposed onerous and extraordinarily costly consequences on Petitioners and their business. Presumably, the issue of causation will be explored in more detail in the district court before any statutory damages are awarded; if not, the problem with the Ninth Circuit’s analysis will be amplified even further. But even at the present stage, the Ninth Circuit’s approach is both dangerous and costly in terms of innovation. Allowing Respondents to obtain a finding of liability and a permanent injunction without any showing of causation gives them an immense power—a power they may use to isolate a particular participant in a broader Internet marketplace and effectively shut down his operation.

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Even before the assessment of any damages, this is an unacceptable and dangerous result.

This Court is already well aware of the dangers of unlimited secondary liability, particularly in the context of intellectual property rights in our complex, cross-border, multi-actor digital world. Currently pending before the Court is a petition for a writ of certiorari to the Federal Circuit in a patent case dealing with a technology that reduces Internet congestion, where secondary liability for inducement was found despite the absence of any direct infringement at all. See Limelight Networks, Inc. v. Akamai Techs., Inc., No. 12-786. The Court has requested the views of the Solicitor General in this matter and will resolve the petition sometime next Term. The issue in the instant case is similar and equally important, as the Ninth Circuit’s decision—like the Federal Circuit’s decision—threatens expansive secondary liability without a proven link to any direct infringement of intellectual property rights. The fact that the issue arises under patent law in one case and copyright law in the other does not diminish the commonality between them; Grokster III expressly drew its standard for secondary copyright liability from patent law, see 545 U.S. at 936, and the same policy concerns—promoting innovation and creativity—animate both areas of law and will necessarily drive the Court’s analysis.

CONCLUSION For the foregoing reasons, the Court should grant

the petition for a writ of certiorari or, alternatively, summarily reverse the Ninth Circuit’s decision.

20

Respectfully submitted. MICHAEL S. ELKIN THOMAS PATRICK LANE Winston & Strawn LLP 200 Park Avenue New York, NY 10166 (212) 294-6700 IRA P. ROTHKEN JARED R. SMITH Rothken Law Firm 3 Hamilton Landing Suite 280 Novato, CA 94949 (415) 924-4250

LINDA T. COBERLY Counsel of Record Winston & Strawn LLP 35 W. Wacker Drive Chicago, Illinois 60601 (312) 558-8768 lcoberly@winston.com

JENNIFER A. GOLINVEAUX ERIN R. RANAHAN THOMAS J. KEARNEY Winston & Strawn LLP 101 California Street San Francisco, CA 94111 (415) 591-1506

SEPTEMBER 2013

APPENDIX

1a APPENDIX A

FOR PUBLICATION UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT COLUMBIA PICTURES INDUSTRIES, INC.;

DISNEY ENTERPRISES, INC.; PARAMOUNT PICTURES CORPORATION; TRISTAR PICTURES,

INC.; TWENTIETH CENTURY FOX FILM CORPORATION; UNIVERSAL CITY STUDIES

LLLP; UNIVERSAL CITY STUDIOS PRODUCTIONS, LLLP; WARNER BROS

ENTERTAINMENT, INC., Plaintiffs-Appellants,

v. GARY FUNG; ISOHUNT WEB TECHNOLOGIES,

INC., Defendants-Appellees.

No. 10-55946, D.C. No. 2:06-cv-05578-SVW-JC Appeal from the United States District Court for the

Central District of California Stephen V. Wilson, District Judge, Presiding

Argued May 6, 2011 Submitted March 21, 2013

Pasadena, California Filed March 21, 2013

Before: Harry Pregerson, Raymond C. Fishre, and Marsha S. Berzon, Circuit Judges.

Opinion by Judge Berzon

2a SUMMARY1 Copyright

The panel affirmed in part and vacated in part the district court’s judgment in favor of film studios, which alleged that the services offered and websites main-tained by the defendants induced third parties to download infringing copies of the studios’ copyrighted works.

Affirming the district court’s summary judgment, the panel held that under Metro-Goldwyn-Mayer Stu-dios, Inc. v. Grokster Ltd., 545 U.S. 913 (2005), the de-fendants were liable for contributory copyright in-fringement on an inducement theory because the plaintiffs established (1) distribution of a device or product, (2) acts of infringement, (3) an object of pro-moting the product’s use to infringe copyright, and (4) causation in the defendants’ use of the peer-to-peer file sharing protocol known as BitTorrent.

The panel held that the defendants were not enti-tled to protection from liability under any of the safe harbor provisions of the Digital Millennium Copyright Act, including safe harbors provided by 17 U.S.C. § 512(a), (c), and (d) for transitory digital network com-munications, information residing on systems or net-works at direction of users, and information location tools. The panel nonetheless rejected the argument that inducement liability is inherently incompatible with protection under the safe harbors.

Reversing and modifying in part the district court’s permanent injunction, the panel held that certain pro- 1 This summary constitutes no part of the op inion of the court. It has been prepared b y court staff for the convenience o f the reader.

3a visions of the injunction were too vague to meet the notice requirements of Fed. R. Civ. P. 65(d), and cer-tain provisions were unduly burdensome.

COUNSEL Ira P. Rothken, Esq. (argued), Robert L. Kovsky,

Esq., and Jared R. Smith, Esq. of Rothken Law Firm, Novato, California, for Defendant-Appellants.

Paul M. Smith (argued), Steven B. Fabrizio, Wil-liam M. Hohengarten, Duane C. Pozza, Garret A. Lev-in, Caroline D. Lopez, Jenner & Block LLP, Washing-ton, D.C.; Karen R. Thorland, Motion Picture Associa-tion of America, Inc., Sherman Oaks, California; Gianni P. Servodidio, Jenner & Block LLP, New York, New York, for Plaintiffs-Appellees.

Andrew H. Schapiro, Mayer Brown LLP, New York, New

York, for amicus curiae Google, Inc. OPINION

BERZON, Circuit Judge: This case is yet another concerning the application

of established intellectual property concepts to new technologies. See, e.g., UMG Recordings, Inc. v. Shel-ter Capital Partners, LLC, — F.3d — (9th Cir. 2013); Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788 (9th Cir. 2007); Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012). Various film studios alleged that the services offered and websites maintained by Appellants Gary Fung and his company, isoHunt Web Technologies, Inc. (isohunt.com, torrentbox.com, pod-tropolis.com, and ed2k-it.com, collectively referred to in this opinion as “Fung” or the “Fung sites”) in-duced third parties to download infringing copies of

4a the studios’ copyrighted works.2 The district court agreed, holding that the undisputed facts establish that Fung is liable for contributory copyright in-fringement. The district court also held as a matter of law that Fung is not entitled to protection from dam-ages liability under any of the “safe harbor” provisions of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512, Congress’s foray into mediating the com-peting interests in protecting intellectual property in-terests and in encouraging creative development of devices for using the Internet to make information available. By separate order, the district court per-manently enjoined Fung from engaging in a number of activities that ostensibly facilitate the infringement of Plaintiffs’ works.

Fung contests the copyright violation determina-tion as well as the determination of his ineligibility for safe harbor protection under the DMCA. He also ar-gues that the injunction is punitive and unduly vague, violates his rights to free speech, and exceeds the dis-trict court’s jurisdiction by requiring filtering of com-munications occurring outside of the United States. We affirm on the liability issues but reverse in part with regard to the injunctive relief granted.

TECHNOLOGICAL BACKGROUND This case concerns a peer-to-peer file sharing pro-

tocol3 known as BitTorrent. We begin by providing 2 Plaintiffs-Appellees are: Columbia Pictures Industries, Inc.; Disney Enterprises, Inc.; Paramount Pictures Corporation; Tris-tar Pictures, Inc.; Twentieth Century Fox Film Corporation; Universal City Studios LLLP; and Warner Bros. Entertainment, Inc.; collectively referred to as “Columbia.” 3 A “pro tocol” is a set of rules used by computers to communi-cate with each other o ver a network. W eb ster’s II D ictionary 57 1 (3d ed. 20 05).

5a basic background information useful to understanding the role the Fung sites play in copyright infringement.

I. Client-server vs. peer-to-peer networks The traditional method of sharing content over a

network is the relatively straightforward client-server model. In a client-server network, one or more cen-tral computers (called “servers”) store the information; upon request from a user (or “client”), the server sends the requested information to the client. In other words, the server supplies information resources to clients, but the clients do not share any of their re-sources with the server. Client-server networks tend to be relatively secure, but they have a few drawbacks: if the server goes down, the entire network fails; and if many clients make requests at the same time, the server can become overwhelmed, increasing the time it takes the server to fulfill requests from clients. Client-server systems, moreover, tend to be more expensive to set up and operate than other systems. Websites work on a client-server model, with the server storing the website’s content and delivering it to users upon demand.

“Peer-to-peer” (P2P) networking is a generic term used to refer to several different types of technology that have one thing in common: a decentralized infra-structure whereby each participant in the network (typically called a “peer,” but sometimes called a “node”) acts as both a supplier and consumer of infor-mation resources. Although less secure, P2P networks are generally more reliable than client-server net-works and do not suffer from the same bottleneck problems. See generally Metro-Goldwyn-Mayer Studi-os, Inc. v. Grokster, Ltd. (“Grokster III”), 545 U.S. 913, 920 & n.1 (2005). These strengths make P2P networks

6a ideally suited for sharing large files, a feature that has led to their adoption by, among others, those wanting access to pirated media, including music, movies, and television shows. Id. But there also are a great num-ber of non-infringing uses for peer-to- peer networks; copyright infringement is in no sense intrinsic to the technology, any more than making unauthorized cop-ies of television shows was to the video tape recorder. Compare A&M Records v. Napster, Inc., 239 F.3d 1004, 1021 (9th Cir. 2001) with Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417, 456 (1984).

II.II. Architecture of P2P networks In a client-server network, clients can easily learn

what files the server has available for download, be-cause the file are all in one central place. In a P2P network, in contrast, there is no centralized file reposi-tory, so figuring out what information other peers have available is more challenging. The various P2P protocols permit indexing in different ways.

A. “Pure” P2P networks In “pure” P2P networks, a user wanting to find out

which peers have particular content available for download will send out a search query to several of his neighbor peers. As those neighbor peers receive the query, they send a response back to the requesting us-er reporting whether they have any content matching the search terms, and then pass the query on to some of their neighbors, who repeat the same two steps; this process is known as “flooding.” In large P2P networks, the query does not get to every peer on the network, because permitting that amount of signaling traffic would either overwhelm the resources of the peers or use up all of the network’s bandwidth (or both). See Grokster III, 545 U.S. at 920 n. 1 . Therefore, the P2P

7a protocol will usually specify that queries should no longer be passed on after a certain amount of time (the so-called “time to live”) or after they have already been passed on a certain number of times (the “hop count”). Once the querying user has the search results, he can go directly 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), and it causes a lot of signaling traffic on the network. The most popular pure P2P protocol was Gnutella. Streamcast, a Grokster defendant, used Gnutella to power its software application, Morpheus. See Grokster III, 545 U.S. at 921-22.4

B. “Centralized” P2P networks “Centralized” P2P networks, by contrast, use a cen-

tralized server to index the content available on all the peers: the user sends the query to the indexing server, which tells the user which peers have the content available for download. At the same time the user tells the indexing server what files he has available for oth-ers to download. Once the user makes contact with the indexing server, he knows which specific peers to con-tact for the content sought, which reduces search time and signaling traffic as compared to a “pure” P2P pro-tocol.

Although a centralized P2P network has similari-ties with a client-server network, the key difference is that the indexing server does not store or transfer the content. It just tells users which other peers have the content they seek. In other words, searching is central-

4 Gnutella is still around, but it is now a “hybrid” system, a con-cept discussed below. Cf Grokster III, 545 U.S. at 921 n.3.

8a ized, but file transfers are peer-to-peer. One conse-quent disadvantage of a centralized P2P network is that it has a single point of potential failure: the index-ing server. If it fails, the entire system fails. Napster was a centralized P2P network, see generally Napster, 239 F.3d at 1011-13, as, in part, is eDonkey, the tech-nology upon which one of the Fung sites, ed2k-it.com, is based.

C. Hybrid P2P networks Finally, there are a number of hybrid protocols.

The most common type of hybrid systems use what are called “supernodes.” In these systems, each peer is called a “node,” and each node is assigned to one “su-pernode.” A supernode is a regular node that has been “promoted,” usually because it has more bandwith available, to perform certain tasks. Each supernode indexes the content available on each of the nodes at-tached to it, called its “descendants.” When a node sends out a search query, it goes just to the supernode to which it is attached. The supernode responds to the query by telling the node which of its descendant nodes has the desired content. The supernode may al-so forward the query on to other supernodes, which may or may not forward the query on further, depend-ing on the protocol. See generally Grokster III, 545 U.S. at 921.

The use of supernodes is meant to broaden the search pool as much as possible while limiting redun-dancy in the search. As with centralized P2P systems, supernodes only handle search queries, telling the nodes the addresses of the other nodes that have the content sought; they are not ordinarily involved in the actual file transfers themselves. Grokster’s software application was based on a P2P protocol, FastTrack,

9a that uses supernodes. See Grokster III, 545 U.S. at 921.

III. BitTorrent protocol The BitTorrent protocol, first released in 2001, is a

further variant on the P2P theme. BitTorrent is a hy-brid protocol with some key differences from “super-node” systems. We discuss those differences after first describing BitTorrent’s distinguishing feature: how it facilitates file transfers.

A. BitTorrent file transfers. Traditionally, if a user wanted to download a file

on a P2P network, he would locate another peer with the desired file and download the entire file from that peer. Alternatively, if the download was interrupted—if, for example, the peer sending the file signed off—the user would find another peer that had the file and resume the download from that peer. The reliability and duration of the download depended on the strength of the connection between those two peers Additionally, the number of peers sharing a particular file was limited by the fact that a user could only begin sharing his copy of the file with other peers once he had completed the download.

With the BitTorrent protocol, however, the file is broken up into lots of smaller “pieces,” each of which is usually around 256 kilobytes (one-fourth of one mega-byte) in size. Whereas under the older protocols the user would download the entire file in one large chunk from a single peer at a time, BitTorrent permits users to download lots of different pieces at the same time from different peers. Once a user has downloaded all the pieces, the file is automatically reassembled into its original form.

10a BitTorrent has several advantages over the tradi-

tional downloading method. Because a user can down-load different pieces of the file from many different peers at the same time, downloading is much faster. Additionally, even before the entire download is com-plete, a user can begin sharing the pieces he has al-ready downloaded with other peers, making the pro-cess faster for others. Generally, at any given time, each user is both downloading and uploading several different pieces of a file from and to multiple other us-ers; the collection of peers swapping pieces with each other is known as a “swarm.”

B. BitTorrent architecture To describe the structure of BitTorrent further, an

example is helpful. Let us suppose that an individual (the “publisher”) decides to share via BitTorrent her copy of a particular movie. The movie file, we shall as-sume, is quite large, and is already on the publisher’s computer; the publisher has also already downloaded and installed a BitTorrent “client” program on her computer.5

To share her copy of the movie file, the publisher first creates a very small file called a “torrent” or “dot-torrent” file, which has the file extension “.torrent.” The torrent file is quite small, as it contains none of the actual content that may be copyrighted but, in- 5 The client program is the software application used to access the P2P network. Unlike Grokster or Napster, which were “closed” systems that permitted only authorized client programs to connect to their networks, BitTorrent is an “open” system, permitting the use of any number of client programs, nearly all of which are free. The Fung sites do not supply any of the client programs necessary to use dot-torrent files to download the cop-ies of movies or other content files; users of the Fung sites have to download such a program from elsewhere.

11a stead, a minimal amount of vital information: the size of the (separate) movie file being shared; the number of “pieces” the movie file is broken into; a cryptograph-ic “hash”6 that peers will use to authenticate the downloaded file as a true and complete copy of the original; and the address of one or more “trackers.” Trackers, discussed more below, serve many of the functions of an indexing server; there are many differ-ent trackers, and they typically are not connected or related to each other.7

Second, the publisher makes the torrent file avail-able by uploading it to one or more websites (“torrent sites”) that collect, organize, index, and host torrent files. Whereas Napster and Grokster had search func-tionality built into their client programs, the standard BitTorrent client program has no such capability.8 BitTorrent users thus rely on torrent sites to find and share torrent files. There is no central repository of torrent files, but torrent sites strive to have the most comprehensive torrent collection possible.

The Fung sites have two primary methods of ac-quiring torrent files: soliciting them from users, who then upload the files; and using several automated

6 As Plaintiffs’ expert explained, “A hash is a unique digital identifier of certain data. It is usually written as a forty-digit long hexadecimal number, where each digit can be 0-9 or A—F.” See also Arista Records LLC v. Lime Group LLC, 784 F. Supp. 2d 398, 423 n.21 (S.D.N.Y. 2011). 7 In an April 2008 declaration, Fung averred that there are “close to two thousand different trackers run by various inde-pendent operators.” The source of this statistic was not given. 8 A few BitTorrent client programs have begun to integrate search and download processes in such a way that torrent sites become unnecessary, but that fact is not germane to any issue in this case.

12a processes (called “bots,” “crawlers,” or “spiders”) that collect torrent files from other torrent sites. Because of this latter route, which other torrent sites also rou-tinely use, torrent sites tend to have largely overlap-ping collections of torrents. According to a declaration Fung signed in April 2008, there were then over 400 torrent sites. Because the torrent sites typically con-tain only torrent files, no copyrighted material resides on these sites.

Lastly, the publisher leaves her computer on and connected to the Internet, with her BitTorrent pro-gram running. The publisher’s job is essentially done; her computer will continue to communicate with the tracker assigned to the torrent file she 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 torrent site to which the torrent file was uploaded and runs a search for the movie. The search results then provide the torrent file for the user to download. Once the user downloads the torrent file and opens it with his BitTorrent program, the program reads the torrent file, learns the address of the tracker, and contacts it. The program then informs the tracker that it is look-ing for the movie associated with the downloaded tor-rent file and asks if there are any peers online that have the movie available for download. Assuming that publishers of that movie are online, the tracker will communicate their address to the user’s BitTorrent program. The user’s BitTorrent program will then con-tact the publishers’ computers directly and begin downloading the pieces of the movie. At this point, the various publishers are known as “seeders,” and the downloading user a “leecher.” Once the leecher has downloaded one or more pieces of the movie, he, too,

13a can be a seeder by sending other leechers the pieces that he has downloaded.

A final few words on trackers. Although no content is stored on or passes through trackers, they serve as a central hub of sorts, managing traffic for their associ-ated torrents.9 The tracker’s primary purpose is to provide a list of peers that have files available for download. Fung avers that this function is the only one provided by his two trackers, discussed below.

Because trackers are periodically unavailable—they can go offline for routine maintenance, reach ca-pacity, be shuttered by law enforcement, and so on—torrent files will often list addresses for more than one tracker. That way, if the first (or “primary”) tracker is down, the user’s client program can proceed to contact the backup tracker(s).

IV. Fung’s role Three of Fung’s websites—isohunt.com (“isoHunt”);

torrentbox.com (“Torrentbox”), and podtropolis.com (“Podtropolis”)—are torrent sites. As described above, they collect and organize torrent files and permit users to browse in and search their collections. Searching is done via keyword; users can also browse by category (movies, television shows, music, etc.).10

9 According to the record in this case, it is also possible, although less efficient, to distribute torrent files and to download their associated content without a tracker, using a technology called DHT, or distributed hash table. 10 As torrent files are added, isoHunt uses an automated process that attempts to place the torrent file in the appropriate catego-ry by looking for certain keywords. Torrent files with the key-words “DVD” and “cam,” for instance—the latter of which refers to a recording of a movie made with a handheld camcorder—would be categorized as movies.

14a IsoHunt, however, which appears to be Fung’s

“flagship” site, goes a step beyond merely collecting and organizing torrent files. Each time a torrent file is added to isoHunt, the website automatically modifies the torrent file by adding additional backup trackers to it. That way, if the primary tracker is down, the us-ers’ BitTorrent client program will contact the backup trackers, making it more likely that the user will be successful in downloading the content sought. In other words, isoHunt alters the torrent files it hosts, making them more reliable than when they are uploaded to the site.

Torrentbox and Podtropolis, in addition to being torrent sites, run associated trackers.11 Their collec-tions of torrent files appear to be fairly small Every torrent file available on Torrentbox and Podtropolis is tracked by the Torrentbox and Podtropolis trackers, respectively, but the Torrentbox and Podtropolis trackers are much busier than the Torrentbox and Podtropolis websites. For example, a torrent file for the movie “Casino Royale” was downloaded from Tor-rentbox.com 50,000 times, but the Torrentbox tracker registered approximately 1.5 million downloads of the movie. This disparity indicates that users obtain the torrent files tracked by Torrentbox and Podtropolis from torrent sites other than Torrentbox.com and Pod- 11 Fung’s fourth website, ed2k-it.com (“Ed2k-it”), is similar to the torrent sites, but works through technology called eDonkey. eDonkey is mostly a centralized system like Napster, but eDon-key client programs—including the popular eMule—can also search other peers directly, as in a pure P2P network. For pur-poses of this case, however, the distinctions between the tech-nologies are irrelevant; as the district court noted, Fung makes no argument that Ed2k-it should be treated differently than the torrent sites. See Columbia Pictures Indus., Inc. v. Fung, No. CV 06-5578, 2009 WL 6355911, at *2 n.4 (C.D. Cal. Dec. 21, 2009).

15a tropolis.com. The Torrentbox and Podtropolis websites both have continually-updated lists of, inter alia, the “Top 20 TV Shows,” the “Top 20 Movies,” and the “Top 20 Most Active Torrents.” These rankings are based on the number of seeders and leechers for each particular torrent file, as measured by the Torrentbox and Pod-tropolis trackers. IsoHunt does not run a tracker, so it cannot measure how frequently the content associated with each torrent file is downloaded; instead, it keeps a continually updated list of the “Top Searches.”

IsoHunt also hosts an electronic message board, or “forum,” where users can post comments, queries, and the like. In addition to posting to the forum himself, Fung also had some role in moderating posts to the forum.

PROCEDURAL HISTORY This suit, against Fung and several John Does,

originally filed in the Southern District of New York, was transferred, on Fung’s motion, to the Central Dis-trict of California. See Columbia Pictures Indus., Inc. v. Fung, 447 F. Supp. 2d 306 (S.D.N.Y. 2006). Colum-bia then filed an amended complaint, alleging that Fung was liable for vicarious and contributory copy-right infringement, in violation of 17 U. S.C. § 106.

On Columbia’s motion for summary judgment on liability, the district court held Fung liable for con-tributory infringement, for inducing others to infringe Plaintiffs’ copyrighted material.12 See Columbia Pic-tures Indus., Inc. v. Fung, No. CV 06-5578, 2009 WL 12 In light of its holding on the inducement theory, the district court did not evaluate whether Fung was liable under the “ma-terial contribution” theory of contributory infringement, see Per-fect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146,1170-72 (9th Cir. 2007), or as vicarious copyright infringers, id. at 1173-75.

16a 6355911, at *15 (C.D. Cal. Dec. 21, 2009). Although Fung sought protection in the DMCA safe harbors for “[t]ransitory digital network communications,” 17 U. S.C. § 512(a), “[i]nformation residing on systems or networks at direction of users,” id. § 512(c), and “[i]nformation location tools,” id. § 512(d), the district court concluded that none of the safe harbors were ap-plicable.

The district court later entered a permanent in-junction that prohibits, generally speaking, “knowing-ly engaging in any activities having the object or effect of fostering infringement of Plaintiffs’ Copyrighted Works, including without limitation by engaging in” certain specified activities. The injunction applies to a “list of titles” provided by Columbia. With regard to the initial list of titles provided, Fung was required to comply with the terms of the injunction—most likely, though not necessarily, by implementing a filtering device—within 14 calendar days. Columbia may sup-plement the list “without restriction”; Fung must com-ply with the terms of the injunction as to the new ti-tles within 24 hours of receiving any supplemented list. The injunction binds both Isohunt Web Technolo-gies, Inc., and Fung personally, “wherever they may be found, including, without limitation, in Canada” (where Fung is from).

The day after the injunction was entered, Columbia served Fung with an initial list of over 23,000 titles of copyrighted works. Many of the titles were or con-tained generic terms, such as “10,” “21,” “Cars,” “Dave,” etc. Other titles were identical or substantially similar to titles of works in the public domain, includ-ing “Jungle Book” and “Miracle on 34th Street,” or to titles of works to which Columbia does not own the copyrights. Citing those features of the initial list,

17a Fung protested that the permanent injunction was too broad. In response, the district court modified the in-junction to require that Columbia provide additional information about the listed copyrighted material, in-cluding the date the material was issued or reissued and the type of media their copyright covers (e.g., film or television show), so that Fung could more readily identify the material. At the same time, the court also admonished that Fung’s concerns were somewhat overblown, as any technical or inadvertent violations would not support a civil contempt finding if all rea-sonable steps to comply with the injunction were tak-en.

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

DISCUSSION As always, we review the district court’s grant of

summary judgment de novo, Au-Tomotive Gold Inc. v. Volkswagen of Am., Inc., 603 F.3d 1133, 1135 (9th Cir. 2010), and “may affirm the district court’s holding on any ground raised below and fairly supported by the record,” Proctor v. Vishay Intertechnology Inc., 584 F.3d 1208, 1226 (9th Cir. 2009). As to the permanent injunction, we review the legal conclusions de novo, the factual findings for clear error, and the decision to grant a permanent injunction, as well as its scope, for an abuse of discretion. See Lemons v. Bradbury, 538 F.3d 1098, 1102 (9th Cir. 2008); Sandpiper Vill. Con-do. Ass ‘n v. Louisiana-Pacific Corp., 428 F.3d 831, 840 (9th Cir. 2005); Scott v. Pasadena Unified Sch. Dist., 306 F.3d 646, 653 (9th Cir. 2002). To review for abuse of discretion, “we first look to whether the trial court identified and applied the correct legal rule . . . [then] to whether the trial court’s resolution of the motion

18a resulted from a factual finding that was illogical, im-plausible, or without support in inferences that may be drawn from the facts in the record.” United States v. Hinkson, 585 F.3d 1247, 1263 (9th Cir. 2009) (en banc).

I. Liability A. Inducement liability under Grokster III

The “inducement” theory, on which the district court’s liability holding was grounded, was spelled out in the Internet technology context by the Supreme Court in Grokster III. Considering how to apply copy-right law to file sharing over P2P networks, Grokster III addressed the circumstances in which individuals and companies are secondarily liable for the copyright infringement of others using the Internet to download protected material.

Grokster III’s inducement holding is best under-stood by first backtracking to Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), the seminal Supreme Court case concerning the use of new technologies to reproduce copyrighted material. Sony considered whether secondary liability for in-fringement could arise solely from the distribution of a commercial product capable of copying copyrighted material—there, the Betamax video tape recorder, made by Sony. Owners of copyrights to television pro-grams maintained that Sony could be liable for copy-right infringement when its customers used the Beta-max to unlawfully tape television shows. There was no evidence that Sony sought to encourage copyright in-fringement through use of the Betamax or had taken steps to profit from unlawful taping. See id. at 437-38. Instead, the only conceivable basis for secondary liabil-ity was distribution of the product “with constructive

19a knowledge of the fact that [Sony’s] customers may use that equipment to make unauthorized copies of copy-righted material.” Id. at 439.

Finding “no precedent in the law of copyright for the imposition of vicarious liability on such a theory,” the Court borrowed from the “closest analogy” it could find, patent law’s “staple article of commerce doctrine.” Id. at 439-42. Under that doctrine, distribution of a component part of a patented device will not violate the patent if the component is suitable for substantial non-infringing uses. See id. at 440; 35 U. S.C. § 271(c). As Sony explained, the staple article of commerce doc-trine balances competing interests,

a copyright holder’s legitimate demand for effective—not merely symbolic—protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copy-ing equipment, like the sale of other ar-ticles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjec-tionable purposes. Indeed, it need mere-ly be capable of substantial noninfring-ing uses.

464 U.S. at 442. As the Betamax was “capable of commercially significant noninfringing uses,” the Court held Sony not liable for contributory copyright infringement.13 Id.

13 Sony declined, however, to “give precise content to the ques-tion of how much use is commercially significant.” 464 U.S. at 442. The majority opinion in Grokster III also refused “to add a more quantified description of the point of balance between pro-

20a The other major Supreme Court case addressing

the mass copying of copyrighted material—there, mu-sic and films—through technological means, Grokster III, concerned the use of software applications based on “pure” and “hybrid” P2P network protocols. The de-fendants, the providers of the copying software to the public, argued for a contributory liability approach similar to that adopted in Sony: as their products were indisputably capable of substantial non-infringing us-es, they maintained, they could not be secondarily lia-ble based on their knowledge that their products could be used to infringe copyrights. Instead, the Grokster defendants suggested, they could be liable for contrib-utory infringement only if they had actual knowledge of a specific infringement at a time when they were capable of preventing it. Accepting this theory and recognizing that there was no evidence regarding timely knowledge of specific acts of infringement, the district court granted summary judgment to the de-fendants, Metro-Goldwyn-Mayer Studios, Inc. v. Grok-ster, Ltd. (“Grokster I”), 259 F. Supp. 2d 1029, 1046 (C.D. Cal. 2003), and we affirmed, Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd. (“Grokster IT), 380 F.3d 1154, 1167 (9th Cir. 2004).

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

limits imputing culpable intent as a matter of law from the characteristics or

tection and commerce when liability rests solely on distribution with knowledge that unlawful use will occur,” 545 U.S. at 934, though two concurring opinions discussed the issue at length, see id. at 941-49 (Ginsburg, J., concurring); id. at 949-66 (Brey-er, J., concurring).

21a uses of a distributed product. But noth-ing in Sony requires courts to ignore ev-idence of intent if there is such evi-dence, and the case was never meant to foreclose rules of fault-based liability derived from the common law.

Grokster III, 545 U.S. at 934-35 (emphasis added). The “staple article of commerce doctrine” adopted in Sony, Grokster III explained, “absolves the equivocal conduct of selling an item with substantial lawful as well as unlawful uses, and limits liability to instances of more acute fault than the mere understanding that some of one’s products will be misused.” Id. at 932-33 (emphasis added). “Thus, where evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, Sony’s staple-article rule will not preclude liability.” Id. at 935.

Grokster III went on to enunciate the “inducement rule,” also borrowed from patent law, providing that “one who distributes a device with the object of pro-moting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of in-fringement by third parties.” Id. at 936-37. This in-ducement principle, as enunciated in Grokster III, has four elements: (1) the distribution of a device or prod-uct, (2) acts of infringement, (3) an object of promoting its use to infringe copyright, and (4) causation. See id. i. Distribution of a “device” or “product”

In describing the inducement liability standard, Grokster III phrased it as applying to one who distrib-utes a “device,” see id., although it also used the word

22a “product,” seemingly interchangeably, see id. at 934-37. The “device” or “product” was the software devel-oped and distributed by the defendants—for Grokster, its eponymous software, based on FastTrack technolo-gy; and for StreamCast, also a defendant in Grokster, its software application, Morpheus, based on Gnutella. See id. at 940 (describing the “device” as “the software in this case”).

The analogy between Grokster III and this case is not perfect. Here, Fung did not develop and does not provide the client programs used to download media products, nor did he develop the BitTorrent protocol (which is maintained by non-party BitTorrent, Inc., a privately-held company founded by the creators of the protocol). Fung argues that because he did not develop or distribute any “device”—that is, the software or technology used for downloading—he is not liable un-der the inducement rule enunciated in Grokster III.

We cannot agree. Unlike patents, copyrights pro-tect expression, not products or devices. Inducement liability is not limited, either logically or as articulated in Grokster III, to those who distribute a “device.” As a result, one can infringe a copyright through culpable actions resulting in the impermissible reproduction of copyrighted expression, whether those actions involve making available a device or product or providing some service used in accomplishing the infringement. For example, a retail copying service that accepts and copies copyrighted material for customers after broad-ly promoting its willingness to do so may be liable for the resulting infringement although it does not pro-duce any copying machines or sell them; all it provides is the “service” of copying. Whether the service makes copies using machines of its own manufacture, ma-chines it owns, or machines in someone else’s shop

23a would not matter, as copyright liability depends on one’s purposeful involvement in the process of repro-ducing copyrighted material, not the precise nature of that involvement.

Grokster III did phrase the rule it applied princi-pally in terms of a “device.” But that was because it was responding to the main argument made by the de-fendants in that case—that they were entitled to pro-tection for commercial products capable of significant non-infringing uses, just as Sony was insulated from liability for infringing use of the Betamax. See Grok-ster III, 545 U.S. at 931-34. When explaining the ra-tionale for permitting secondary infringement liability, Grokster III used more general language:

When a widely shared service or product is used to commit infringement, it may be impossible to enforce rights in the protected work effectively against all di-rect infringers, the only practical alter-native being to go against the distribu-tor of the copying device for secondary liability on a theory of contributory or vicarious infringement.

Id. at 929-30 (emphases added); see also id. at 924 (describing Napster as a “notorious file-sharing ser-vice”); id. at 925 (describing one defendant’s efforts “to market its service as the best Napster alterna-tive”); id. at 937-38; id. at 939 (describing the import of defendants’ “efforts to supply services to former Napster users”).

Since Grokster III, we have not considered a claim of inducement liability on facts closely comparable to those here. But we have, in two cases, considered claims of inducement liability against parties provid-

24a ing services as opposed to products, without suggest-ing that the difference matters. Perfect 10, Inc. v. Visa Int'l Serv. Ass’n, 494 F.3d 788, 800-02 (9th Cir. 2007); Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1170 n.11 (9th Cir. 2007). The two Perfect 10 cases confirm that, as one would expect, the inducement copyright doctrine explicated in Grokster III applies to services available on the Internet as well as to devices or products.

We hold that Columbia has carried its burden on summary judgment as to the first element of the Grokster III test for inducement liability. ii. Acts of infringement

To prove copyright infringement on an inducement theory, Columbia also had to adduce “evidence of ac-tual infringement by” users of Fung’s services. Grok-ster III, 545 U.S. at 940. This they have done.

Both uploading and downloading copyrighted ma-terial are infringing acts. The former violates the cop-yright holder’s right to distribution, the latter the right to reproduction. See 17 U.S.C. § 106(1) & (3); Napster, 239 F.3d at 1014. Based on statistical sam-pling, Columbia’s expert averred that between 90 and 96% of the content associated with the torrent files available on Fung’s websites are for “confirmed or highly likely copyright infringing” material. Although Fung takes issue with certain aspects of the expert’s methodology, he does not attempt to rebut the factual assertion that his services were widely used to infringe copyrights. Indeed, even giving Fung the benefit of all doubts by tripling the margins of error in the expert’s reports, Columbia would still have such overwhelming evidence that any reasonable jury would have to con-clude that the vastly predominant use of Fung’s ser-

25a vices has been to infringe copyrights.

In sum, as in Grokster III, although an exact calcu-lation of infringing use, as a basis for a claim of dam-ages, is subject to dispute, there is no question” that Plaintiffs have met their burden on summary judg-ment to warrant equitable relief. Grokster III, 545 U.S. at 940-41. iii. With the object of promoting its use to infringe copyright

The third, usually dispositive, requirement for in-ducement liability is that the “device” or service be distributed “with the object of promoting its use to in-fringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” Id. at 936-37.

As an initial matter, Fung argues that this factor includes two separate elements—the improper object and “clear expression or other affirmative steps taken to foster infringement.” Not so. “[C]lear expression or other affirmative 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 proof of the improper object. Confirm-ing that understanding of the “clear expression” phrase, Grokster III emphasized, right after articulat-ing the inducement factor, that the improper object must be plain and must be affirmatively communicat-ed through words or actions:

We are, of course, mindful of the need to keep from trenching on regular com-merce or discouraging the development of technologies with lawful and unlawful potential. Accordingly, just as Sony did

26a not find intentional inducement despite the knowledge of the [Betamax] manu-facturer that its device could be used to infringe, mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability. Nor would ordi-nary acts incident to product distribu-tion, such as offering customers tech-nical support or product updates, sup-port liability in themselves. The in-ducement rule, instead, premises liabil-ity on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or dis-courage innovation having a lawful promise

Id. at 937 (citation omitted). In Grokster III itself, the Court found ample evi-

dence, of several types, to support inducement liabil-ity. See id. at 937-40. First, Grokster III relied in part on advertisements as proof of an impermissible, in-fringing purpose, noting that “[t]he classic instance of inducement is by advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations.” Id. at 937. Both Grokster III de-fendants had engaged in such affirmative solicitation, advertising their software as an alternative to Nap-ster—which notoriously facilitated wide-scale copy-right infringement—at a time when Napster’s unlaw-ful activities were about to be shuttered. See id. at 937-38.

Second, Grokster III relied for proof of Grokster’s infringing purpose on communications that, while not

27a in haec verba promoting infringing uses, provided in-formation affirmatively supporting such uses. “[B]oth companies,” moreover, “communicated a clear message by responding affirmatively to requests for help in lo-cating and playing copyrighted materials.” Id. at 938. Thus, Grokster included as evidence of an infringing purpose an electronic newsletter distributed by Grok-ster that linked to articles promoting Grokster’s ability to access copyrighted music. See id. at 938.

A third category of “clear expression” recognized in Grokster III as pertinent to proof of improper purpose was explicit internal communication to that effect. As to one of the defendants, Streamcast, “internal com-munications,” including proposed advertising designs, provided “unequivocal indications of unlawful pur-pose.” Id. at 938. The Court explained that “[w]hether the messages were communicated [to potential cus-tomers] is not . . . the point . . . . The function of the message in the theory of inducement is to prove by a defendant’s own statements that his unlawful purpose disqualifies him from claiming protection.” Id. Thus, the Court went on, “[p]roving that a message was sent out . . . is the preeminent but not exclusive way of showing that active steps were taken with the purpose of bringing about infringing acts.” Id.

Grokster III also mentioned two sorts of “other af-firmative steps” as permissible evidence that support an inference of an intent to induce infringement, while cautioning that such sorts of circumstantial evidence would not be independently sufficient. The first was that “neither company attempted to develop filtering tools or other mechanisms to diminish the infringing activity using their software,” which the Court said “underscore[d]” the defendants’ “intentional facilita-tion of their users’ infringement.” Id. at 939. The

28a Court was careful to caution that “in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent in-fringement.” Id. at 939 n.12.

Similarly, Grokster III pointed to the fact that the defendants “make money by selling advertising space, by directing ads to the screens of computers employing their software.” Id. at 940. Because “the extent of the software’s use determines the gain to the distributors, the commercial sense of their enterprise turns on high-volume use, which the record shows is infring-ing.” Id. Here again, however, “[t]his evidence alone would not justify an inference of unlawful intent.” Id.

Using these Grokster III evidentiary categories and cautions as templates, we conclude that there is more than enough unrebutted evidence in the summary judgment record to prove that Fung offered his ser-vices with the object of promoting their use to infringe copyrighted material. No reasonable jury could find otherwise.

As for the necessary “clear expression or other af-firmative steps” evidence indicative of unlawful intent, the most important is Fung’s active encouragement of the uploading of torrent files concerning copyrighted content. For a time, for example, isoHunt prominently featured a list of “Box Office Movies,” containing the 20 highest-grossing movies then playing in U.S. thea-ters. When a user clicked on a listed title, she would be invited to “upload [a] torrent” file for that movie. In other words, she would be asked to upload a file that, once downloaded by other users, would lead directly to their obtaining infringing content. Fung also posted numerous messages to the isoHunt forum requesting

29a that users upload torrents for specific copyrighted films; in other posts, he provided links to torrent files for copyrighted movies, urging users to download them.14 Though not the exclusive means of proving in-ducement, we have characterized a distributor’s com-munication of an inducing message to its users as “crucial” to establishing inducement liability. See Visa, 494 F.3d at 801 (quoting Grokster III, 545 U.S. at 937). That crucial requirement was met here. Like Grok-ster’s advertisements—indeed, even more so—Fung’s posts were explicitly “designed to stimulate others to commit [copyright] violations,” and so are highly pro-bative of an unlawful intent. Grokster III, 545 U.S. at 937.15

As in Grokster, moreover, Fung “communicated a clear message by responding affirmatively to requests for help in locating and playing copyrighted materi-als.” Id. at 938. The record is replete with instances of Fung responding personally to queries for assistance in: uploading torrent files corresponding to obviously copyrighted material, finding particular copyrighted

14 In addition to statements made by Fung personally, the dis-trict court relied on statements made by individuals who served as “moderators” of the isoHunt forum, finding that there was an agency relationship between those individuals and Fung. Fung maintains that he did not have the requisite control over the moderators for an agency relationship to exist. In light of the other evidence of unlawful intent, we need not and do not rely on statements made by anyone other than Fung. Nor do we rely on the generic organizational structure of Fung’s websites—i.e., that they organized files in browsable categories or used an au-tomated indexing program that matched filenames with specific terms. These features as used by Fung do not themselves send the type of inducing “message” that would be adequate to prove an unlawful intent. See Grokster III, 545 U.S. at 937. 15 See infra pp. 34-35.

30a movies and television shows, getting pirated material to play properly, and burning the infringing content onto DVDs for playback on televisions.

Two types of supporting evidence, insufficient in themselves—like the similar evidence in Grokster /H—corroborate the conclusion that Fung “acted with a purpose to cause copyright violations by use of’ their services. Id. at 938. First, Fung took no steps “to de-velop filtering tools or other mechanisms to diminish the infringing activity” by those using his services.16 Id. at 939. Second, Fung generates revenue almost ex-clusively by selling advertising space on his websites. The more users who visit Fung’s websites and view the advertisements supplied by Fung’s business part-ners, the greater the revenues to Fung. Because “the extent of the [services’] use determines the gain to [Fung], the commercial sense of [his] enterprise turns on high-volume use, which the record shows is infring-ing.” Id. at 940. Given both the clear expression and other affirmative steps and the supporting evidence, Fung’s “unlawful objective is unmistakable.” Id. iv. Causation

Grokster III mentions causation only indirectly, by speaking of “resulting acts of infringement by third

16 Fung did attempt to keep certain types of torrents off his web-sites. First, because Fung is personally opposed to pornography, he took steps to keep torrent files related to pornography out of his sites’ collections. Second, Fung attempted to remove torrent files that led to downloads of fake or corrupted content files. These efforts were not directed at “diminish[ing] the infringing activity” taking place, Grokster III, 545 U.S. at 939, and so are not pertinent to the inducement inquiry (except to show that Fung had the means to filter content on his websites when he chose to do so).

31a parties.” Id. at 937 (emphasis added).17 The parties here advance competing interpretations of the causa-tion requirement adopted through that locution: Fung and amicus curiae Google argue that the acts of in-fringement must be caused by the manifestations of the distributor’s improper object—that is, by the in-ducing messages themselves. Columbia, on the other hand, maintains that it need only prove that the “acts of infringement by third parties” were caused by the product distributed or services provided.

We think Columbia’s interpretation of Grokster III is the better one. On that view, if one provides a ser-vice that could be used to infringe copyrights, with the manifested intent that the service actually be used in that manner, that person is liable for the infringement that occurs through the use of the service. See id. at 937. As Grokster III explained:

It is not only that encouraging a par-ticular consumer to infringe a copyright can give rise to secondary liability for the infringement that results. Induce-ment liability goes beyond that, and the distribution of a product can itself give rise to liability where evidence shows that the distributor intended and en-couraged the product to be used to in-fringe. In such a case, the culpable act is not merely the encouragement of in-

17 As a reminder, Grokster III’s articulation was that “one who distributes a device with the object of promoting its use to in-fringe copyright, as shown by clear expression or other affirma-tive steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Id. at 936-37.

32a fringement but also the distribution of the tool intended for infringing use.

Id. at 940 n.13; see also 3-12 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 12.04[A] [4] [b] (Matthew Bender, rev. 2010).

We are mindful, however, of the potential severity of a loose causation theory for inducement liability. Under this theory of liability, the only causation re-quirement is that the product or service at issue was used to infringe the plaintiff s copyrights. The possible reach of liability is enormous, particularly in the digi-tal age.

Copyright law attempts to strike a balance amongst three competing interests: those of the copy-right holders in benefitting from their labor; those of entrepreneurs in having the latitude to invent new technologies without fear of being held liable if their innovations are used by others in unintended infring-ing ways; and those of the public in having access both to entertainment options protected by copyright and to new technologies that enhance productivity and quali-ty of life. See generally Grokster III, 545 U.S. at 937; Sony, 464 U.S. at 428-32. Because copyright law’s “ul-timate aim is . . . to stimulate artistic creativity for the general public good,” Sony, 464 U.S. at 432 (quoting Twentieth Century Music Corp. v. Aiken, 422 U.S. 151, 156 (1975)), it is important that we not permit in-ducement liability’s relatively lax causation require-ment to “enlarge the scope of [copyright’s] statutory monopolies to encompass control over an article of commerce”—such as technology capable of substantial non-infringing uses—”that is not the subject of copy-right protection.” Sony, 464 U.S. at 421.

We emphasize a few points in this regard. First, as

33a previously discussed, proper proof of the defendant’s intent that its product or service be used to infringe copyrights is paramount. “[M]ere knowledge of infring-ing potential or of actual infringing uses” does not sub-ject a product distributor or service provider to liabil-ity. Grokster III, 545 U.S. at 937. When dealing with corporate or entity defendants, moreover, the relevant intent must be that of the entity itself, as defined by traditional agency law principles; liability cannot be premised on stray or unauthorized statements that cannot fairly be imputed to the entity.18 See id. at 937 (discussing the evidence that “StreamCast and Grok-ster,” each a corporate entity, “communicated an in-ducing message to their software users”).

Moreover, proving that an entity had an unlawful purpose at a particular time in providing a product or service does not infinitely expand its liability in either temporal direction. If an entity begins providing a ser-vice with infringing potential at time A, but does not appreciate that potential until later and so does not develop and exhibit the requisite intent to support in-ducement liability until time B, it would not be held liable for the infringement that occurred between time A and B. Relatedly, an individual or entity’s unlawful objective at time 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 the infringing use of their prod-uct, lest the public be deprived of the useful good or service they are still capable of producing. See Grok-ster III, 545 U.S. at 937; Sony, 464 U.S. at 432.

18 There is no question in this case that Fung was authorized to and did speak on behalf of the corporate defendant, isoHunt Web Technologies, Inc.

34a We also note, as Fung points out, that Grokster III

seemingly presupposes a condition that is absent in this case: that there is but a single producer of the “device” in question. Only Sony sold the Betamax, and only Grokster and Streamcast distributed their respec-tive software applications. Assessing causation was thus a straightforward task. In Sony, for example, there was no question that some customers would pur-chase and use the Betamax in ways that infringed copyright. Thus, in a “but-for” sense, there was no question that Sony caused whatever infringement re-sulted from the use of Betamax sets; the Court none-theless held Sony not liable on the ground that even if Sony caused the infringement, it was not at fault, with fault measured by Sony’s intent. But as Grokster III explained, “nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability.” 545 U.S. at 934. Grokster III thus held that where there is sufficient evidence of fault—that is, an unlawful objective distributors are liable for causing the infringement that resulted from use of their prod-ucts. See id. at 940. In other words, Grokster III and Sony were able to assume causation and assess liabil-ity (or not) based on fault. In the present case, howev-er, where other individuals and entities provide ser-vices identical to those offered by Fung, causation, even in the relatively loose sense we have delineated, cannot be assumed, even though fault is unquestiona-bly present.

Fung argues, on this basis, that some of the acts of infringement by third parties relied upon by the dis-trict court may not have involved his websites at all. He points out, for example, that by far the largest number of torrents tracked by the Torrentbox tracker

35a are obtained from somewhere other than Tor-rentbox.com. If a user obtained a torrent from a source other than his websites, Fung maintains, he cannot be held liable for the infringement that resulted. Cf. Per-fect 10, Inc. v. Google, Inc., 653 F.3d 976, 982 (9th Cir. 2011) (affirming the district court’s denial of a prelim-inary injunction based on Google’s alleged direct copy-right infringement because the plaintiff, Perfect 10, failed to show “a sufficient causal connection between irreparable harm to [its] business and Google’s opera-tion of its search engine”); Visa, 494 F.3d at 796-802 (affirming the district court’s dismissal under Federal Rule of Civil Procedure 12(b)(6) in part because the “causal chain” between defendant credit card compa-nies’ services and infringing activity by Internet users was too attenuated).

On the other hand, Fung’s services encompass more than the provision of torrent files. Fung’s track-ers manage traffic for torrent files, obtained from Tor-rentbox and Podtropolis as well as other torrent sites, which enables users to download copyrighted content. If Plaintiffs can show a sufficient casual connection between users’ infringing activity and the use of Fung’s trackers, the fact that torrent files were ob-tained from elsewhere may not relieve Fung of liabil-ity. See Grokster III, 545 U.S. at 940.

We do not decide the degree to which Fung can be held liable for having caused infringements by users of his sites or trackers. The only issue presently before us is the permanent injunction, which, as in Grokster III, does not in this case depend on the “exact calculation of infringing use [] as a basis for a claim of damages.” 545 U.S. at 941. We therefore need not further enter-tain Fung’s causation arguments at this time, but leave it to the district court to consider them, in light

36a of the observations we have made, when it calculates damages.

In sum, we affirm the district court’s holding that Columbia has carried its burden of proving, on the ba-sis of undisputed facts, Fung’s liability for inducing others to infringe Columbia’s copyrights.

B. DMCA Safe Harbors Fung asserts affirmative defenses under three of

the DMCA’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 es-tablishing that he meets the statutory requirements. See Balvage v. Ryderwood Improvement and Serv. Ass ‘n, Inc., 642 F.3d 765, 776 (9th Cir. 2011).

Columbia argues, and the district court agreed, that inducement liability is inherently incompatible with protection under the DMCA safe harbors. This court has already rejected the notion that there can never be a DMCA safe harbor defense to contributory copyright liability, holding “that . . . potential liability for contributory and vicarious 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 this connection, that the DMCA does not in terms exempt from protection any mode of copyright liability, including liability under the doc-trine of inducement. Moreover, the DMCA’s legislative history confirms that Congress intended to provide protection for at least some vicarious and contributory infringement. See S. Rep. No. 105-190, 40 (1998); UMG Recordings, Inc. v. Shelter Capital Partners, LLC, —F.3d (9th Cir. 2013) (noting that § 512(c) does not exclude from its protection vicarious or contributo-ry liability).

37a Nor is there any inherent incompatibility between

inducement liability and the requirements that apply to all of the DMCA safe harbors. For example, a pre-requisite for the safe harbors is that the service pro-vider implement a policy of removing repeat infring-ers. See 17 U.S.C. § 512(i)(1)(A). Although at first glance that requirement that might seem impossible to establish where the requisites for inducing in-fringement are met, see In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003), on closer examina-tion the appearance of inherent incompatibility dissi-pates. In some instances, for example, the Grokster standard for inducement might be met even where a service provider has a policy of removing proven re-peat infringers. It is therefore conceivable that a ser-vice provider liable for inducement could be entitled to protection under the safe harbors.

In light of these considerations, we are not clair-voyant enough to be sure that there are no instances in which a defendant otherwise liable for contributory copyright infringement could meet the prerequisites for one or more of the DMCA safe harbors. We there-fore think it best to conduct the two inquiries inde-pendently— although, as will appear, aspects of the inducing behavior that give rise to liability are rele-vant to the operation of some of the DMCA safe har-bors and can, in some circumstances, preclude their application. i. “Transitory digital network communications” (17 U.S.C. § 512(a))

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

A service provider shall not be liable for monetary relief, or, except as provided

38a in subsection (j), for injunctive or other equitable relief, for infringement of cop-yright by reason of the provider’s transmitting, routing, or providing con-nections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing con-nections, if-- (1) the transmission of the material was initiated by or at the direction of a per-son other than the service provider; the transmission, routing, provision of con-nections, or storage is carried out through an automatic technical process without selection of the material by the service provider; (2) the service provider does not select the recipients of the material except as an automatic response to the request of another person; (3) no copy of the material made by the service provider in the course of such in-termediate or transient storage is main-tained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the sys-tem or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably

39a necessary for the transmission, routing, or provision of connections; and (4) the material is transmitted through the system or network without modifica-tion of its content.

17 U.S.C. § 512(a). For purposes of this safe harbor only, “the term ‘service provider’ means an entity of-fering the transmission, routing, or providing of con-nections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received.” 17 U.S.C. § 512(k)(1)(A). The district court dismissed the applica-tion of this safe harbor in a footnote, stating that it did not apply to Fung “[b]ecause infringing materials do not pass through or reside on [Fung’s] system.”

The district court should not have rejected this safe harbor on the ground it did. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007), held that the § 512(a) safe harbor does not require that the service provider transmit or route infringing material, ex-plaining that “[t]here is no requirement in the statute that the communications must themselves be infring-ing, and we see no reason to import such a require-ment.” Id. at 1116; see also id. (“Service providers are immune for transmitting all digital online communica-tions, not just those that directly infringe.”).

We could, perhaps, end our analysis of the § 512(a) safe harbor there. The district court seemingly held Fung liable for inducement based not on Fung’s track-ers’ routing services, but, instead, on the dot-torrent files Fung collects and indexes. And it is not clear that Columbia is seeking to establish liability based direct-ly on the tracking functions of Fung’s trackers.

40a It appears, however, that Fung’s trackers generate

information concerning the torrent files transmitted that Fung then compiles and uses to induce further infringing use of his websites and trackers. In that sense, the tracking function is connected to the basis on which liability was sought and found. Without de-termining whether that information-generating use would itself affect the availability of the § 512(a) safe harbor, we hold that safe harbor not available for Fung’s trackers on other grounds.

Unlike a P2P network like Napster, in which users select particular files to download from particular us-ers, Fung’s trackers manage a “swarm” of connections that source tiny pieces of each file from numerous us-ers; the user seeking to download a file chooses only the file, not the particular users who will provide it, and the tracker identifies the source computers to the user seeking to download a work.

Given these characteristics, Fung’s trackers do not fit the definition of “service provider” that applies to this safe harbor. The definition provides that a “ser-vice provider” provides “connections . . . between or among points specified by 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’s cli-ent will connect in order to download a file. The track-er, not the requesting user, selects the publishers from which chunks of data will be transmitted.

We have held that § 512(a) applies to service pro-vides who act only as “conduits” for the transmission of information. UMG Recordings,— F.3d at — & n.10 (noting that § 512(a) applies “where the service pro-vider merely acts as a conduit for infringing material without storing, caching, or providing links to copy-

41a righted material” (internal quotation marks omitted)); Ellison v. Robertson, 357 F.3d 1072, 1081 (9th Cir. 2004) (discussing the definition of a “service provider” for purposes of § 512(a)); H.R. Rep. 105-551(11), 63 (1998) (explaining that the § 512(a) safe harbor is lim-ited to service providers performing “conduit-only functions”). Because they select which users will com-municate with each other, Fung’s trackers serve as more than “conduits” between computer users. Fung’s trackers therefore are not “service providers” for pur-poses of § 512(a), and are not eligible for the § 512(a) safe harbor.

Fung asserts that these functions are “automatic technical processes” that proceed “without selection of any material by us.” Even so, for the tracker to be a “service provider” for purposes of the § 512(a) safe harbor, the tracker, whether its functions are auto-matic or not, must meet the special definition of “ser-vice provider” applicable to this “conduit” safe harbor. If those functions go beyond those covered by that def-inition, then it does not matter whether they are au-tomatic or humanly controlled. See UMG, — F.3d at —; Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19, 39 (2d Cir. 2012) (discussing “conduit only’ functions un-der § 512(a)”); In re Charter Commc’ns, Inc., Subpoena Enforcement Matter, 393 F.3d 771, 775 (8th Cir. 2005) (noting that § 512(a) “limits the liability of [service providers] when they do nothing more than transmit, route, or provide connections for copyrighted materi-al—that is, when the [provider] is a mere conduit for the transmission”). ii. “Information residing on systems or networks at direction of users” (17 US.C. § 512(c))

This safe harbor provides:

42a (1) In general. A service provider19 shall not be liable for monetary relief, or, ex-cept as provided in subsection (j), for in-junctive or other equitable relief, for in-fringement of copyright by reason of the storage at the direction of a user of ma-terial that resides on a system or net-work controlled or operated by or for the service provider, if the service provider-- (A) (i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing; (ii) in the absence of such actual knowledge, is not aware of facts or cir-cumstances from which infringing activ-ity is apparent; or (iii) upon obtaining such knowledge or awareness, acts expedi-tiously to remove, or disable access to, the material; (B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and

19 17 U.S.C § 512(k) defines “service provider” more broadly for purposes of subsection (c) than it does for subsection (a). “As used in n section[s] other than subsection (a), the term ‘service provider’ means a provider of online services or network access, or the operator of facilities therefor, and includes an entity de-scribed in subparagraph (A).” Id. § 512(k)(1)(B).

43a (C) upon notification of claimed in-fringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the sub-ject of infringing activity.

17 U.S.C. § 512(c). The district court held that Fung is ineligible for

this safe harbor for the same reason it rejected the § 512(a) safe harbor—that is, because the infringing ma-terial does not actually reside on Fung’s servers. As with § 512(a), this holding was in error. As CCBill emphasized, we will not read requirements into the safe harbors that are not contained in the text of the statute. See CCBill, 488 F.3d at 1116. Moreover, § 512(c) explicitly covers not just the storage of infring-ing material, but also infringing “activit[ies]” that “us [e] the material [stored] on the system or network.” 17 U.S.C. § 512(c)(1)(A)(i). Here, as we have explained, the infringing activity associated with Fung—the peer-to-peer transfer of pirated content—relies upon tor-rents stored on Fung’s websites. According to the rec-ord, sometimes those torrents are uploaded by users of the sites, while other torrents are collected for storage by Fung’s websites themselves. The former situation would be at least facially eligible for the safe harbor, assuming the other criteria are met. 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 is available only if the service pro-vider “does not have actual knowledge that the mate-rial or an activity using the material on the system or

44a network is infringing,” 17 U.S.C. § 512(c)(1)(A)(i), or “is not aware of facts or circumstances from which in-fringing activity is apparent,” id. § 512(c)(1)(A)(ii). In UMG Recordings, — F.3d at —, this court endorsed the Second Circuit’s interpretation of § 512(c)(1)(A), that “the actual knowledge provision turns on whether the provider actually or ‘subjectively’ knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement ‘objec-tively’ 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 statu-torily compliant notification of infringement. Under § 512(c)(3)(B), notification of infringement that fails to comply with the requirements set forth in § 512(c)(3)(A) “shall not be considered . . . in determin-ing whether a service provider has actual knowledge or is aware of facts or circumstances from which in-fringing activity is apparent.” 17 U.S.C. § 512(c)(3)(B)(i). And, as Fung points out, the district court noted that there was at least a “triable issue of fact as to the adequacy of the statutory notice that Plaintiffs provided to [Fung].”

We need not determine the adequacy of Columbia’s notification of claimed infringement—indeed, as the district court held, it would not be appropriate to do so at this stage. Fung had “red flag” knowledge of a broad range of infringing activity for reasons independent of any notifications from Columbia, and therefore is inel-igible for the § 512(c) safe harbor.

As noted, the record is replete with instances of Fung actively encouraging infringement, by urging his

45a users to both upload and download particular copy-righted works, providing assistance to those seeking to watch copyrighted films, and helping his users burn copyrighted material onto DVDs. The material in question was sufficiently current and well-known that it would have been objectively obvious to a reasonable person that the material solicited and assisted was both copyrighted and not licensed to random members of the public, and that the induced use was therefore infringing. Moreover, Fung does not dispute that he personally used the isoHunt website to download in-fringing material. Thus, while Fung’s inducing actions do not necessarily render him per se ineligible for pro-tection under § 512(c),20 they are relevant to our de-termination that Fung had “red flag” knowledge of in-fringement.

Fung introduced no contrary facts with regard to identified torrents involved in these documented activ-ities, responding only with the generalized assertion that he “ha[s] a robust copyright compliance system.” But “conclusory allegations, standing alone, are insuf-ficient to prevent summary judgment.” Newman v. County of Orange, 457 F.3d 991, 995 (9th Cir. 2006) (internal quotation marks and citation omitted).21

20 See supra pp. 37-39. 21 We note that it is not clear from the language of § 512(c) or from the pertinent case law, whether exclusion from the § 512(c) safe harbor because of actual or “red flag” knowledge of specific infringing activity applies only with regard to liability for that infringing activity, or more broadly. See Viacom Int’l, Inc., 676 F.3d at 31 (noting “Mlle limited body of case law interpreting the knowledge provisions of the § 512(c) safe harbor”). However, as we shall explain, that issue does not arise with regard to the § 512(c)(1)(B), “financial benefit/right to control” safe harbor. As we conclude that the § 512(c) safe harbor is not available to Fung on that ground as well, we need not question whether ac-

46a As Fung has not carried his burden as the non-

moving party of demonstrating a genuine dispute as to the material facts regarding his eligibility for the § 512(c) safe harbor, see Newman, 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 right and ability to con-trol” (§ 512(c)(1)(13))

Under § 512(c)(1)(B), a service provider loses pro-tection under the safe harbor if two conditions are met: (1) the provider “receive [s] a financial benefit di-rectly attributable to the infringing activity”; and (2) the “service provider has the right and ability to con-trol such activity.” 17 U.S.C. § 512(c)(1)(B). Fung meets both requirements and is therefore ineligible for protection under the § 512(c) safe harbor.

As to the first prong of § 512(c)(1)(B), we have held, in the context of service providers who charge for their services, that a service provider receives a direct fi-nancial benefit from infringing activity where “there is a causal relationship between the infringing activity and any financial benefit a defendant reaps, regard-less of how substantial the benefit is in proportion to a defendant’s overall profits.” Ellison, 357 F.3d at 1079; see also Napster, 239 F.3d at 1023; CCBill, 488 F.3d at 1117-18 (holding that the Ellison “direct financial ben-efit” vicarious liability standard applies under 17 U.S.C. § 512(c)(1)(B)). Thus, where a service provider obtains revenue from “subscribers,” the relevant in-

tual or red flag knowledge of specific infringing material or ac-tivity eliminates the § 512(c) safe harbor broadly, or only with respect to the known or objectively apparent infringing activity.

47a quiry is “whether the infringing activity constitutes a draw for subscribers, not just an added benefit.” CCBill, 488 F.3d at 1117 (quoting Ellison, 357 F.3d at 1079).22

At the same time, our opinions have not suggested that the “financial benefit” prong of § 512(c)(1)(B) is peripheral or lacks teeth. Ellison ultimately concluded that the financial benefit standard was not met, be-cause there was inadequate proof that “customers ei-ther subscribed because of the available infringing material or cancelled subscriptions because it was no longer available.” Ellison, 357 F.3d at 1079. And CCBill similarly found that evidence that the service provider hosted, for a fee, websites that contain in-fringing material inadequate to establish the requisite financial benefit. In so holding, CCBill cited to DMCA legislative history stating that a direct financial bene-fit cannot be established showing that a service pro-vider “receive[d] a one-time set-up fee and flat, period-

22 Our decisions interpreting the “financial benefit” prong of § 512(c)(1)(B) derive almost entirely from our earlier decisions discussing “direct financial benefits” in the context of vicarious liability for copyright infringement. Those cases also involved defendants who derived their revenue from consumers. In par-ticular, our decision in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 263-64 (9th Cir. 1996), has been the starting point for our subsequent § 512(c)(1)(B) decisions. In Fonovisa, we held that swap meet operators “reap [ed] substantial financial bene-fits from admission fees, concession stand sales and parking fees, all of which flow[ed] directly from customers who want[ed] to buy the counterfeit recordings” available at the swap meets. 76 F.3d at 263. In doing so, we relied on district court decisions “imposing vicarious liability on the operator[s] of [dance hall] business[es] where infringing performances enhance [d] the at-tractiveness of the venue [s] to potential customers.” Id. (citing Polygram Int’l Publ’g, Inc. v. Nevada/TIG, Inc., 855 F. Supp. 1314, 1332 (D. Mass. 1994)).

48a ic payments for service from a person engaging in in-fringing activities.” 488 F.3d at 1118 (quoting H.R. Rep. 105-551(II), 54 (1998)).

Moreover, the structure of § 512(c)(1)(B) indicates that the lack of direct financial benefit prong of the safe harbor requirement is central, rather than pe-ripheral. The statute sets out as the requirement that the service provider “not receive a financial benefit di-rectly attributable to the infringing activity.” It then states the “right and ability to control” in a dependent clause, describing a limitation on the financial benefit requirement to certain circumstances. The grammati-cal emphasis, then, is on the lack of direct financial benefit requirement, with the right to control prong secondary.

Against this background, we note that we have never specified what constitutes a “financial benefit directly attributable to the infringing activity,” 17 U.S.C. § 512(c)(1)(B) (emphasis added), where, as here, the service provider’s revenue is derived from advertis-ing, and not from users. We do so now.

Here, the record shows that Fung generated reve-nue by selling advertising space on his websites. The advertising revenue depended on the number of users who viewed and then clicked on the advertisements. Fung marketed advertising to one advertiser by point-ing to the “TV and movies . . . at the top of the most frequently searched by our viewers,” and provided an-other with a list of typical user search queries, includ-ing popular movies and television shows. In addition, there was a vast amount of infringing material on his websites—whether 90-96% or somewhat less—supporting an inference that Fung’s revenue stream is predicated on the broad availability of infringing ma-

49a terials for his users, thereby attracting advertisers. And, as we have seen, Fung actively induced infring-ing activity on his sites.

Under these circumstances, we hold the connection between the infringing activity and Fung’s income stream derived from advertising is sufficiently direct to meet the direct “financial benefit” prong of § 512(c)(1)(B). Fung promoted advertising by pointing to infringing activity; obtained advertising revenue that depended on the number of visitors to his sites; at-tracted primarily visitors who were seeking to engage in infringing activity, as that is mostly what occurred on his sites; and encouraged that infringing activity. Given this confluence of circumstances, Fung’s reve-nue stream was tied directly to the infringing activity involving his websites, both as to his ability to attract advertisers and as to the amount of revenue he re-ceived.

With respect to the second prong of § 512(c)(1)(B), we recently explained in UMG that the “right and ability to control” infringing activity involves “some-thing more” than “merely having the general ability to locate infringing material and terminate users’ ac-cess.” 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 to control,’ the service provider must [also] ‘exert[] substantial influence on the activities of users.’ Id. (quoting Viacom Int’l, Inc., 676 F.3d at 38) (second alteration in original). In doing so, we noted that “ [s]ubstantial influence’ may include . . . purposeful conduct, as in Grokster.” Id. In the ab-sence of any evidence of inducement or any other rea-son to suggest the defendant exerted substantial influ-ence over its users’ activities, we concluded the de-fendant was not ineligible for protection under this

50a provision. Id.

Here, we are confronted with the opposite situa-tion. Fung unquestionably had the ability to locate in-fringing material and terminate users’ access. In addi-tion to being able to locate material identified in valid DMCA notices, Fung organized torrent files on his sites using a program that matches file names and content with specific search terms describing material likely to be infringing, such as “screener” or “PPV.” And when users could not find certain material likely to be infringing on his sites, Fung personally assisted them in locating the files. Fung also personally re-moved “Taken, infected, or otherwise bad or abusive torrents” in order to “protect[] the integrity of [his websites’] search index[es].”

Crucially, Fung’s ability to control infringing activ-ity on his websites went well beyond merely locating and terminating users’ access to infringing material. As noted, there is overwhelming evidence that Fung engaged in culpable, inducing activity like that in Grokster III. Although Fung’s inducement actions do not categorically remove him from protection under § 512(c), they demonstrate the substantial influence Fung exerted over his users’ infringing activities, and thereby supply one essential component of the finan-cial benefit/right to control exception to the § 512(c) safe harbor.

Because he meets both prongs of § 512(c)(1)(B), Fung is not eligible 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 service provider loses protection with regard to any infringing activity using the service. See supra note

51a 20. As we held in UMG, the § 512(c)(1)(B) “right and ability to control” requirement does not depend only upon the ability to remove known or apparent infring-ing material. — F.3d at —. Instead, there must also be substantial influence on the infringing activities of us-ers, indicating that it is the overall relationship be-tween the service provider and infringing users that matters. Also, to the degree this DMCA provision had its origin in vicarious liability concepts, see CCBill 488 F.3d at 1117, those concepts rest on the overall rela-tionship between the defendant and the infringers, ra-ther than on specific instances of infringement. See Napster, 239 F.3d 1023-24 (discussing Napster’s gen-eral ability to “control[] and patrol[]” content on its system); id. at 1022 (noting that “[v]icarious copyright liability is an ‘outgrowth’ of respondeat superior” (quoting Fonovisa, 76 F.3d at 262)). The term “right and ability to control such activity” so reflects, as it emphasizes a general, structural relationship and speaks of “such activity,” not any particular activity.

We therefore hold that because Fung does not meet the requirements of § 512(c)(1)(B), he is outside of the § 512(c) safe harbor with respect to all infringement activity on the sites that are the subject of this suit. iii. “Information location tools” (17 U.S.C. § 512(d))

The last safe harbor Fung invokes provides: A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of cop-yright by reason of the provider refer-ring or linking users to an online loca-tion containing infringing material or infringing activity, by using information

52a location tools, including a directory, in-dex, reference, pointer, or hypertext link, if the service provider (1) (A) does not have actual knowledge that the material or activity is infringing; (B) in the absence of such actual knowledge, is not aware of facts or cir-cumstances from which infringing activ-ity is apparent; or (C) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (2) does not receive a financial bene-fit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and (3) upon notification of claimed in-fringement as described in subsection (c)(3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the sub-ject of infringing activity, except that, for purposes of this paragraph, the in-formation described in subsection (c)(3)(A)(iii) shall be identification of the reference or link, to material or activity claimed to be infringing, that is to be removed or access to which is to be disa-bled, and information reasonably suffi-cient to permit the service provider to locate that reference or link

53a 17 U.S.C. § 512(d).

We affirm the grant of summary judgment to Co-lumbia on Fung’s claim to the § 512(d) safe harbor for the reasons just discussed with regard to § 512(c): Fung was broadly “aware of facts or circumstances from which infringing activity [wa]s apparent.” 17 U.S.C. § 512(d)(1)(B). Moreover, he received a direct financial benefit from that infringing activity, and had the “right and ability to control such activity.” Id. § 512(d)(2).

II. Injunction Under 17 U.S.C. § 502(a), a district court is em-

powered to grant a permanent injunction “as it may deem reasonable to prevent or restrain infringement of a copyright.” Fung does not challenge the issuance of injunctive relief generally, only the scope of the injunc-tion issued.

In particular, Fung argues that the permanent in-junction is vague and unduly burdensome.23 We con-sider each argument in turn.

A. Vagueness Rule 65(d) requires “[e]very order granting an in-

junction” to “state its terms specifically” and to “de-scribe in reasonable detail—and not by referring to the complaint or other document—the act or acts re-strained or required.” Fed. R. Civ. P. 65(d)(1)(B)—(C). ‘“ [O]ne basic principle built into Rule 65 is that those 23 Fung also maintains that the injunction is impermissibly ex-traterritorial, but that argument is wrong as a matter of fact. The injunction explicitly applies only to acts of infringement “that take place in the United States.” Fung also challenges the injunction in other respects not discussed in the text. We have considered them and find them without merit.

54a against whom an injunction is issued should receive fair and precisely drawn notice of what the injunction actually prohibits.’ Fortyune v. Am. Multi-Cinema, Inc., 364 F.3d 1075, 1086-87 (9th Cir. 2004) (quoting Union Pac. R.R. v. Mower, 219 F.3d 1069, 1077 (9th Cir. 2000)). “The Rule was designed to prevent uncer-tainty and confusion on the part of those faced with injunctive orders, and to avoid the possible founding of a contempt citation on a decree too vague to be under-stood.” Id. (quoting Schmidt v. Lessard, 414 U.S. 473, 476 (1974)). Generally speaking, “an ordinary person reading the court’s order should be able to ascertain from the document itself exactly what conduct is pro-scribed.” 11A Charles A. Wright et al., Federal Prac-tice & Procedure § 2955 (2d ed.). Several provisions of the permanent injunction fail to meet this standard.

First, the injunction’s definition of a key phrase, “Infringement-Related Terms,” is too vague to provide the notice required by Rule 65(d). The injunction pro-hibits Fung from “including Infringement-Related Terms in metadata for any webpages”; “creating, maintaining or providing access to browsable website categories of Dot-torrent or similar files using or based on Infringement-Related Terms”; and “organizing, harvesting or categorizing Dot-torrent or similar files using or based on Infringement-Related Terms.” But subsection (ii) of the definition of the phrase “In-fringement-Related Terms” states that it includes “terms that are widely known to be associated with copyright infringement (for example ‘warez,’ ‘Axxo,’ ‘Jaybob,’ ‘DVD Rips,’ ‘Cam,’ ‘Telesync,’ ‘Telecine,’ ‘Screener,’ or ‘PPV.’).” Beyond the specifically-named examples, no one reading this injunction can tell what it means for a term to be “widely known to be associat-ed with copyright infringement.”

55a We understand the desire to build flexibility into

the injunction. But Rule 65(d), overall, prefers certain-ty to flexibility. See Fortyune, 364 F.3d at 1086-87. Subsection (ii) of the injunction’s definition of “In-fringement-Related Terms” therefore must be modified to state simply that the phrase includes specifically named terms. Given that the district court has juris-diction to enforce the injunction, Columbia can request modification in the future to add, upon competent proof, specific other terms as well.

Other provisions suffer from similar problems. Paragraph 3(j) prohibits “soliciting or targeting a user base generally understood, in substantial part, to be engaging in infringement of, or seeking to infringe, Plaintiffs’ Copyrighted Works.” This language targets a Grokster-like situation, in which Grokster sought to attract former Napster users. But the language used is simply too imprecise, as the resort to the term “gener-ally understood” indicates. How is one to determine what is “generally understood”—whose knowledge matters, and how widespread must the understanding be? And what is a “user base,” an undefined term? It is also unclear whether the “in substantial part” refers to the “user base,” the “generally understood” phrase, or the “engaging in infringement” phrase. Unless it can be rewritten to comply with the requirements of Rule 65(d) for fair notice through adequate specificity and detail, Paragraph 3(j) must be excised. See Rule 65(d); Fortyune, 364 F.3d at 1086-87.

Similarly, paragraph 3(1) prohibits “indexing or providing access to Dot-torrent or similar files har-vested or collected from well-known infringing source sites, such as ‘The Pirate Bay.” Here again, Rule 65(d) requires more specificity. Paragraph 3(1) must be amended to omit the vague words “well-known infring-

56a ing source sites, such as,” and to specify the particular infringing sites covered—with the caveat, again, that Plaintiffs can seek to amend the list in the future.

Another provision of the injunction states that af-ter receiving a list of titles from the Plaintiffs, Fung is required to have a mechanism in place to ensure that he is not facilitating the infringement of those titles. Fung complains that Plaintiffs’ lists of titles are error-filled and that Fung “[is] compelled to locate and cor-rect [the errors] under threat of contempt proceed-ings.” Although the injunction is reasonably clear in this regard, we clarify that Fung has no burden to cor-rect Plaintiffs’ errors.

B. Unduly burdensome Fung maintains, and we agree, that certain provi-

sions of the injunction could be interpreted to prevent Fung from ever working for any technology company whose services others might use to infringe copyright, even if those other companies are not themselves lia-ble for primary or secondary copyright infringement. Fung argues that such a restriction would be unduly burdensome.

‘“ [I]njunctive relief should be no more burdensome to the defendant than necessary to provide complete relief to the plaintiffs’ before the court.” L.A. Haven Hospice, Inc. v. Sebelius, 638 F.3d 644, 664 (9th Cir. 2011) (quoting Califano v. Yamasaki, 442 U.S. 682, 702 (1979)). We agree that insofar as the injunction can be interpreted to prohibit Fung from seeking legit-imate employment, it is more burdensome than neces-sary to provide Plaintiffs relief. Accordingly, the per-manent injunction should be amended appropriately to limit the employment prohibition. We leave the fi-nal wording to the district court.

57a CONCLUSION

In sum, we affirm the district court’s grant of summary judgment to Plaintiffs on liability. We also affirm summary judgment to Plaintiffs on Fung’s claims that he is entitled to the safe harbors provided by 17 U.S.C. § 512(a), (c), and (d), albeit on grounds different than those relied upon by the district court. The permanent injunction is modified as noted above. Costs are awarded to the Plaintiffs.

AFFIRMED IN PART, VACATED IN PART, INJUNCTION MODIFIED IN PART.

58a APPENDIX B

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

COLUMBIA PICTURES INDUSTRIES, INC., et al., Plaintiffs,

v. GARY FUNG, et al.,

Defendants.

ORDER GRANTING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT ON

LIABILITY [249]

CASE NO. CV 06-5578 SVW (JCx)

59a I. INTRODUCTION

In September 2006, Plaintiffs1 filed a Complaint al-leging copyright infringement against Defendant Gary Fung (“Fung”). [Doc. No. 1.] Plaintiffs’ Complaint con-tends that Fung operated a file-sharing service as well as related computer servers as a part of an ongoing file-sharing network that profits from alleged copy-right infringement by its users. Plaintiffs then filed a First Amended Complaint adding Defendants Isohunt Web Technologies, Inc. (“Isohunt, Inc.”) and Does 1 through 10. [Doc. No. 13.]. (The Court refers to Fung and Isohunt, Inc. collectively as “Defendants.”)

Plaintiffs now bring this Motion for Summary Judgment [Doc. No. 249] on the grounds that Defend-ants’ users have infringed their copyrights and are li-able under theories of inducement, contributory in-fringement, and vicarious infringement. The Court requested Supplemental Briefing in an Order dated April 3, 2008. [Doc. No. 342.] The Court requested further Supplemental Briefing and augmentation of the record in an Order dated August 25, 2009. [Doc. No. 358.]

The material facts supporting Plaintiffs’ claims are almost wholly unrebutted. Generally, Defendants’ rest their case on legal arguments and meritless evi-dentiary objections, and offer little of their own evi-dence that directly addressed Plaintiffs’ factual asser-tions. Accordingly, summary judgment is appropriate in the present case. Having considered the moving

1 The Plaintiffs in this action are: Columbia Pictures Industries, Inc.; Disney Enterprises, Inc.; Paramount Pictures Corporation; Tristar Pictures, Inc.; Twentieth Century Fox Film Corporation; Universal City Studios LLLP; Universal City Studios Produc-tions LLLP;

60a papers, as well as arguments presented at hearing and in supplemental briefing, the Court Grants Plaintiffs’ Motion for Summary Judgment on Liability.

II. FACTUAL BACKGROUND A. The Torrent Structure

Plaintiffs own or control a large quantity of copy-rights within the entertainment and popular media fields. (Plaintiffs’ Statement of Undisputed Facts (“Pls.’ SUF”), ¶ 1). Defendant Fung maintains and op-erates a number of websites, including www.isohunt.com, www.torrentbox.com, www.podtropolis.com, and www.ed2k-it.com (collec-tively “Fung sites” or “Defendants’ sites”), that allow users to download files to their computers.

Plaintiffs maintain that Fung and his websites fa-cilitate their users’ infringement of copyrighted files. Specifically, Plaintiffs assert that, through his opera-tion and promotion of the websites, Fung allows users to download infringing copies of popular movies, tele-vision shows, sound recordings, software programs, video games, and other copyrighted content free of charge. Users of the Fung sites have downloaded works that are copyrighted by Plaintiffs; these down-loads have taken place without authorization from Plaintiffs. (Pls.’ SUF, ¶¶ 2-3.)

The Fung sites are an evolutionary modification of traditional “peer-to-peer” sharing sites such as Nap-ster and Grokster. A peer-to- peer service provides a method for users of a network to exchange files quickly and easily between the individuals on the network – other “peers”. See, e.g., Metro-Goldwyn-Mayer Studi-os, Inc. v. Grokster, Ltd, 545 U.S. 913, 919 (2005).

61a (See also Horowitz2 Decl., at ¶ 12.)

2 Ellis Horowitz is a Professor of Computer Science and Elec-

trical Engineering at the University of Southern California. Mr. Horowitz has served as a tenured professor since 1983 and his relevant research has been in the field of software development. (Horowitz Decl., at ¶¶ 3, 5.)

On summary judgment, expert opinions are admissible under the general requirements of Fed. R. Evid. 702, which requires that the testimony be based on sufficient facts and be the product of reliable principles and methods, and that the witness has ap-plied the principles and methods reliably to the facts of the case. On summary judgment, expert testimony is also subject to Fed. R. Civ. P. 56(e)(1), which requires a showing [1] that “the affiant is competent to give an expert opinion and [2] the factual basis for the opinion is stated in the affidavit, even though the underlying factual details and reasoning upon which the opinion is based are not.” Bulthuis v. Rexall Corp., 789 F.2d 1315, 1318 (9th Cir. 1985).

Here, Horowitz’s testimony is admissible on summary judg-ment. See also Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 130-31, 133, 150, 152 (S.D.N.Y. 2009) (relying on Horowitz’s testimony).

Further, the Court notes that both parties’ experts (Dr. Hor-owitz and Dr. Waterman for Plaintiffs, and Dr. Gribble for De-fendants) are generally unrebutted. (See also footnotes 7 and 13, infra, for a discussion of the other experts’ qualifications.)

Generally, the Court relies on the experts with respect to three matters: first, the technological structure of Defendants’ websites, which is agreed-upon in all material respects by Dr. Gribble (for Defendants) and Dr. Horowitz (for Plaintiffs); second, the statistics regarding Defendants’ users’ downloading activities, which is set forth by Dr. Waterman (for Plaintiffs) and wholly un-addressed by Defendants’ evidence; and third, the dispute over whether or not Defendants were technologically capable of filter-ing copyright- infringing materials from their websites, upon which Dr. Gribble and Dr. Horowitz disagree (and is discussed in greater detail infra, Part IV.B.4).

Accordingly, the experts’ declarations set forth admissible

62a The content of the files shared therefore resides on

the computers of individual users rather than on cen-tral servers. (Horowitz Decl., at ¶ 12.)

Through use of the Fung sites, which are common-ly known as “BitTorrent” or “torrent” sites, users download content directly from the computers of other users and not directly from the servers of the Defend-ants, thus operating as a sharing service of the peer-to-peer variety. (See Horwitz Decl., at ¶ 16.) In a Bit-Torrent network, however, the download process is unique from that of previous systems such as Napster and Grokster.3 Rather than downloading a file from facts. Where unrebutted, these facts allow summary judgment in favor of the party proferring the expert testimony on that particu-lar issue. Where the experts’ disagreement raises a genuine dis-pute, the Court will address the dispute accordingly. 3 Napster involved a peer-to-peer network with a central “search index” that served as Napster’s collective directory for the files available on the server at any given time. In order to down-load the files from another user in the Napster network, the in-dividual would search the Napster server for the desired file and then select the desired file from a list of available users in the network. Similar to other peer-to-peer networks, the actual files shared never passed through or resided on the Napster servers. See A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1011-1013 (9th Cir. 2001). In contrast, the technology in the Grokster and Kazaa networks provided a distinct form of the peer-to-peer network. Unlike Napster, there was no central indexing of available files. Instead, an individual scanning through the Grokster software would enter a search term and the software itself, through use of a supernode – or indexing computer – would con-tact other computers seeking matching files. When a result was found matching the query, the information regarding the results (the IP address and other information) would be sent to the re-questing computer. The searching user would then download directly from the relevant computer and the file would be placed in the designated folder of the requesting computer. See Grok-

63a an individual user, users of a bit-torrent network will select the file that they wish to download, and, at that point, the downloading will begin from a number of host computers that possess the file simultaneously. (See id. at ¶¶ 23-24.) BitTorrent technology relies on a variety of mechanisms in order to accomplish the ul-timate downloading of an given file, including: (1) a software application that users download, which is commonly referred to as a “client application”; (2) web-sites, also known as “torrent sites,” which allow users to select “dot-torrent files” that they wish to download; and (3) servers, also known as “trackers,” that manage the download process. (Horwitz Decl., at ¶ 17.) The client applications and trackers work together through the use of a “BitTorrent protocol” which standardizes the client-client and client-tracker communications. (Id.) These components essentially work together to allow individuals to visit a torrent site, download files, and keep track of those downloads – as well as discov-er additional persons to download from – through the use of trackers. In such a system the downloading of the desired content is occurring from multiple source points at the same time and allowing larger downloads to move more expeditiously. During this simultaneous downloading process users form what is known as a “swarm,” which allows for quick exchange of the down-loading material.4 ster, 545 U.S. at 921. In a variation of this network, known as Gnutella, the process is similar but involves no supernodes. In-stead, the peer computers communicate directly with each other through the network and requests go directly to other connected users. See id. at 922. 4 Plaintiffs acknowledge that one of the Fung sites, www.ed2k-it.com, is based on another form of technology known as “eDon-key.” (Mot., at 6 n.4.) The Court agrees with Plaintiffs’ expert that “the basic elements of eDonkey and BitTorrent technology

64a Accordingly, in order to download files from others

in a BitTorrent network, users must engage in a num-ber of steps. First, users must install a BitTorrent cli-ent application. (Horowitz Decl., ¶ 18.) Standing alone, a BitTorrent client application does not possess the ability to search other computers for files. Instead, as part of the second step, users must visit a torrent site for the purpose of locating dot-torrent files con-taining the content that they wish to download. (Id. at ¶ 19.)5 These torrent sites maintain indexes of availa-ble torrent files for download that users may search, or, in the alternative, users may upload torrent files to share with others through the torrent site. (Id.) The-se torrent files are referred to as “dot-torrent” files in reference to their file extension name.6 The dot-torrent files do not contain the actual content item searched for; rather, the dot-torrent file contains the data used by the BitTorrent client to retrieve the con-tent through a peer-to-peer transfer. (Id. at ¶ 21.) In the third step, once the user clicks on the desired dot-torrent file, the BitTorrent client will locate and down-load the actual content item. (Id. at ¶ 22.) This is accomplished through the use of trackers that are con-tained within the dot-torrent file. The dot- torrent file contains “hash” values that are used to identify the various pieces of the content file and the location of play similar roles,” and that the minor technical distinctions are not material to the present dispute. (See Horowitz Decl. ¶¶ 30-34.) Notably, Defendants do not provide any arguments specifi-cally premised on the difference in technology of “eDonkey.” 5 Torrent sites are websites accessible through the use of an In-ternet browser. (Horowitz Decl., ¶ 20.) 6 Accordingly, the extension of those files searched on a torrent site would be “.torrent” in contrast to prior incarnations of peer-to-peer networks where users would search for a file with an extension such as “.mp3” or “.doc”.

65a those pieces in the network. The BitTorrent client ap-plication then simultaneously downloads the pieces of the content file from as many users as are available at the time of the request, and then reassembles the con-tent file on the requesting computer when the down-load is complete. (Id. at ¶ 23.) Once a user downloads a given content file, he also becomes a source for fu-ture requests and downloads. (Id.)

The advantage of BitTorrent technology is the cu-mulative nature of its downloading and economies of scale. As more users download a given file, there are more sources for the file pieces necessary for others. This process, whereby individuals maybe be uploading and/or downloading from many sources at any given time is known as a “swarm.” (Id. at ¶ 24.) This pre-vents a backlog of users waiting to download from one individual user with the source file.

B. Sites Maintained by Defendant Fung Defendant Fung operates a number of websites, in-

cluding www.isohunt.com (“Isohunt”), www.torrentbox.com (“Torrentbox”), www.podtropolis.com (“Podtropolis”), and www.ed2k-it.com (“eDonkey”). The structure and manner in which users download files from these sites differs in certain respects. The BitTorrent websites – Isohunt, Torrentbox, and Podtropolis – all provide users the ability to search for and download BitTorrent files. (Horowitz Decl., at ¶ 26.) As explained by Defendants’ expert Steven Gribble,7 “the defendants’ Web sites col-

7 Steven Gribble is an Associate Professor of Computer Science and Engineering at the University of Washington. Dr. Gribble’s research focuses on computer systems and computer security, and has focused in the past on the operations of peer-to-peer systems. (Gribble Decl. ¶ 1.)

66a lect, receive, index, and make available descriptions of content, including so-called ‘dot-torrent files,’ and they also provide access to ‘open-access’ BitTorrent Track-ers.” (Gribble Decl. ¶ 4A.)

Users of BitTorrent websites click on a “download torrent” button or link on the website that will begin the downloading process described above. (Id. at ¶ 27.) The elements of the downloading process work togeth-er to bring the desired content to the user’s computer without any further actions by the user. (Id.) As one of Plaintiffs’ experts explains: “[t]he only purpose of a dot-torrent file is to enable users to identify, locate, and download a copy of the actual content item refer-enced by the dot-torrent file. . . . Once a user has clicked the ‘download’ torrent button or link, the . . . desired content file should begin downloading to the user’s computer without any further action or input from the user.” (Horowitz Supp. Decl., ¶¶ 5-6.)

The BitTorrent websites, as set forth in further de-tail below, also contain a number of categories from which users can select files to download, including “Top Searches,” “Top 20 Movies,” “Top 20 TV Shows,” “Box Office Movies.” (SUF ¶¶ 8-12, 47-55.)8 For ex-ample, the Isohunt home page contains a listing of “Top Searches,” which provides a listing of the most commonly searched-for terms by users of the websites. This category contained code filtering out pornogra-phy- related terms from the “Top Searches” display.

For the reasons discussed in footnote 2, supra, Gribble’s testi-mony is admissible on summary judgment. 8 The “Box Office Movies” feature, although once available, is no longer an element of the website. (Horowitz Decl., ¶ 39-40; Defs.’ SGI, ¶ 57.) There is no dispute, however, that this catego-ry was once on the BitTorrent website.

67a (Id. at ¶ 59.) The items found within the “Top Search-es” category are all associated with copyrighted con-tent. (SUF, at ¶ 8.) Much the same holds true for the “Top 20 Most Downloaded Torrents” on Defendant Fung’s Torrentbox site. (Id. at 9.) Another of Defend-ants’ sites, Podtropolis, simply contains lists of the “Top 20 Movies” and “Top 20 TV Shows,” all of which correspond to copyrighted content. (Id. at ¶ 10.) The ed2k-it website contains files in lists entitled “High Quality DVD Rips” and “TV Show Releases,” all of which correspond to copyrighted content.9 (Id. at ¶ 11.)

Plaintiffs note that the meta tags10 used on Fung’s websites often included the term “warez” as a header for every page.11 Plaintiffs also point to certain other elements of the webpage that related to known copy-righted material. Defendants, on the home page of the Isohunt website, asked users to upload dot-torrent files of Box Office Movies and also maintained a list of

9 Defendant Fung attempts to dispute these facts, but not on the grounds that the factual statements are inaccurate. Instead, he contends that these elements of the website provide only a small sample of what is available on the website. Whether or not this is true, it does not rebut the factual accuracy of the claims that Plaintiffs set forth. Defendant Fung also asserts that the lists created by these categories are user-generated and, therefore, simply reflect user demand on the site. This argument ignores the fact that Defendants created and operated the websites in a manner that placed these “user-generated” categories on the websites. 10 Meta tags are terms commonly embedded into web pages in order to allow search engines to more quickly categorize the substance of a given webpage. 11 The term “warez” is a term used to refer to pirated content. See Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 133 (S.D.N.Y. 2009). (See also SUF, at ¶ 25.)

68a the top twenty grossing movies in U.S. theaters at the time. (SUF, at ¶¶ 50-51.) These lists served the func-tion of getting users to upload dot-torrent files of the latest blockbuster films and have them posted on the Isohunt website. (Id. at 52-54.)12

Plaintiffs engaged in a randomized statistical anal-ysis of the works available on the Isohunt and Tor-rentbox sites. According to Plaintiffs’ expert Richard Waterman,13 approximately 95% of downloads occur-ring through Defendants’ sites are downloads of copy-right- infringing content. (See Waterman Decl. ¶¶ 6-7.) Waterman’s study of the Torrentbox downloads used actual user downloads from log files that were made available upon discovery requests. Waterman further states that 95.6% of all dot-torrent files downloaded from Torrentbox are for either copyrighted or highly likely copyrighted material. (Id. at ¶ 31.) In a study of the Isohunt website, Waterman found that approxi-mately 90% of files available and 94% of dot-torrent files downloaded from the site are copyrighted or high-ly likely copyrighted. (Id. at ¶¶ 24, 28.) Though De-fendants raise conclusory boilerplate objections to Wa-terman’s declaration, Defendants fail to call Water-man’s factual conclusions into doubt. (See Defs.’ Evi-

12 Plaintiffs acknowledge that, at some point, the “Box Office Movies” feature was discontinued on the website. (SUF, at ¶ 54.) 13 Richard Waterman is an Adjunct Associate Professor of Sta-tistics at the University of Pennsylvania’s Wharton School of Business. (Waterman Decl. ¶ 1.) Dr. Waterman operates a sta-tistics consultancy and has testified in a similar case involving secondary copyright infringement. See Arista Records LLC, 633 F. Supp. 2d at 143-44.

For the reasons discussed in footnote 2, supra, Water-man’s testimony is admissible on summary judgment.

69a dentiary Objections, at 10-19.) Despite Defendants’ repeated assertions that the evidence is based on “junk science,” (id.) Defendants fail to rebut Water-man’s statement that he relied on the standard statis-tical sampling techniques used in his field. (Water-man Decl. ¶ 8 n.1.) It is also noteworthy that numer-ous courts have relied on such statistical sampling. See Arista Records, 633 F. Supp. 2d at 144-45; MGM Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d 966, 985 (C.D. Cal. 2006); A & M Records, Inc. v. Napster, 114 F. Supp. 2d 896, 902-03 (N.D. Cal. 2000), aff’d, 239 F.3d 1004 (9th Cir. 2001). To the extent that the evi-dence suggests an unrealistic level of accuracy, the Court notes that Waterman’s data shows that these numbers are accurate to a 95% confidence level, and include margins of error of plus-or-minus 5% or less. (See Waterman Decl. ¶¶ 13, 14, 18, 25, 29, 32, 34.) Further, Plaintiffs provide the specific data upon which Waterman based his categorization of available files as infringing, likely infringing, and non-infringing. (See Pls.’ Ex. T, Waterman Depos., at 39, 48; Friedman Decl. ¶¶ 11, 15, 16.) In any event, for the purposes of this case, the precise percentage of in-fringement is irrelevant: the evidence clearly shows that Defendants’ users infringed on a significant scale. It simply does not matter whether 75% (to pick a number) of available materials were copyrighted or 95% of available materials were copyrighted; and even if this distinction did matter, Defendants have simply failed to satisfy their summary judgment burden by submitting admissible evidence that raises a triable dispute regarding Plaintiffs’ evidence that a substan-tial percentage of the available files included copy-right-infringing or highly likely copyright-infringing content. See Matsushita Elec. Indus. Co., Ltd. v. Zen-ith Radio Corp., 475 U.S. 574, 586-87 (1986) (“When

70a the moving party has carried its burden under Rule 56(c), its opponent must do more than simply show that there is some metaphysical doubt as to the mate-rial facts. In the language of the Rule, the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’”) (internal cita-tions omitted).

C. Fung’s Participation in the Websites In addition to the general structure of the pages

maintained by Defendants, Defendant Fung has per-sonally made a number of statements regarding the copyrighted nature of the works available on his sites. In one such post on the Isohunt website Defendant Fung responded to a user’s post by stating “they ac-cuse us for [sic] thieves, and they r [sic] right. Only we r [sic] ‘stealing’ from the lechers (them) and not the originators (artists).” (SUF, at ¶ 14.) In an interview Fung stated: “Morally, I’m a Christian. ‘Thou shalt not steal.’ But to me, even copyright infringement when it occurs may not necessarily be stealing.” (Id. at ¶ 15.) In another post Fung stated: “We completely oppose RIAA & Co. so do not be alarmed by our indexing ac-tivities. . . .” (Id. at ¶ 18.) In another interview Fung also stated that users were attracted to his website by the availability of a blockbuster film of the time, The Da Vinci Code. (Id. at ¶ 20.) Fung’s other statements included references to aiding individuals in the down-load of then-popular movie titles such as Matrix Re-loaded and Lord of the Rings: Return of the King, pointing users to links where they could download cop-ies of these movies through the torrent sites. (Id. at ¶¶ 27-29.) Other statements made on the website en-couraged or made available the downloading of illegal content by users who were browsing the discussion fo-rums on Fung’s websites. (Id. at ¶¶ 33-46.)

71a Plaintiffs also provide details relating to the assis-

tance that Fung would give website users in down-loading copyrighted material within the forum discus-sions of the various websites. In one such instance, in response to a user query on how to make a DVD from a downloaded copy of the film Pirates of the Caribbe-an, Fung provided a link to a website that would allow the individual to burn a DVD of the downloaded copy. (SUF, at 68.) Fung provided users with assistance on a number of occasions regarding how they could go about playing or extracting the copyrighted films that they downloaded from the Defendants’ websites. (Id. at 70, 72.) Fung also provided assistance to a user who was searching for episodes of the television series Star Trek: Enterprise; Fung provided links to search possible search queries that would turn up the work. (Id. at 71.) Fung also provided technical advice re-garding the use of “trackers” in response to emails containing dot-torrent files connected with copyrighted television programs, such as the NBC series The Of-fice. (Id. at 79.)

III. SUMMARY JUDGMENT STANDARD A. Rule 56 Standard

Rule 56(c) requires summary judgment for the moving party when the evidence, viewed in the light most favorable to the nonmoving party, shows that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56(c); Tarin v. County of Los Angeles, 123 F.3d 1259, 1263 (9th Cir. 1997).

The moving party bears the initial burden of estab-lishing the absence of a genuine issue of material fact. See Celotex Corp v. Catrett, 477 U.S. 317, 323-24

72a (1986). When a party moves for summary judgment under Rule 56(c), that party bears the burden of af-firmatively establishing all elements of its legal claim. See Southern Cal. Gas Co. v. City of Santa Ana, 336 F.3d 885 (9th Cir. 2003) (per curiam) (adopting Dis-trict Court order as its own); see also Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986) (“[I]f the movant bears the burden of proof on an issue, ei-ther because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his fa-vor.”) (emphasis in original).

Once the moving party has met its initial burden, Rule 56(e) requires the nonmoving party to go beyond the pleadings and identify specific facts that show a genuine issue for trial. See Celotex, 477 U.S. at 323-34; Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A scintilla of evidence or evidence that is merely colorable or not significantly probative does not present a genuine issue of material fact. Addisu v. Fred Meyer, 198 F.3d 1130, 1134 (9th Cir. 2000). Summary judgment is precluded only if there is a genuine dispute “where the evidence is such that a reasonable jury could return a verdict for the nonmov-ing party” over facts that might affect the outcome of the suit under the governing law. See Anderson, 477 U.S. at 248; see also Aprin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir. 2001) (the nonmoving party must identify specific evidence from which a reasonable jury could return a verdict in its favor).

B. Evidentiary Standards Under the Local Rules of this Court, the Court may

73a base its judgment on the facts stated in the moving party’s “Statement of Uncontroverted Facts and Con-clusions of Law,” L.R. 56-1, but only to the extent that the facts are “adequately supported by the moving party” –- i.e., with evidence in the record –- and are uncontroverted by evidence submitted or identified by the opposition. L.R. 56-3.

“A trial court can only consider admissible evidence in ruling on a motion for summary judgment.” Orr v. Bank of Am., 285 F.3d 764, 773 (9th Cir. 2002); see al-so Fed. R. Civ. P. 56(e). Of course, the court need only consider evidentiary objections if the Court actually relies on such evidence. Thus, to the extent that the Court relies on evidence to which a party has properly objected, the Court will address these objections in the course of this Order.

IV. ANALYSIS A. Preliminary Issues Regarding Secondary Liability 1. Secondary Theories of Liability

Plaintiffs move for summary judgment against de-fendants on three separate grounds: inducement of copyright infringement, material contribution to copy-right infringement, and vicarious copyright infringe-ment. The Court will only address the first theory, be-cause Defendants’ inducement liability is overwhelm-ingly clear. Discussion of Plaintiffs’ alternative theo-ries of liability would be unnecessarily duplicative with respect to the central question at issue in this Motion: Defendants’ secondary liability for its users’ copyright infringement.

The first two theories (material contribution and inducement) are known collectively as “contributory liability.” Perfect 10 v. Visa Int’l Serv. Ass’n, 494 F.3d

74a 788, 795 (9th Cir. 2007) (“One contributorily infringes when he (1) has knowledge of another’s infringement and (2) either (a) materially contributes to or (b) in-duces that infringement.”), cert. denied, 128 S.Ct. 2871 (2008). Despite the analytical similarities between the inducement and material contribution theories, it is now established in this Circuit that inducement and material contribution are distinct theories of contribu-tory liability through which defendants can be found liable. Id.; see also Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1227 (C.D. Cal. 2007) (“Grokster V”) (“material contribution and inducement are two doctrinal subsets of the contribu-tory infringement theory of liability.”). Generally, in-ducement requires that the defendant has undertaken purposeful acts aimed at assisting and encouraging others to infringe copyright, see Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913, 936-37 (2005) (“Grokster III”); in contrast, material contribu-tion (in the context of “computer system operator[s]”) applies if the defendant “has actual knowledge that specific infringing material is available using its sys-tem, and can take simple measures to prevent further damage to copyrighted works, yet continues to provide access to infringing works.” Perfect 10, Inc. v. Ama-zon.com, Inc., 508 F.3d 1146, 1172 (9th Cir. 2007) (in-ternal citations and quotations omitted) (emphasis in original). The third theory, vicarious liability, is simi-lar to contributory liability but includes some contours that differ from these other theories of liability. A de-fendant “infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it.” Grokster III, 545 U.S. at 930. 2. Actual Infringement by Defendants’ Users

75a With respect to all three of Plaintiffs’ theories of li-

ability, Plaintiffs must first demonstrate that there has been direct infringement of their copyrights by third parties. Amazon, 508 F.3d at 1169 (citing A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 n.2 (9th Cir. 2001)) (“Secondary liability for copyright in-fringement does not exist in the absence of direct in-fringement by a third party.”). Plaintiffs have provid-ed direct evidence of copyright infringement by De-fendants’ users, and Defendants have not introduced any evidence creating a triable issue of fact on this is-sue.

To establish copyright infringement, Plaintiffs must show that they own the copyrights that have been infringed, and that third parties have made un-authorized copies, downloads, or transfers of this ma-terial. 17 U.S.C. § 106(1), (3). Implicit in 17 U.S.C. § 106 is a further requirement at issue in the present case: that the infringement of Plaintiffs’ copyrights oc-cur inside the United States. The Ninth Circuit has determined that “United States copyright laws do not reach acts of infringement that take place entirely abroad.” Subafilms, Ltd. v. MGM-Pathe Comm’ns Co., 24 F.3d 1088, 1098 (9th Cir. 1994) (en banc), cert. de-nied sub nom. Subafilms, Ltd. v. United Artists Corp., 513 U.S. 1001 (1994). As a later panel of that court wrote, “in order for U.S. copyright law to apply, at least one alleged infringement must be completed en-tirely within the United States.” Allarcom Pay Televi-sion, Ltd. v. Gen’l Instrument Corp., 69 F.3d 381, 387 (9th Cir. 1995).

In the context of secondary liability, an actor may be liable for “activity undertaken abroad that know-ingly induces infringement within the United States.” 3 Nimmer on Copyright, § 12.04(D)(2) (citing Arm-

76a strong v. Virgin Records, Ltd., 91 F. Supp. 2d 628, 634 (S.D.N.Y. 2000); Blue Ribbon Pet Prods., Inc. v. Rolf C. Hagen (USA) Corp., 66 F. Supp. 2d 454, 462-64 (E.D.N.Y. 1999)). Once Plaintiffs have established that an act of infringement has taken place within the United States, Defendants may be held liable for their conduct that constitutes inducement, material contri-bution, or vicarious infringement, even if Defendants’ conduct took place abroad. Id.14

Here, there is not a genuine factual dispute over whether the users of Fung’s websites infringed Plain-tiffs’ copyrights. It is undisputed that Plaintiffs “own or control the copyrights, or exclusive rights under copyright” for the works at issue in this case. (SUF, ¶ 1.) It is also undisputed that Plaintiffs have not au-thorized the distribution of their copyrighted works by Defendants or Defendants’ users. (SUF, ¶ 3.)

The only purported dispute with respect to third parties’ direct infringement is whether Plaintiffs have provided any evidence that users of Fung’s sites have violated 17 U.S.C. § 106(1) and § 106(3) by reproduc-ing and distributing Plaintiffs’ copyrighted works. (SUF, ¶ 2; SGI, ¶ 2.)

Defendants argue that Plaintiffs must provide evi-dence that both the transferor and the transferee are located in the United States. (See Defs.’ Supp. Opp. at 3-4.) However, United States copyright law does not require that both parties be located in the United States. Rather, the acts of uploading and downloading are each independent grounds of copyright infringe- 14 The Court notes that Defendants have operated computer servers in Maryland and Texas. Columbia Pictures Inds., Inc. v. Fung, 447 F. Supp. 2d 306, 310 (S.D.N.Y. 2006) (order granting motion for change of venue and transferring case to this Court).

77a ment liability. Uploading a copyrighted content file to other users (regardless of where those users are locat-ed) violates the copyright holder’s § 106(3) distribution right. Downloading a copyrighted content file from other users (regardless of where those users are locat-ed) violates the copyright holder’s § 106(1) reproduc-tion right. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1014 (9th Cir. 2001). Accordingly, Plain-tiffs need only show that United States users either uploaded or downloaded copyrighted works; Plaintiffs need not show that a particular file was both uploaded and downloaded entirely within the United States.

Defendants also assert that Plaintiffs rely on in-admissible hearsay and inadmissible statistical data. (SGI, ¶ 3.) Contrary to Defendants’ assertions, Plain-tiffs’ expert evidence is admissible; and, in any event, Plaintiffs provide direct evidence of specific acts of in-fringement. There is abundant evidence of copyright infringement using Defendants’ websites.

Plaintiffs’ expert Richard Waterman conducted a study showing that more than 95% of files available through Defendants’ websites are copyrighted or are highly likely to be copyrighted. (SUF, ¶¶ 5-6.) Even taking into account Waterman’s margins of error (5% or less), such overwhelming statistical evidence is suf-ficient to establish that Defendants’ websites allowed third party users to access copyrighted material, and that users of Defendants’ websites made copyrighted material available for others to access.15

15 As noted supra, this expert evidence is admissible and unre-butted. Notably, other courts dealing with similar issues have relied on similar studies based on statistical samples of the rele-vant products or services. These courts have approved the basic statistical methodologies employed by Plaintiffs’ expert. See,

78a Plaintiffs’ broad statistical evidence is corroborated

by evidence of specific instances of downloads and transfers of copyrighted works through Defendants’ websites. In his deposition, Defendant Fung admitted to using the Isohunt website to download copyrighted broadcast television shows such as The Simpsons and Lost. (SUF, ¶¶ 2, 57, 122.) Similarly, Fung admitted to downloading the copyrighted film The Lord

of the Rings: The Fellowship of the Ring. (SUF, ¶ 58.) Declarant Chris Masciarelli stated that he used Defendants’ website isohunt.com to download a copy-righted work entitled Family Guy Presents Stewie Griffin: The Untold Story. (SUF, ¶ 2; Masicarelli Decl.).

Although Defendants argue that there is no clear evidence that any infringement took place in the Unit-ed States, Plaintiffs have presented admissible evi-dence of domestic infringement involving a copyright owned by each of Plaintiffs. Plaintiffs provide evi-dence based on internet protocol (“IP”) address16 data

e.g., Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 145 (S.D.N.Y. 2009); Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d 966, 985 (C.D. Cal. 2006); A & M Records, Inc v. Napster, Inc., 114 F.Supp.2d 896, 902-03 & n.6 (N.D. Cal. 2000), aff’d in part and rev’d on other grounds, 239 F.3d 1004 (9th Cir. 2001). 16 “An IP address is a standard way of identifying a computer that is connected to the Internet. With an IP address, a party could identify the Internet Service Provider providing internet service to the user of the computer corresponding to such IP ad-dress.” (June 8, 2007 Order Granting in Part and Denying in Part Plaintiffs’ Motion to Require Defendants to Preserve and Produce Server Log Data and for Evidentiary Sanctions) (Magis-trate Judge) (citing United States v. Heckenkamp, 482 F.3d 1142, 1144 (9th Cir. 2007)) [docket no. 146].)

79a and usage-summary data produced by Defendants themselves. Plaintiffs have also have used IP-address data to locate Defendants’ users and show that partic-ular infringing downloads took place in the United States. (Pozza Supp. Decl. ¶¶ 3, 4, Ex. 5; see also Masciarelli Decl.) Further, in an examination of roughly 400 downloads (the only available evidence containing users’ IP addresses), approximately 50% of the actual downloads using Defendants websites were made from the United States. (Waterman Supp. Decl. ¶ 7; Horowitz Supp. Decl. ¶ 21 & Ex. 1.)17

Plaintiffs have also provided evidence that, contra-ry to Defendants’ wholly unsupported assertions, dot-torrent files downloaded from Defendants’ sites corre-spond to and automatically cause the downloading of Plaintiffs’ copyrighted content.1818 (Bedser Supp.

Defendants’ own expert has opined that IP-based loca-tion analysis is highly accurate. (Gribble Decl. ¶ 30.) Plaintiffs’ expert agrees. (Horowitz Supp. Decl. ¶ 11.) 17 Defendants’ own usage summaries show that approximately 25% of Defendants’ users are located in the United States. (Horowitz Supp. Decl. ¶ 24, Ex. 5.) This 25% figure is further supported by evidence from Alexa and Quantcast, which are third-party sources of internet traffic information. (See Horo-witz Supp. Decl. ¶ 24 & Ex. 6.) Defendants do not object to the exhibits which contain this 25% figure. (See Defs.’ Objections to Horowitz Supp. Decl, ¶ 14; Defs.’ Objections to Waterman Supp. Decl., ¶ 3.) 18 The fact that the dot-torrent files automatically cause content files to be downloaded and assembled (see also supra Part II.A) rebuts Defendants’ assertions that users’ act of downloading dot- torrent files does not constitute actual copyright infringement. It may be true that the act of downloading a dot-torrent file is not itself a copyright-infringing action; but once that dot-torrent file triggers the process of downloading a content file, copyright infringement has taken place. Because dot-torrent files auto-matically trigger this content-downloading process, it is clear that dot-torrent files and content files are, for all practical pur-

80a Decl., ¶ 4; Ishikawa Supp. Decl., Ex. 2; Grodsky Supp. Decl., Ex. 2; Sehested Supp. Decl., Ex. 2). Finally, Plaintiffs have linked the United States-based down-loads (as identified by Plaintiffs’ experts) with copy-righted works owned by each of the individual Plain-tiffs. (Whitehead Supp. Decl., Ex. 1; Clinton Supp. Decl. Ex. 1; Sunderland Supp. Decl., Ex. 1; Kang Supp. Decl., Ex. 1; Cherkoori Supp. Decl., Ex. 1; Kaplan Supp. Decl., Ex. 1.)

Accordingly, Plaintiffs’ evidence conclusively estab-lishes that individuals located in the United States have used Fung’s sites to download copies of copy-righted works. Defendants fail to introduce any evi-dence that raises a triable issue regarding the fact that Plaintiffs’ copyrights have been infringed by third parties.

B. Inducement of Infringement Plaintiffs first seek summary judgment under the

“inducement” theory articulated in the Supreme Court case Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913 (2005) (“Grokster III”). In an opinion by Justice Souter, the Supreme Court held that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Grokster III, 545 U.S. at 936-37. The Su-preme Court further explained,

[M]ere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor [of

poses, synonymous. To conclude otherwise would be to elevate form over substance.

81a the device] to liability. Nor would ordi-nary acts incident to product distribu-tion, such as offering customers tech-nical support or product updates, sup-port liability in themselves. The in-ducement rule, instead, premises liabil-ity on purposeful, culpable expression and conduct, and thus does nothing to compromise legitimate commerce or dis-courage innovation having a lawful promise.

Id. at 937 (emphasis added). Importantly, liability may attach even if the defendant does not induce spe-cific acts of infringement. Id. at 940 n.13 (emphasis added).19 Instead, the court may “infer[] a patently illegal objective from statements and actions showing what [the defendant’s] objective was.” Id. at 941.

19 In its opinion, the Supreme Court noted the defendant’s ar-gument that a court must make a determination of their liability on the basis of specific past acts that encouraged inducement. Defendants here offer a similar argument. The Supreme Court, however, rejected such a proposition, stating:

This contention misapprehends the basis for their potential liability. It is not only that en-couraging a particular consumer to infringe a copyright can give rise to secondary liability for the infringement that results. Inducement lia-bility goes beyond that, and the distribution of a product can itself give rise to liability where ev-idence shows that the distributor intended and encouraged the product to be used to infringe. In such a case, the culpable act is not merely the encouragement of infringement but also the dis-tribution of the tool intended for infringing use.

Grokster III, 545 U.S. at 940 n.13 (internal citations omitted, emphasis added).

82a An unlawful objective to promote infringement can

be shown by a variety of means. “The classic instance of inducement is by advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations.” Id. at 937; see also Visa Int’l., 494 F.3d at 800. For example, in Grokster III, the de-fendants “respond[ed] affirmatively to requests for help in locating and playing copyrighted materials.” 545 U.S. at 938. However, showing that the defendant sent out a specific message is “not [the] exclusive way of” demonstrating inducement. Grokster III, 545 U.S. at 938. The Supreme Court in Grokster III highlight-ed three facts from which a reasonable factfinder could infer intent to foster infringement in that case. First, the Court noted that the defendant’s owns communi-cations and advertising designs had expressed an in-tent to target Napster users, a community well-known for copyright infringement. Although it was not known whether some of the advertising designs were actually communicated to the public, “whether the messages were communicated is not to the point on this record.” Id. at 938. “The function of the message in the theory of inducement is to prove by a defend-ant’s own statements that his unlawful purpose dis-qualifies him from claiming protection.” Id. Second, the Court found it probative that defendants did not attempt to develop filtering tools or other means of diminishing the use of its products for infringement. Taken alone, the failure to develop a filter would be insufficient to support liability; but viewed in conjunc-tion with other evidence it underscored the defend-ants’ unlawful objective. Id. at 939 n.12. Third, the Court considered the fact that the defendants’ busi-ness model depended on high-volume use of its soft-ware, which was overwhelmingly infringing, as cir-cumstantial evidence of intent to induce infringement.

83a Id. at 939-40. Again, this evidence would not alone justify the imposition of liability, but it supported an inference of unlawful intent when viewed in context with other evidence in the record. Id. Based on these elements of the factual record, the Court held that the defendants’ “unlawful objective is unmistakable.” Id. at 940.

On remand from the Supreme Court, the District Court took into account other factors in finding the de-fendants’ intent to induce infringement, including the “the staggering scale of infringement” occurring through use of defendants’ products, technical assis-tance provided by the defendants to users for the play-back of copyrighted content, and affirmative steps tak-en by defendants to ensure that their products would be capable of infringing use. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d 966, 985-92 (C.D. Cal. 2006) (“Grokster IV”).

Upon review of all the evidence in the present case, the Court determines that evidence of Defendants’ in-tent to induce infringement is overwhelming and be-yond reasonable dispute. 1. Defendants’ message to users

Plaintiffs present a variety of undisputed evidence that Defendants disseminated a message “designed to stimulate others” to commit infringements. Grokster III, 545 U.S. at 916. The clearest instance of Defend-ants’ solicitation of infringing activity is the “Box Of-fice Movies” feature of Defendants’ Isohunt site. As Defendant Fung admitted in his deposition, this fea-ture essentially involved Defendants’ periodic posting of a list of the top 20 highest-grossing films then play-ing in United States, which linked to detailed web-

84a pages concerning each film.20 Each of these pages con-tained “upload torrent” links allowing users to upload dot-torrent files for the films. Though Defendants eventually discontinued this feature, they did not re-move pages that had already been created. (SUF, ¶¶ 50-55.) By implementing this feature, therefore, De-fendants engaged in direct solicitation of infringing activity. Defendant Fung, in his subsequent declara-tion filed with Defendants’ Opposition, denies that this feature was intended to induce copyright infringement and asserts that the web- pages “did not lead any-where.” (Fung Decl., ¶ 58.) However, “actions speak louder than words,” Arista Records, 633 F. Supp. 2d at 153 n.20, and Fung cannot dispute the objective his-torical fact that the websites included a “Box Office Movies” feature at one time. This feature evidences Defendants’ intent to encourage their users’ infringe-ment.

In addition to the “Box Office Movies” feature, Plaintiffs present other evidence that Defendants dis-seminated messages designed to stimulate induce-ment. In particular, Plaintiffs demonstrate that, De-fendants’ websites present available torrent files (the vast majority of which contain infringing content) in browseable categories and provide further information about the works contained in the files. (SUF, ¶¶ 47-48.) Defendants also generate lists of the most popu-lar files in categories like “Top 20 Movies.” (SUF, ¶ 49.) Defendants do not dispute the presence of such information on their web-site, but instead merely as- 20 It goes without saying that the highest-grossing films current-ly in theaters are copyrighted works. See Grokster V, 454 F. Supp. 2d at 992 (“it is common knowledge that most popular music and movies are copyrighted”). Defendants have not re-butted this obvious inference.

85a sert that the lists’ content originates from users or from automated processes that simply reflect user ac-tivity. (SGI ¶ 11; Fung. Decl., ¶¶ 54-55, 57). Defend-ants’ assertions ignore the material fact that Defend-ants designed the websites and included a feature that collects users’ most commonly searched-for titles. The fact that these lists almost exclusively contained copy-righted works (see SUF ¶¶ 8-13) and that Defendants never removed these lists is probative of Defendants’ knowledge of ongoing infringement and failure to stop this infringement.

Plaintiffs also provide evidence of what the Su-preme Court has termed the “classic instance of in-ducement” — a statement that “broadcasts a message designed to stimulate others to commit violations.” Grokster III, 545 U.S. at 938. Defendant Fung made statements on the Isohunt website encouraging or as-sisting infringement. He posted on his website a mes-sage telling the website’s users that they should “try Peer Guardian,” a software application that can be used to frustrate copyright enforcement against file sharers. (SUF, ¶ 94.) Accord Grokster III, 545 U.S. at 937-38. Fung also provided a link to a torrent file for the recent film Lord of the Rings: Return of the King on the Isohunt site and stated, “if you are curious, download this.” (SUF, ¶ 29.) Additionally, Fung cre-ated a promotional page inviting users to upload tor-rent files for Matrix Reloaded, another recent film. (SUF, ¶ 28.)

It is also undisputed that certain key terms known to the pirating community, such as “warez,” were meta tags embedded in the websites for reference by search engines. Additionally, the Fung websites have honor-ary ranking systems for those who posted a certain number of forum users messages; ranks include titles

86a such as “I pir4te, therefore I am” and “All Day I Dream About W4rez.” (SUF, ¶ 22.) In other words, the websites bestowed honors by identifying users as copyright infringers. This is strong circumstantial evi-dence that Defendants promoted their users’ infring-ing activities by consciously fostering a community that encouraged – indeed, celebrated – copyright in-fringement.

Perhaps most tellingly, Fung has personally en-gaged in a broad campaign of encouraging copyright infringement. In a statement on the Isohunt website, Fung stated: “they accuse us for [sic] thieves, and they r [sic] right. Only we r [sic] ‘stealing’ from the lechers (them) and not the originators (artists).” (SUF, at ¶ 14.) In an interview with another website Fung stat-ed: “Morally, I’m a Christian. ‘Thou shalt not steal.’ But to me, even copyright infringement when it occurs may not necessarily be stealing.” (Id. at ¶ 15.) Fung’s statements provide further evidence that he has en-couraged third parties to engage in copyright in-fringement. These statements also provide probative evidence regarding Fung’s intent in creating the De-fendant websites to aid others’ infringement. 2. Defendants’ assistance to users engaging in in-fringement

There is also evidence that Defendants directly as-sisted users in engaging in infringement. As in Grok-ster III, Defendants in the present case have “re-spond[ed] affirmatively to requests for help in locating and playing copyrighted materials.” 545 U.S. at 938.

Defendant Fung personally posted messages in the Isohunt discussion forums in which he provided tech-nical assistance to users seeking copyrighted works. Specifically, in response to an Isohunt user who posted

87a a message stating he did not know how to watch a file containing Lord of the Rings: Return of the King which he had recently downloaded, Defendant Fung provided directions on how to extract and play the vid-eo file. (SUF, ¶ 69.) The record is replete with such instances of technical assistance provided to users by Defendant Fung through the forum. (See, e.g., SUF, ¶ 70 (Fung provided technical assistant to users who downloaded the film Kill Bill); SUF, ¶ 71 (Fung pro-vided assistance to user searching for Star Trek: En-terprise episodes by giving search tips); SUF, ¶ 79 (Fung explained how to attach a tracker URL to a dot-torrent file sent to him by an Isohunt user, and rec-ommended the user use the tracker at tor-rentbox.com).)

In addition to Fung’s personal statements, state-ments by the “moderators” of Fung’s websites provide further evidence of the Defendant websites’ active in-ducement of infringing activities. There are numerous individuals who are known as “moderators” or “ad-mins.” The term “moderators” refers to “individuals whose job it is to look after the running of the forums from day to day.” (SGI, ¶ 41.) Moderators can edit, de-lete, and reorganize postings in the forums. (SGI, ¶ 42.) Some moderators, referred to as “admins,” also have the ability to ban selected abusive users and re-move user-posted dot- torrent files. (Id.) There is no substantive dispute by Defendants regarding their re-lationship to these individuals. Defendants assign this status and give these individuals authority to moderate the forums and user discussions. These in-dividuals were under the control of Defendants and assigned duties related to the administration of the web forums. Therefore, there is an agency relation-ship between these individual moderators (or “ad-

88a mins”) and Defendants.21

The Defendant websites are full of statements by moderators who assisted users seeking to download files or provided links to other websites containing the requested items. In a post on the Isohunt forums, moderator “Estranged” provided instructions regard-ing DVD ripping and conversion. (SUF, ¶ 45.) In a post on Torrentbox, moderator “Skull and Bones” re-ferred a user to 353 dot-torrent files including King Kong and Silent Hill, which were “very good quality” and stated that “[m]ost of your films are here at Tor-

21 An agency relationship is created “by a principal’s manifesta-tion to an agent that, as reasonably understood by the agent, expresses the principal’s assent that the agent take action on the principal’s behalf.” Restatement (Third) of Agency, § 3.01 (2006); see Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52 & n.31 (1989) (looking to Restatement to de-termine federal common law of agency under Copyright Act). Under common law principles of agency, the “modera-tors” were the Defendants’ agents with respect to their interac-tions with the online message boards and forums. Even though there is no evidence that the moderators were specifically au-thorized to post messages in these forums, the websites’ act of designating them as “moderators” and providing them with spe-cific forum-related powers leads a “third party reasonably [to] believe[] the actor has authority to act on behalf of the principal and that belief is traceable to the principal’s manifestations.” Restatement (Third) of Agency, § 2.03 (2006) (describing “appar-ent authority”). There is no genuine dispute that agency is established here, as Defendants introduce no evidence that would provide a triable issue to rebut Plaintiffs’ prima facie showing of agency. Defendants merely assert that Plaintiffs evidence “suggests tri-able issues of fact.” (Opp. at 19 n.10.) Unsupported assertions do not give rise to a genuine dispute of fact. Plaintiffs’ evidence, unless refuted, compels a finding of an agency relationship. Plaintiffs’ evidence has not been refuted, and agency is accord-ingly established.

89a rentbox or search on isohunt.com.” (SUF, ¶ 46.) In a post on the website Podtropolis, moderator “New-AgePirate” responded to a user who posted a list with films such as The Godfather, Clockwork Orange, and One Flew Over the Cuckoo’s Nest, with a post that stated “Great list by the way man.

Great to have you here.” (SUF, ¶ 35.) All of these statements demonstrate that there was an active role played by the administrators of the websites within the forum, encouraging and providing technical assis-tance for users seeking to engage in infringing activi-ties.

All of these statements demonstrate the assistance Defendant Fung and the corporate Defendant provid-ed to the websites’ users in infringing Plaintiffs’ copy-rights. Such actions demonstrate that Defendants did not maintain a hands-off approach to the operation of the sites. Instead, various of Defendants’ representa-tives gave technical assistance and aid in the orga-nized forum discussions that furthered the third par-ties’ infringement using the sites.

Defendant Fung argues that the First Amendment protects any statements made by him or the agents. Such an argument, however, is unavailing. The cen-tral premise of the Supreme Court’s decision in Grok-ster III is that a defendant’s statements can be proba-tive of an intent to induce infringement. Explicit statements by defendants will often form the most substantial form of proof in inducement or material contribution cases. See generally Grokster III, 545 U.S. 913; Napster, 239 F.3d 1004. Additionally, the statements themselves are not the activity prohibited by this doctrine, but rather are evidence of the “intent to induce,” which is the underlying wrongful act. It is

90a well- established that such statements are not protect-ed by the First Amendment:

The first amendment does not pro-vide a defense to a criminal charge simp-ly because the actor uses words to carry out his illegal purpose. Crimes . . . fre-quently involve the use of speech as part of the criminal transaction. . . . To the extent . . . that [the defendant] appears to contend that he is immune from search or prosecution because he uses the printed word in encouraging and counseling others in the commission of a crime, we hold expressly that the first amendment does not provide a defense as a matter of law to such conduct.

United States v. Barnett, 667 F.2d 835, 842 (9th Cir. 1982).22

22 In one of the main arguments in Defendants’ Opposition, De-fendants offer an extended discussion of the intersection be-tween the First Amendment and the internet. (Opp. at 18-23.) Quoting from a broad selection of caselaw, Defendants largely appear to advocate that the First Amendment immunizes any and all activity on the internet. Defendants’ various First Amendment arguments are inapposite and unavailing. See Re-ligious Tech. Ctr. v. Netcom On-Line Communcations Svcs., 907 F. Supp. 1361, 1377-78 (N.D. Cal. 1995); see generally 4 Nimmer on Copyright § 19E.03-04. Notably, it appears that copyright law incorporates First Amendment considerations by providing for “fair use” defenses and by distinguishing between uncopyrightable “ideas” and cop-yrightable “expressions.” See Los Angeles News Svc. v. Tullo, 973 F.2d 791, 795-96 (9th Cir. 1992). Further, secondary copy-right liability is sensitive to First Amendment concerns in that it generally regulates intentional behavior. See Grokster, 545 U.S. at 937; Amazon, 508 F.3d at 1772; cf. Universal City Studi-

91a 3. Defendants’ implementation of technical features promoting copyright infringement

Defendants’ implementation of certain technical features in their web-sites is also probative of Defend-ants’ intent to induce copyright infringement. Most obviously, Defendants’ websites allow users to locate dot-torrent files. Once downloaded to a users’ comput-er, torrent files automatically engage in a “swarm” downloading process that permits users to download a single content file simultaneously from many other users. (SUF ¶¶ 23-24.) This process expedites the ex-change of large, content-rich files such as television programs and movies.

Defendant Fung also implemented a “spider” pro-gram, which locates and obtains copies of dot-torrent files from other web-sites, including well-known in-fringing sites such as “The Pirate Bay.” (SUF, ¶¶ 86-87.) Defendant Fung additionally directs the program to specific web pages containing terms like “seinfeld-videos,” which one would infer contains infringing con-tent from the television show Seinfeld. (SUF, ¶ 88.) Defendants do not rebut this obvious inference.

os v. Reimerdes, 111 F. Supp. 2d 294, 339-41 (S.D.N.Y. 2000) (“Anything that would impose strict liability on a web site oper-ator for the entire contents of any website to which the operator linked . . . would raise grave constitutional concerns”) (emphasis added), aff’d on other grounds sub nom. Universal City Studios v. Corley, 273 F.3d 429 (2d Cir. 2002). Finally, and most importantly, it must be emphasized that the present case involves conduct not expression, and to the extent that Defendants’ expression is being curtailed, they should re-call that they “could have expressed their theme without copy-ing [Plaintiffs’] protected expression.” Walt Disney Prods. v. Air Pirates, 581 F.2d 751, 759 (9th Cir. 1978), cert. denied sub nom. O’Neill v. Walt Disney Prods., 439 U.S. 1132 (1979).

92a Defendants also organized files using a program

that matches content filenames with specific terms. Some of the specific terms used by the program de-scribe likely infringing content, such as “Screener” or “PPV”.23 (SUF, ¶¶ 91-92.)

Defendants no do not dispute these facts except to assert that the spider programs were automated, ge-neric components that operated in a copyright-neutral manner. (SGI, ¶¶ 89-91.) Essentially, Defendants ar-gue that they merely assembled a website that com-bined already- existing technologies, and that they did not include any unique innovations that were specifi-cally tailored to assist the distribution of copyrighted works. These assertions are inapposite. The unrebut-ted factual evidence shows that Fung designed pro-grams which improved the functioning of his websites with respect to infringing uses. Combined with other evidence regarding Defendants’ improper purposes, these technological features support a finding of in-ducement liability.24

23 “Screener” refers to an advance copy of a film given to critics for review, while “PPV” refers to “pay-per-view.” Defendants offer no authority contesting these standard meanings. 24 Given that Defendants’ “unlawful objective is unmistakable,” see Grokster III, 545 U.S. at 940, the Court refrains from ad-dressing the factual disputes regarding whether or not Defend-ants were technologically capable of implementing filtering mechanisms to reduce copyright infringement through their websites. (See SUF, ¶¶ 103, 107; SGI ¶¶ 110-11, 143.) In Grok-ster III, the defendants’ failure to implement a copyright filter was probative circumstantial evidence of the defendants’ intent to induce infringement. However, the failure to implement a copyright filter is not a determinative factor in analyzing a de-fendant’s inducement of infringement. Rather, the relevant question is whether “the summary judgment record [establishes that the defendants] acted with a purpose to cause copyright

93a 4. Defendants’ business model depends on massive infringing use

Plaintiffs assert that Defendants’ business model depended on massive infringing use. In the instant litigation, just as with the programs at issue in Grok-ster III, Defendants’ business generates its revenue almost exclusively by selling advertising space on the sites. (SUF, ¶ 109; Pltf. Ex. 1, Fung Dep., at 326-27.) Similarly, the revenue depends on users visiting De-fendants’ sites and viewing the advertising. (SUF, ¶ 110.) As discussed previously, Defendant Fung acknowledges that the availability of popular works is what attracts users to the sites. (See, e.g., Ex. 173 (in-terview of Fung admitting that the availability of the then-popular Da Vinci Code film was a key attraction to his website).) Defendant Fung also solicited adver-tisement on the basis of the availability of works on his website. For example, in an email to a potential advertiser, moviegoods.com, Fung wrote that Isohunt would “make a great partner, since TV and movies are at the top of the most frequently searched by our visi-

violations by use of software suitable for illegal use.” Id. at 938. This improper purpose can be shown in a variety of ways; the factors considered by the Supreme Court in Grokster were not exhaustive or exclusive. See Grokster III, 545 U.S. at 938-39. In the present case, given Defendants’ overwhelming affirmative conduct to encourage and assist copyright infringement, Plain-tiffs are entitled to summary judgment in their favor even if De-fendants were incapable of creating an effective copyright filter. Indeed, Plaintiffs have established that Defendants engaged in “[t]he classic instance of inducement . . . by advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations.” See Grokster III, 545 U.S. at 937. Given that Defendants so clearly acted to induce infringement, it is immaterial that they may or may not have been able to pre-vent such infringement by implementing a copyright filter.

94a tors.” (SUF, ¶ 112; Pls.’ Ex 174.)

In short, there is no factual dispute that the avail-ability of copyright material was a major draw for us-ers of Fung’s websites, and there is no dispute that De-fendants derive revenue from the websites and that this revenue increases along with the number of users. (SUF ¶¶ 109-110, 132-133.)25 This is further evidence of Defendants’ intent to assist infringing uses. 5. Additional Considerations

Throughout their legal memoranda and supporting evidentiary papers, Defendants argue that there is no evidence of infringing activity. This argument obvi-ously fails in light of the evidence discussed supra, Part IV.A.2. However, to the extent that Defendants subjectively believe that their users have not engaged in copyright infringement, Defendants’ “ostrich-like refusal to discover the extent to which its system was being used to infringe copyright is merely another piece of evidence” of Defendants’ purposeful, culpable conduct in inducing third party infringement. See In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003). 6. Summary of Inducement

The undisputed evidence shows that Defendants (both Fung and the websites) engaged in “purposeful, culpable expression and conduct” aimed at promoting infringing uses of the websites. See Grokster III, 545 U.S. at 937. Accordingly, Plaintiff’s motion for sum-

25 Defendants assert that “there is no detail, no dollar amounts,” (Opp. at 35), but Plaintiffs correctly point out that the present Motion involves liability not damages, so such detail is unneces-sary. (Reply at 12.)

95a mary judgment on Defendants’ liability for induce-ment of infringement is GRANTED.

C. Alternative Theories of Secondary Liability Having determined that Defendants are liable un-

der an inducement theory for their users’ infringing activities, the Court refrains from addressing Plain-tiff’s Motion for Summary Judgment on the theories of material contributory infringement and vicarious in-fringement.

V. DEFENDANTS’ DIGITAL MILLENNIUM COPYRIGHT ACT AFFIRMATIVE DEFENSES The Digital Millennium Copyright Act provides af-

firmative defenses for providers of certain internet services. In many ways, the Digital Millennium Copy-right Act is simply a restatement of the legal stand-ards establishing secondary copyright infringement - in many cases, if a defendant is liable for secondary infringement, the defendant is not entitled to Digital Millennium Copyright Act immunity; if a defendant is not liable for secondary infringement, the defendant is entitled to Digital Millennium Copyright Act immuni-ty. The two sets of rules do not entirely overlap, but this framework is helpful for understanding the Act’s statutory text and structure. Cf. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1025 (9th Cir. 2001) (“We do not agree that . . . potential liability for contributory and vicarious infringement renders the Digital Mil-lennium Copyright Act inapplicable per se.”).

Here, the relevant section of the Digital Millenni-um Copyright Act, 17 U.S.C. § 512(d), reads:

Information location tools.--A service provider shall not be liable for monetary relief, or, except as provided in subsec-

96a tion (j), for injunctive or other equitable relief, for infringement of copyright by reason of the provider referring or link-ing users to an online location contain-ing infringing material or infringing ac-tivity, by using information location tools, including a directory, index, refer-ence, pointer, or hypertext link, if the service provider–

(1) (A) does not have actual knowledge that the ma-terial or activity is infringing;

(B) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(C) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material; (2) does not receive a financial benefit directly at-tributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and

(3) upon notification of claimed infringement as de-scribed in subsection (c)(3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infring-ing activity, except that, for purposes of this para-graph, the information described in subsection (c)(3)(A)(iii) shall be identification of the reference or link, to material or activity claimed to be infringing, that is to be removed or access to which is to be disa-

97a bled, and information reasonably sufficient to permit the service provider to locate that reference or link.

17 U.S.C. § 512(d). In other words, a provider of “information location

tools” (such as Defendants’ websites26) must satisfy the three conjunctive requirements of § 512(d) in order to obtain safe harbor. These three safe harbor re-quirements are that the defendant: [1] does not know (§ 512(d)(1)(A)) or have reason to know (§ 512(d)(1)(B)) of infringing activities, or does not remove infringing

26 See Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d 1146, 1175 (C.D. Cal. 2002) (“[S]ection 512(d) . . . creates a ‘safe harbor’ for copyright infringement resulting from the use of information location tools by service providers, which include directories, indexes, references, pointers and hypertext links.”). Defendants also argue that they fall within the safe harbor pro-visions of 17 U.S.C. § 512(a) (“transitory digital network com-munications”) and 17 U.S.C. § 512(c) (“information residing on systems or networks at direction of users”), but these categories are inapplicable to Defendants’ particular technologies as well as Defendants’ substantive conduct upon which Plaintiffs are suing. Defendants themselves assert that “[n]o infringing mate-rials are posted on or pass through defendants’ systems,” (Opp. at 34), which is factually supported by the record because De-fendants’ websites are used to download dot-torrent files, not content files (Gribble Decl. ¶ 21; Fung Decl. ¶¶ 9, 52). Because infringing materials do not pass through or reside on Defend-ants’ system, Defendants may not rely on § 512(a) and § 512(c). In addition, Plaintiffs claims are unrelated to secondary liability “by reason of the storage [of data] . . . on a system or network controlled or operated by” Defendants, 17 U.S.C. § 512(c)(1) (emphasis added), or “by reason of [Defendants’] transmitting, routing, or providing connections for[] material through a sys-tem or network controlled or operated by” Defendants, 17 U.S.C. § 512(a) (emphasis added). Plaintiffs’ claims are premised on active inducement of infringement, not passive transmission or storage of infringing materials.

98a materials upon receipt of such knowledge (§ 512(d)(1)(C); and [2] does not profit from infringement where it has the power to control the infringement (§ 512(d)(2)); and [3] upon receiving notice (in the statu-torily- prescribed manner) from the copyright holder, removes the infringing material (§ 512(d)(3)).

In the present case, Plaintiffs have established that Defendants have reason to know of their users’ in-fringing activities. Defendants have not satisfied their summary judgment burden by identifying facts show-ing that Defendants were “not aware of facts or cir-cumstances from which infringing activity [wa]s ap-parent.” 17 U.S.C. § 512(d)(1)(B). Further, Defendants have not introduced any evidence that they “act[ed] expeditiously to remove, or disable access to, the [in-fringing] material” once they became aware that this infringing activity was apparent. (See generally Defs.’ SGI ¶¶ eee-lll.) Thus, Defendants are not entitled to statutory safe harbor under 17 U.S.C. § 512(d).2727

27 The Court refrains from addressing at length the second prong of the safe harbor rule, the § 512(d)(2) “financial benefit” requirement. Defendants have profited from their users’ in-fringement, see supra Part IV.B.5, and Defendants undisputedly have the ability to block users from Defendants’ websites. (SUF ¶¶ 136-139; see also SUF ¶ 106, SGI ¶ 109; SGI ¶¶ 141-142; Fung Decl. ¶ 61.) As the Ninth Circuit explained in Napster, the “ability to block infringers’ access to a particular environ-ment for any reason whatsoever is evidence of the right and ability to supervise.” 239 F.3d at 1023. Accordingly, Defendants have also failed to raise a triable issue of fact regarding the second requirement for receiving § 512(d) safe harbor, because they “receive a financial benefit directly attributable to the infringing activity,” and they have “the right and ability to control such activity.” 17 U.S.C. § 512(d)(2). As for the third safe harbor requirement, there appears to be a triable issue of fact as to the adequacy of the statutory notice

99a In order to obtain safe harbor, a defendant cannot

have knowledge of ongoing infringing activities. This “knowledge” standard is defined as “actual knowledge” or “willful ignorance.” According to the widely- cited House and Senate Report on the law, “if the service provider becomes aware of a ‘red flag’ from which in-fringing activity is apparent, it will lose the limitation of liability if it takes no action.” H.R. Rep. 105-551(II), at 53; see also Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1114 (9th Cir. 2007). The Congressional Report notes that the service provider is only liable if it “turned a blind eye to ‘red flags’ of obvious infringe-ment.” H.R. Rep. 105-551(II), at 57. Other courts have applied this test as requiring “willful ignorance of readily apparent infringement.” UMG Recordings, Inc. v. Veoh Networks Inc., F. Supp. 2d , 2009 WL 3422839, at *7 (C.D. Cal. 2009) (citing Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1108 (W.D. Wash. 2004)).

Even under this stringent “willful ignorance” test, it is apparent that Defendants have “turned a blind eye to ‘red flags’ of obvious infringement.” See H.R. Rep. 105-551(II), at 57. Most importantly, Defendant Fung himself has engaged in unauthorized downloads of copyrighted material; even if those downloads were done abroad and were not actionable under United States copyright law (and thus would not provide “ac-tual knowledge” of illegal activity for purposes of 17 U.S.C. § 512(d)(1)(A)), Fung’s actions show that Fung was aware that infringing material was available on that Plaintiffs provided to Defendants. (See Parker Decl. ¶¶ 9, 12-14.) However, because Defendants have not identified any triable issues of facts regarding the first two safe harbor re-quirements, summary judgment is appropriate in Plaintiffs’ fa-vor.

100a the Defendant websites. Given the “worldwide” na-ture of the world-wide web, it would have been obvious that United States-based users could access these same infringing materials and thus engage in infring-ing acts. Defendants provide no evidence to rebut this obvious conclusion that United States-based users would have been able to download the same copyright-ed works that Fung himself downloaded.

Furthermore, Plaintiffs introduce evidence pro-duced by Defendants themselves that shows that ap-proximately 25% of Defendants’ websites’ users were based in the United States. (Horowitz Supp. Decl. ¶ 24, Ex. 5.) This evidence further shows that, at its height, over ten million unique users visited Defend-ants’ websites each month (see Horowitz Supp. Decl., Ex. 5 at 25; Horowitz Supp. Decl., ¶ 19 n.4), which strongly suggests that some 2.5 million United States citizens visited Defendants’ websites each month. Fur-ther, this evidence shows that at one point, Defend-ants’ websites were accessed over 50 million times from the United States in a single month. (Horowitz Supp. Decl., Ex. 5 at 32.) Upon accessing Defendants’ websites, these American users would have found that 90% to 95% of the available materials contained copy-righted content. (See Waterman Decl. ¶¶ 6, 7, 24, 28, 31.) Defendants fail to introduce any evidence rebut-ting this overwhelming evidence, and thus fail to raise a triable issue of fact as to whether Defendants had actual knowledge of copyright infringement or were willfully ignorant of ongoing copyright infringement.

There is a variety of other evidence of Defendants’ willful ignorance to ongoing infringement. Defendants designed their website to include lists such as “Top Searches,” “Top 20 Movies,” “Top 20 TV Shows,” and “Box Office Movies,” and Defendants designed these

101a lists to automatically update to reflect user activities. These lists included numerous copyrighted works. (SUF ¶¶ 8-12, 47-55.) See Grokster V, 454 F. Supp. 2d at 992 (“it is common knowledge that most popular music and movies are copyrighted”). Thus, unless De-fendants somehow refused to look at their own webpages, they invariably would have been known that (1) infringing material was likely to be available and (2) most of Defendants’ users were searching for and downloading infringing material.

In addition, Plaintiffs submit overwhelming statis-tical evidence of the prevalence of copyrighted materi-al available through Defendants’ websites. (SUF ¶¶ 5-7.) This evidence shows that 90%-95% of the material was likely to be copyright infringing, a percentage that is nearly identical to the facts in Napster, in which “eighty-seven percent of the files available on Napster may be copyrighted.” 239 F.3d at 1011. In that case, the district court rejected the defendant’s plainly mer-itless arguments seeking safe harbor under § 512(d). A&M Records, Inc. v. Napster, Inc., 114 F. Supp. 2d 896, 919 & n.24 (N.D. Cal. 2000), aff’d in part and rev’d in part, 239 F.3d 1004 (9th Cir. 2001). Given that Defendants’ own statistics show that millions of Defendants’ users are located in the United States (Horowitz Supp. Decl. ¶ 24, Ex. 5), Defendants were certainly “aware of a ‘red flag’ from which infringing activity is apparent.” H.R. Rep. 105-551(II), at 57. Defendants do not introduce any evidence to raise a triable issue of fact on this question.

In light of this overwhelming evidence, the only way Defendants could have avoided knowing about their users’ infringement is if they engaged in an “os-trich-like refusal to discover the extent to which [their] system[s] w[ere] being used to infringe copyright.” See

102a In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003). In other words, to avoid actual knowledge of infringement, Defendants would have had to engage in willful blindness.

There is one last reason why Defendants are una-ble to benefit from the 17 U.S.C. § 512 safe harbors. As stated by Judge Posner in In re Aimster Copyright Litig., 334 F.3d 643, 655 (7th Cir. 2003):

The common element of its safe harbors is that the service provider must do what it can reasonably be asked to do to prevent the use of its service by ‘repeat infringers.’ 17 U.S.C. § 512(i)(1)(A). Far from doing anything to discourage repeat infringers of the plaintiffs’ copy-rights, Aimster invited them to do so, showed them how they could do so with ease using its system, and by teaching its users how to encrypt their unlawful distribution of copyrighted materials disabled itself from doing anything to prevent infringement.

In other words, inducement liability and the Digital Millennium Copyright Act safe harbors are inherent-ly contradictory. Inducement liability is based on ac-tive bad faith conduct aimed at promoting infringe-ment; the statutory safe harbors are based on passive good faith conduct aimed at operating a legitimate internet business. Here, as discussed supra, Defend-ants are liable for inducement. There is no safe har-bor for such conduct.

Accordingly, Defendants are not entitled to the af-firmative defenses provided by the Digital Millennium Copyright Act.

103a VI. DEFENDANTS’ RULE 56(f) REQUEST

Defendants argue that they must conduct more discovery. Defendants seek information regarding the practices of online search companies such as Google and Yahoo. (Opp., at 33-35; Rothken 56(f) Decl. ¶ 6.) Defendants also seek information related to the likeli-hood that Defendants’ technologies will be used for non-infringing tasks in the future. (Rothken 56(f) Decl. ¶¶ 7-9.) Finally, Defendants seek information related to the potential for Plaintiffs to create a cen-tralized database listing copyright-infringing works and copyright- infringing users.28

Rule 56(f) requires “specified reasons” that are “es-sential” to the opposition. Defendants meet neither requirement.

Such discovery is utterly irrelevant to the present Order, which relates specifically to Defendants’ efforts directed at inducing third parties’ infringement. In-ducement liability does not turn on whether other ac-tors would or not be liable (as with Google and Yahoo), or whether Defendants’ websites’ future uses might be lawful. Nor does inducement liability turn on whether Plaintiffs could have mitigated their damages by mak-ing efforts to reduce third party infringement. Rather,

28 Defendants further seek information regarding the prevalence of Defendants’ non-United States users (Rothken 56(f) Decl. ¶ 5); however, Plaintiffs’ supplemental evidence regarding U.S.-based infringement has directly answered each one of Defend-ants’ purportedly unanswered questions. Defendants failed to renew or amend their Rule 56(f) request in light of Plaintiffs’ new evidence, and their previous requests for additional discov-ery have been mooted by Plaintiffs evidence. Further, in light of the IP address-based location methods discussed supra, Defend-ants have been in possession of the sought-after evidence throughout the course of this litigation.

104a inducement liability turns on whether Defendants, through their own conscious conduct, actively encour-aged others to infringe Plaintiffs’ copyrights. De-fendants provide no evidence as to how the further discovery would diminish their liability in the instant action. Indeed, the relevant evidence, as presented by Plaintiffs’ Motion for Summary Judgment and dis-cussed throughout the present Order, is largely undis-puted and, further, is in Defendants’ possession.

Accordingly, Defendants’ Rule 56(f) request is DENIED.

VII. CONCLUSION This case contains the same general pattern pre-

sented in Metro- Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001), and, more recently, Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124 (S.D.N.Y. 2009). The De-fendants in the present case attempt to distinguish their situation on three main grounds: first, that the BitTorrent technology is different from the other tech-nologies because users do not download content files through Defendants’ websites; second that Defend-ants’ conduct is protected by the First Amendment; and third, that Defendants’ users are located across the globe, not just in the United States.

On the evidence presented to the Court, none of these arguments raises a triable question of fact for the jury to decide. Defendants’ technology is nothing more than old wine in a new bottle. Instead of logging into a proprietary network in order to download files from each others’ computers, Defendants’ users access Defendants’ generally- accessible website in order to download those files. And instead of downloading con-

105a tent files directly through Defendants’ website, De-fendants’ users download dot-torrent files that auto-matically trigger the downloading of content files. These technological details are, at their core, indistin-guishable from the previous technologies. In fact, De-fendants’ technologies appear to improve upon the previous technologies by permitting faster downloads of large files such as movies. Such an improvement quite obviously increases the potential for copyright infringement.

Regarding Defendants’ second main argument, caselaw establishes that Defendants are misguided if they think that the First Amendment provides blanket protection to all internet-based activities, particularly where those activities involve copyright infringement.

Finally, Defendants third main argument ignores the unrebutted fact that millions of United States citi-zens have accessed Defendants’ websites, and a sub-stantial proportion of the files made available to them through those websites contained copyrighted or high-ly-likely copyrighted works. Further, Plaintiffs have provided undisputed evidence of specific infringing acts done in the United States.

Thus, as in Grokster, summary judgment is appro-priate on the question of inducement liability. For the foregoing reasons, the Court GRANTS Plaintiff’ Mo-tion for Summary Judgment on Liability as to in-ducement of infringement. The Court sets a status conference for January 11, 2010, at 1:30 p.m.

106a APPENDIX C

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

COLUMBIA PICTURES INDUSTRIES, INC., et al., Plaintiffs,

v. GARY FUNG, et al.,

Defendants.

ORDER RE: PLAINTIFFS’ MOTION FOR PERMANENT INJUNCTION [395]

CASE NO. CV 06-5578 SVW (JCx)

Stephen V. Wilson, United States District Judge

107a As stated at the March 22, 2010 hearing, the

Court’s proposed deletions and additions are contained herein. The parties’ responses to the Court’s altera-tions — and only the Court’s alterations — shall be filed according to the following schedule:

• Defendants’ response of no more than eight pages: March 29, 2010;

• Plaintiffs’ reply of no more than eight pages: April 5, 2010;

• Defendants’ sur-reply of no more than five pages: April 12, 2010. Upon receiving the parties’ briefing, the Court will issue such further orders as are necessary.

The Court’s proposed additions are highlighted in UNDERLINED BOLD and deletions in strike-through text.

On December 21, 2009, the Court granted Plain-tiffs’ Motion for Summary Judgment on Liability, Docket # 391 (the “Order”), finding that Defendants Gary Fung and Isohunt Web Technologies, Inc. (collec-tively, “Defendants”) induced infringement of Plain-tiffs’ copyrights in violation of United States copyright law. See Metro-Goldwyn-Mayer Studios, Inc. v. Grok-ster, 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). The Court found that “evidence of Defendants’ intent to induce infringement is overwhelming and beyond reasonable dispute,” Order at 25, and therefore that “Defendants’ inducement liability is overwhelm-ingly clear,” id. at 15. On the issue of a permanent in-junction, the Court has considered the briefs filed by the parties and the argument presented at the hearing on this matter. Based on the foregoing and all matters of record in this action, pursuant to Federal Rule of Civil Procedure 65 and 17 U.S.C. § 502, the Court en-

108a ters a Permanent Injunction in favor of Plaintiffs and against Defendants in accordance with the terms con-tained herein.

The Court concludes that a permanent injunction should issue to restrain further infringement of Plain-tiffs’ copyrights. Plaintiffs have satisfied their burden under eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006), “(1) that [they have] suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that inju-ry; (3) that, considering the balance of hardships be-tween the plaintiff[s] and defendant[s], a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.” Id. at 391.

Plaintiffs have demonstrated that they have suf-fered irreparable harm, and would suffer further ir-reparable harm from Defendants’ continued infringe-ment, in three independent ways. First, given the staggering volume of infringement of Plaintiffs’ copy-rights, it is extremely unlikely that Defendants will be able fully to compensate Plaintiffs monetarily for the infringements Defendants have induced in the past, or the infringements they could induce in the future. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 518 F. Supp. 2d 1197, 1217 (C.D. Cal. 2007) (“Grokster V”). Second, given the way in which Defendants’ system works, when Defendants’ end-users download one of Plaintiffs’ works, the end-users automatically and simultaneously further distribute the work to innu-merable others as a required part of the download pro-cess; additionally, at the conclusion of the download, Defendants’ end-users obtain an unprotected digital copy of Plaintiffs’ work that those end-users can fur-

109a ther distribute indefinitely at will.1 Thus, when De-fendants induce infringement, “Plaintiffs’ copyrighted works can be unstoppably and near-instantaneously infringed throughout the computer-literate world with the files obtained by [Defendants’] end-users. Plain-tiffs’ power to control their rights has been so com-promised by the means through which [Defendants] encouraged end-users to infringe (digital files plus the internet) that the inducement amounts to irreparable harm.” Id. at 1218-19. Third, it is axiomatic that the availability of free infringing copies of Plaintiffs’ works through Defendants’ websites irreparably undermines the growing legitimate market for consumers to pur-chase access to the same works. E.g., Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 928-29, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005) (“dig-ital distribution of copyrighted material threatens copyright holders as never before, because every copy is identical to the original, copying is easy, and many people (especially the young) use file-sharing software to download copyrighted works”); A&M Records, Inc. v.

1 The Court notes that Defendants argue that the Su-preme Court’s holding in Grokster was limited solely to "devices” that induce infringement. Defendants further argue that they are immune from an injunction against their "activities.” (Opp. at 6-7, 19.) Defendants’ argument lacks merit. Nothing in Grokster requires that there be a "device”; the central inquiry is based on the defendants’ “purposeful, culpable expression and conduct.” Grokster, 545 U.S. at 937. The Supreme Court’s holding in Grokster was not limited solely to “devices.” The Supreme Court used terms such as "device,” "product,” and "tool” inter-changeably. Id. at 940 n.13. In addition, the clear import of the Supreme Court’s opinion was that a defendant may be secondarily liable for his conduct and activities wholly separate and apart from any products, devices, or tools.

110a Napster, Inc., 239 F.3d 1004, 1017 (9th Cir. 2001) (cit-ing “Napster’s deleterious effect on the present and future digital download market”).

For many of the same reasons, Plaintiffs have demonstrated that they do not have an adequate rem-edy at law for the harm that has been or could be caused by Defendants’ infringement. “‘Damages are no remedy at all if they cannot be collected.’” Grokster V, 518 F. Supp. 2d at 1219 (quoting Douglas Laycock, The Death of the Irreparable Injury Rule, 103 Harv. L. Rev. 687, 716 (1990)). Likewise, “[a] legal remedy is inadequate if it would require a multiplicity of suits.” Id. at 1220 (quoting Laycock, 103 Harv. L. Rev. at 714) (alteration in original). Here, especially given the mul-tiplicity of infringements of Plaintiffs’ works caused by a single user downloading a single dot-torrent file from Defendants’ sites, see Order at 6-7, it would be unten-able for Plaintiffs to track and proceed against each infringing end-user. Additionally, Plaintiffs would not be able to recover damages from Defendants for the inevitable derivative infringements that would occur outside Defendants’ websites when copyrighted con-tent acquired as a result of Defendants’ inducement is further distributed by Defendants’ users. These fur-ther infringements are a continuing threat, making remedies at law insufficient to compensate for Plain-tiffs’ injuries. The only realistic method for remedying such future harm from Defendants’ inducement is by way of a permanent injunction. Grokster V, 518 F. Supp. 2d at 1220.

The balance of hardships between Defendants and Plaintiffs also warrants the issuance of a permanent injunction. As described, absent an injunction, Plain-tiffs would suffer a severe hardship as a result of De-fendants’ inducement of infringement. The injunction

111a being ordered by the Court would not pose a corre-sponding hardship on Defendants.

The Court has already found that Defendants’ websites are used overwhelmingly for copyright in-fringement, with upwards of 95% of all dot-torrent files downloaded from Defendants’ websites corre-sponding to works that are infringing or at least high-ly likely to be infringing. Liability Order at 10-11. Ob-viously, the harm to Defendants from no longer being able to exploit and profit from that infringement is not a hardship the Court need consider. See Cadence De-sign Sys., Inc. v. Avant! Corp., 125 F.3d 824, 829 (9th Cir. 1997) (defendant “cannot complain of the harm that will befall it when properly forced to desist from its infringing activities” (citation and internal quota-tion marks omitted)). Beyond that, the Court’s injunc-tion is limited to Plaintiffs’ copyrights and will not substantially interfere with any claimed non-infringing aspects of Defendants’ system.

The Court is further persuaded that Defendants would likely continue to induce infringement in the absence of a permanent injunction. As this Court ob-served in Grokster:

[A] successful inducer will sometimes have no need to repeat the infringing message ad infinitum. This is especially likely to be the case where the product in question is overwhelmingly used for infringing purposes, and requires little or no specialized training to operate. At a certain point, the inducer can simply continue to distribute the product with-out any additional active encourage-ment, recognizing that the marketplace

112a will respond in turn. Thus, once the market has internalized the inducer’s promotion of infringement, the resulting infringements should be attributable to that defendant even though he/she no longer chooses to actively promote that message.

Grokster V, 518 F. Supp. 2d at 1233-34. The Court finds those observations fully applicable

to this case. For years, Defendants operated their websites as popular destinations for copyright in-fringement and etched their niche in the market for infringement. Defendants were enormously successful in building a user-base of infringers that, by Defend-ants’ own account, number in the millions. See Order at 42. As stated, the evidence of Defendants’ illegal ob-jective was “overwhelming” and the resulting amount of infringement of Plaintiffs’ copyrights has been stag-gering.

Defendants’ websites “remain[] inexorably linked to [Defendants’] historical efforts to promote infringe-ment.” Grokster V, 518 F. Supp. 2d at 1235. Absent an injunction directing Defendants to prevent infringe-ment of Plaintiffs’ works, it is highly likely that De-fendants’ existing users and new users would continue to use Defendants’ system to infringe Plaintiffs’ copy-rights.

Moreover, the Court’s conclusion that Defendants are likely to continue to induce copyright infringement is warranted by (1) the great extent to which Defend-ants have actively encouraged copyright infringement in the past; (2) the fact that Defendants’ very business model, at its core, depends upon copyright infringe-ment, and Defendants would financially benefit from

113a further infringement; and (3) the fact that, even since the Court’s Order finding Defendants liable for induc-ing copyright infringement, Defendants have not taken steps to mitigate the infringement of Plaintiffs’ works. Defendants’ proposed “primal” or “lite” website contains all of the same index-ing and searching functions as the original web-sites, only with a different interface for the us-ers to operate. (See Servodido Reply Decl., Ex. G, at 15-21.) In fact, Defendants have not even ceased the actively

inducing conduct that the Court expressly indicat-

ed in its Order plainly encourages and promotes copy-right infringement. Defendant Fung has affirma-tively stated that he will not take steps to pre-vent infringement on his websites unless he is ordered to do so by this Court. (Fung interview, quoted in Defs. Opp. at 3.) In short, Defendants’ past and present statements and conduct estab-lish that Defendants ‘fully intendr1 to continue [their] distribution of the” tools that are central to their inducement of copyright infringement. See Grokster V, 518 F. Supp. 2d at 1229-30.

Finally, the Court agrees that the public interest will be served with a permanent injunction, since it will protect Plaintiffs’ copyrights against increased and unrestrained infringement. Id. at 1222. Although Defendants argue that the BitTorrent ‘ecosys-tem” would be harmed by the present injunction (Opp. at 15-17), this injunction is aimed solely at Defendants’ unlawful use of BitTorrent and sim-ilar technology, not at third parties’ lawful use of BitTorrent and similar technology.

114a The Court thus finds that the four part eBay test

favors the imposition of a permanent injunction to re-strain Defendants’ infringement. In its discretion, the Court deems it appropriate for a permanent injunction to issue. [It will therefore be ordered, adjudged, and decreed that:] 1. For the purposes of this Permanent Injunction, the following definitions shall apply:

(a) “Defendants” shall mean Gary Fung and Iso-hunt Web Technologies, Inc., whether acting joint-ly or individually. (b) “Isohunt System” shall mean the websites www.isohunt.com, www.podtropolis.com, www.torrentbox.com, and www.ed2k-it.com, and shall further include any servers, trackers, soft-ware, and electronic data that make up or support such websites. (c) “Comparable System” shall mean any website, system or software that provides users access to Plaintiffs’ Copyrighted Works, using BitTorrent or any peer-to-peer or other file-sharing or content delivery technology. (d) “Copyrighted Works” shall mean each of those works, or portions thereof, whether now in exist-ence or later created, in which any Plaintiff (or parent, subsidiary or affiliate of any Plaintiff), at the time of Defendants’ conduct in question, owns or controls a valid and subsisting exclusive right under the United States Copyright Act, 17 U.S.C. §§ 101 et seq., and which Plaintiffs have identified to Defendants by the title of the work. (e) “Dot-torrent or similar files” shall mean dot-

115a torrent files, magnet links, hash links, or other functionally similar files, links or identifiers. (f) “Infringement-Related Terms” shall mean:

(i) terms that refer to the titles or commonly understood names of Plaintiffs’ Copyrighted Works (for example, the title or common name of a television series); (ii) terms that signal the availability of Plain-tiffs’ Copyrighted Works (for example, “Televi-sion,” “Box Office Movies,” “DVD Rips,” “Cam,” “Telesync,” “Telecine,” “Screener” or “PPV”); or (iii) terms that are widely associated with copyright infringement (for example “warez,” “Axxo,” or “Jaybob”).

2. Subject to the terms of Paragraph 5 below, De-fendants shall be permanently enjoined from know-ingly engaging in any of the following activities in connection with the Isohunt System or any Compara-ble System:

(a) hosting, indexing, linking to, or other-wise providing access to any Dot-torrent or similar files that correspond, point or lead to any of the Copyrighted Works; (b) assisting with end-user reproductions or transmissions of any of the Copyrighted Works through a tracker server, or any other server or software that assists users in locating, identify-ing or obtaining files from other users offering any of the Copyrighted Works for transmis-sion; or (c) hosting or providing access to any of the Copyrighted Works.

116a 3. Defendants shall immediately and permanently be enjoined from knowingly engaging in any activities having the object or effect of fostering infringement of Plaintiffs’ Copyrighted Works, including without lim-itation, by engaging in any of the following activities:

(a) advertising or promoting access to or the availability of Plaintiffs’ Copyrighted Works; (b) encouraging or soliciting users to repro-duce or distribute Plaintiffs’ Copyrighted Works; (c) encouraging or soliciting users to up-load, post or index any Dot-torrent or similar files that correspond, point or lead to any of the Copyrighted Works; (d) encouraging or soliciting users to link to copies of Plaintiffs’ Copyrighted Works; (e) providing technical assistance or sup-port services to users engaged in infringement of, or seeking to infringe, Plaintiffs’ Copyright-ed Works; (f) creating, maintaining, highlighting or otherwise providing access to lists of “top” downloads of, or search terms for, Dot-torrent or similar files that include, refer to or signal the availability of Plaintiffs’ Copyrighted Works; (g) including Infringement-Related Terms in metadata for any webpages; (h) creating, maintaining or providing ac-cess to browsable website categories of Dot-torrent or similar files using or based on In-fringement-Related Terms;

117a (i) organizing, harvesting or categorizing Dot-torrent or similar files using or based on Infringement-Related Terms; (j) soliciting or targeting a user base gener-ally understood, in substantial part, to be en-gaging in infringement of, or seeking to in-fringe, Plaintiffs’ Copyrighted Works; (k) transferring or redirecting users of the Isohunt System to any other service that, di-rectly or indirectly, provides access to unau-thorized copies of Plaintiffs’ Copyrighted Works; (l) indexing or providing access to Dot-torrent or similar files harvested or collected from well-known infringing source sites, such as “The Pirate Bay”; (m) soliciting revenue from third party ad-vertisers or advertising brokers based on (or by referring to or highlighting) the availability of Plaintiff’s Copyrighted Works.

4. The terms of Paragraphs 2 and 3 of this Per-manent Injunction shall not apply to any Copyrighted Work for which Defendants have obtained express written authorization or license for the use being made of such Copyrighted Work from each Plaintiff that owns or controls the rights to such Copyrighted Work, provided such authorization or license is in force and valid at the time of Defendants’ use of the Copyrighted Work. 5. Defendants shall not be in violation of this Permanent Injunction as to Copyrighted Works that Plaintiffs, or representatives of Plaintiffs, have not (a) identified to Defendants by title of the work, and

118a (b) represented to Defendants that, based on a rea-sonable review and good faith belief, a Plaintiff (or a parent, subsidiary or affiliate of a Plaintiff) owns or controls a valid and subsisting exclusive right under the United States Copyright Act, 17 U.S.C. §§ 101 et seq. in the work (a “list of titles”).

(a) Plaintiffs shall be permitted to supple-ment and update their list of titles without re-striction, including without limitation with works soon-to-be but not yet released to the public. (b) Plaintiffs shall provide Defendants with the list of titles in electronic form. (c) Defendants shall promptly provide Plaintiffs with a valid email address to use for the lists of titles, and Defendants shall imme-diately notify Plaintiffs in writing of any change in such email address. A list of titles shall be deemed delivered when sent to the most current email provided by Defendants. (d) With regard to the initial list of titles provided by Plaintiffs pursuant to this Perma-nent Injunction, Defendants shall be required to comply with the terms of Paragraph 2 above no later than 14 calendar days from the date Plaintiffs deliver the initial list of titles. (e) For all subsequent lists of titles, De-fendants shall be required to comply with the terms of Paragraph 2 above no later than 24 hours from the time Plaintiffs deliver the list of titles. (f) In the event a commercial vendor or other third party becomes able to provide De-

119a fendants with a reliable list of Plaintiffs’ Copy-righted Works, Plaintiffs may apply to the Court for an order modifying this Permanent Injunction to relieve them of the obligation of providing Defendants with lists of titles, even if there is a cost to Defendants of securing the lists of titles from the commercial vendor or third party.

6. Prior to Defendants entering into any agree-ment or transaction whatsoever to sell, lease, license, assign, convey, give away, distribute, loan, barter, hypothecate, encumber, pledge or otherwise transfer, whether or not for consideration or compensation, any part of the software, source code, data files, other technology, domain names, trademarks, brands, or Dot-torrent or similar files used in connection with the Isohunt System or any Comparable System (a “Transfer of Isohunt-Related Assets”), Defendants shall require, as a condition of any such transaction, that the transferee:

(a) submit to the Court’s jurisdiction and venue; (b) agree to be bound by the terms herein; and (c) apply to the Court for an order adding it as a party to this Permanent Injunction.

Defendants shall not permit any Transfer of Isohunt-Related Assets to close until the Court has entered such an order. Defendants further shall not engage in a Transfer of Isohunt-Related Assets with or to any person whom Defendants know to be engaged in, or intending to be engaged in, conduct that would vio-late the terms of Paragraphs 2 or 3 above.

120a 7. This Permanent Injunction shall bind Gary Fung, individually, and Isohunt Web Technologies, Inc., and their officers, agents, servants, employees, attorneys, successors, and assigns, and all those in active concert or participation with any of them, who receive actual notice of this Permanent Injunction by personal service or otherwise. Defendants shall pro-vide a copy of this Permanent Injunction to each of their respective officers, agents, servants, employees, attorneys, principals, shareholders, current and fu-ture administrators or moderators for the Isohunt System (or Comparable System) or any online forums associated with the Isohunt System (or Comparable System), and any domain name registries or regis-trars responsible for any domain names used in con-nection with the Isohunt System (or Comparable Sys-tem). 8.Nothing in this Permanent Injunction shall limit the right of Plaintiffs to seek to recover damages un-der 17 U.S.C. § 504, or costs, including attorneys’ fees, under 17 U.S.C. § 505. 9. For purposes of clarity, as the Court has per-sonal jurisdiction over Defendants and has concluded that the conduct of Defendants induces infringement of Plaintiffs’ Copyrighted Works in the United States under the copyright laws of the United States, this Permanent Injunction enjoins the conduct of Defend-ants wherever they may be found, including without limitation in Canada. 10. The Court further clarifies that this in-junction only covers acts of infringement, as defined in 17 U.S.C. § 106, that take place in the United States. To the extent that an act of re-producing, copying, distributing, performing,

121a or displaying takes place in the United States, it may violate 17 U.S.C. § 106, subject to the generally applicable requirements and defenses of the Copyright Act. Further, as explained in the Court’s December 23, 2009 Order, "United States copyright law does not require that both parties be located in the United States. Rather, the acts of uploading and downloading are each independent grounds of copyright infringement liability.” Summary Judgment Order at 19. 11. Violation of this Permanent Injunction shall expose the Defendants, and all others properly bound by it, to all applicable penalties, including for con-tempt of Court. 12. The Court shall maintain jurisdiction over this action for the purposes of enforcing this Permanent Injunction.

IT IS SO ORDERED.

Stephen V. Wilson, United States District Judge

122a APPENDIX D

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA

COLUMBIA PICTURES INDUSTRIES, INC.; et al. Plaintiffs,

v. GARY FUNG; et al.,

Defendants. Case No. 2:06-cv-05578-SVW-(JCx)

Modified Order Granting Plaintiffs’ Motion for Permanent Injunction

Honorable Stephen V. Wilson United States District Judge

123a I. BACKGROUND

On December 21, 2009, the Court granted Plain-tiffs’ Motion for Summary Judgment on Liability (the “Order,” docket no. 391), finding that Defendants Gary Fung and Isohunt Web Technologies, Inc. (collectively, “Defendants”) induced infringement of Plaintiffs’ copy-rights in violation of United States copyright law. See Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 545 U.S. 913, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005). The Court found that “evidence of Defendants’ intent to induce infringement is overwhelming and beyond reasonable dispute,” Order at 25, and therefore that “Defendants’ inducement liability is overwhelmingly clear,” id. at 15.

On the issue of a permanent injunction, the Court has considered the briefs filed by the parties, the ar-guments presented at the March 22, 2010 hearing on this matter, and the proposed language and argu-ments presented by the parties in response to the Court’s proposed order. The Court has also considered the instructions of the Ninth Circuit regarding the permanent injunction in its opinion dated March 21, 2013. Columbia Pictures Indus. v. Fung, 710 F.3d 1020, 1047-1049 (9th Cir. 2013). Based on the forego-ing and all matters of record in this action, pursuant to Federal Rule of Civil Procedure 65 and 17 U.S.C. § 502, the Court enters a Permanent Injunction in favor of Plaintiffs and against Defendants in accordance with the terms contained herein.

II. DISCUSSION The Court concludes that a permanent injunction

should issue to restrain further infringement of Plain-tiffs’ copyrights. Plaintiffs have satisfied their burden under eBay Inc. v. MercExchange, L.L.C., 547 U.S.

124a 388, 126 S. Ct. 1837, 164 L. Ed. 2d 641 (2006), “(1) that [they have] suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are inadequate to compensate for that inju-ry; (3) that, considering the balance of hardships be-tween the plaintiff[s] and defendant[s], a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction.” Id. at 391.

A. Irreparable Harm Plaintiffs have demonstrated that they have suf-

fered irreparable harm, and would suffer further ir-reparable harm from Defendants’ continued infringe-ment, in three independent ways. First, given the staggering volume of infringement of Plaintiffs’ copy-rights, it is extremely unlikely that Defendants will be able fully to compensate Plaintiffs monetarily for the infringements Defendants have induced in the past, or the infringements they could induce in the future. Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, 518 F. Supp. 2d 1197, 1217 (C.D. Cal. 2007) (“Grokster V”). Second, given the way in which Defendants’ system works, when Defendants’ end-users download one of Plaintiffs’ works, the end-users automatically and simultaneously further distribute the work to innu-merable others as a required part of the download pro-cess; additionally, at the conclusion of the download, Defendants’ end-users obtain an unprotected digital copy of Plaintiffs’ work that those end-users can fur-ther distribute indefinitely at will.1 Thus, when De- 1 Defendants argue that the Supreme Court’s holding in Grok-ster was limited solely to “devices” that induce infringement. Defendants further argue that they are immune from an in-junction against their “activities.” (Opp. at 6-7, 19.) De-fendants’ argument lacks merit. Nothing in Grokster requires

125a fendants induce infringement, “Plaintiffs’ copyrighted works can be unstoppably and near-instantaneously infringed throughout the computer-literate world with the files obtained by [Defendants’] end-users. Plain-tiffs’ power to control their rights has been so com-promised by the means through which [Defendants] encouraged endusers to infringe (digital files plus the internet) that the inducement amounts to irreparable harm.” Id. at 1218-19. Third, it is axiomatic that the availability of free infringing copies of Plaintiffs’ works through Defendants’ websites irreparably undermines the growing legitimate market for consumers to pur-chase access to the same works. E.g., Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 928-29, 125 S. Ct. 2764, 162 L. Ed. 2d 781 (2005) (“dig-ital distribution of copyrighted material threatens copyright holders as never before, because every copy is identical to the original, copying is easy, and many people (especially the young) use file-sharing software to download copyrighted works”); A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1017 (9th Cir. 2001) (citing “Napster’s deleterious effect on the present and future digital download market”).

B. Inadequate Remedy at Law

that there be a “device”; the central inquiry is based on the de-fendants’ “purposeful, culpable expression and conduct.” Grok-ster, 545 U.S. at 937. The Supreme Court’s holding in Grokster was not limited solely to “devices.” The Supreme Court used terms such as “device,” “product,” and “tool” interchangeably. Id. at 940 n.13.

In addition, the clear import of the Supreme Court’s opinion was that a defendant may be secondarily liable for his conduct and activities, separate and apart from any products, devices, or tools he distributes.

126a For many of the same reasons,2 Plaintiffs have

demonstrated that they do not have an adequate rem-edy at law for the harm that has been or could be caused by Defendants’ infringement. “‘Damages are no remedy at all if they cannot be collected.’” Grokster V, 518 F. Supp. 2d at 1219 (quoting Douglas Laycock, The Death of the Irreparable Injury Rule, 103 Harv. L. Rev. 687, 716 (1990)). Likewise, “[a] legal remedy is inadequate if it would require a multiplicity of suits.” Id. at 1220 (quoting Laycock, 103 Harv. L. Rev. at 714) (alteration in original).

Here, as in Grokster V, “[t]he irreparable harm analysis centers on two basic themes: (1) [Defendant] has and will continue to induce far more infringement than it could ever possibly redress with damages; and (2) Plaintiffs’ copyrights (especially those of popular works) have and will be rendered particularly vulner-able to continuing infringement on an enormous scale due to [Defendant’s] inducement.” Grokster V, 518 F. Supp. 2d at 1217. Both of these elements are present in this case as well.

In the Summary Judgment Order, the Court con-cluded that the evidence “strongly suggests that some 2.5 million United States citizens visited Defendants’ websites each month” and that “at one point, Defend-ants’ websites were accessed over 50 million times from the United States in a single month.” Order at 41. The Court also concluded that Plaintiffs’ statistical evidence showed that over 90% of the downloads using Defendants’ websites were associated with copyright-infringing materials. Accord A& M Records, Inc. v.

2 The “irreparable harm” and “inadequate remedies at law” in-quiries are essentially identical. Grokster V, 518 F. Supp. 2d at 1219

127a Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001) (re-lying on statistical evidence to show extent of in-fringement); Grokster V, 518 F. Supp. 2d at 1217-19 (same). Defendants have introduced no evidence to re-but these showings.

In addition, given the multiplicity of infringements of Plaintiffs’ works caused by a single user download-ing a single dot-torrent file from Defendants’ sites, see Order at 6-7, it would be untenable for Plaintiffs to track and proceed against each infringing end-user. Additionally, Plaintiffs would not be able to recover damages from Defendants for the inevitable derivative infringements that would occur outside Defendants’ websites when copyrighted content acquired as a re-sult of Defendants’ inducement is further distributed by Defendants’ users. These further infringements are a continuing threat, making remedies at law insuffi-cient to compensate for Plaintiffs’ injuries. The only realistic method for remedying such future harm from Defendants’ inducement is by way of a permanent in-junction. Grokster V, 518 F. Supp. 2d at 1220.

C. Balance of Hardships The balance of hardships between Defendants and

Plaintiffs also warrants the issuance of a permanent injunction. As described, absent an injunction, Plain-tiffs would suffer a severe hardship as a result of De-fendants’ inducement of infringement. The injunction being ordered by the Court would not pose a corre-sponding hardship on Defendants. The Court has al-ready found that Defendants’ websites are used over-whelmingly for copyright infringement, with upwards of 95% of all dot-torrent files downloaded from De-fendants’ websites corresponding to works that are in-fringing or at least highly likely to be infringing.

128a Summary Judgment Order at 10-11. Obviously, the harm to Defendants from no longer being able to ex-ploit and profit from that infringement is not a hard-ship the Court need consider. See Cadence Design Sys., Inc. v. Avant! Corp., 125 F.3d 824, 829 (9th Cir. 1997) (defendant “cannot complain of the harm that will befall it when properly forced to desist from its in-fringing activities”) (citation and internal quotation marks omitted). Beyond that, the Court’s injunction is limited to Plaintiffs’ copyrights and will not substan-tially interfere with any claimed non- infringing as-pects of Defendants’ system.

The Court is further persuaded that Defendants would likely continue to induce infringement in the absence of a permanent injunction. As this Court ob-served in Grokster:

[A] successful inducer will sometimes have no need to repeat the infringing message ad infinitum. This is especially likely to be the case where the product in question is overwhelmingly used for infringing purposes, and requires little or no specialized training to operate. At a certain point, the inducer can simply continue to distribute the product with-out any additional active encourage-ment, recognizing that the marketplace will respond in turn. Thus, once the market has internalized the inducer’s promotion of infringement, the resulting infringements should be attributable to that defendant even though he/she no longer chooses to actively promote that message.

129a Grokster V, 518 F. Supp. 2d at 1233-34.

The Court finds those observations fully applicable to this case. For years, Defendants operated their websites as popular destinations for copyright in-fringement and etched their niche in the market for infringement. Defendants were enormously successful in building a user-base of infringers that, by Defend-ants’ own account, number in the millions. See Order at 42. As stated, the evidence of Defendants’ illegal ob-jective was “overwhelming” and the resulting amount of infringement of Plaintiffs’ copyrights has been stag-gering. Defendants’ websites “remain[] inexorably linked to [Defendants’] historical efforts to promote infringement.” Grokster V, 518 F. Supp. 2d at 1235. Absent an injunction directing Defendants to prevent infringement of Plaintiffs’ works, it is highly likely that Defendants’ existing users and new users would continue to use Defendants’ system to infringe Plain-tiffs’ copyrights.

Moreover, the Court’s conclusion that Defendants are likely to continue to induce copyright infringement is warranted by (1) the great extent to which Defend-ants have actively encouraged copyright infringement in the past; (2) the fact that Defendants’ very business model, at its core, depends upon copyright infringe-ment, and Defendants would financially benefit from further infringement; and (3) the fact that, even since the Court’s Order finding Defendants liable for induc-ing copyright infringement, Defendants have not tak-en meaningful steps to mitigate the infringement of Plaintiffs’ works. Defendants’ proposed “primal” or “lite” website contains all of the same indexing and searching functions as the original websites, only with a different interface for the users to operate. (See Ser-vodidio Reply Decl., Ex. G, at 15-21.) In fact, Defend-

130a ants have not even ceased all of the active conduct of encouraging and promoting infringement which the Court specifically identified in its Summary Judgment Order. A number of features shows and movies fea-ture; a “top searches” feature (which invariably in-cludes all, or almost all, copyrighted works); and ac-cess to Plaintiffs’ works that are specifically identified as the subject of this action. (Pls. Reply at 10.) De-fendant Fung has affirmatively stated that he will not take steps to prevent infringement on his websites un-less he is ordered to do so by this Court. (Fung inter-view, quoted in Defs. Opp. at 3.) In short, Defendants’ past and present statements and conduct establish that Defendants “fully intend[] to continue [their] dis-tribution of the” tools that are central to their induce-ment of copyright infringement. See Grokster V, 518 F. Supp. 2d at 1229-30.

As this Court explained at length in Grokster V, a defendant who is liable for inducing infringement may be enjoined from distributing his products in the fu-ture, even if he no longer promotes an inducing mes-sage. Although the quote is lengthy, it is worth setting forth in full:

The Court is mindful of the following critical passage from the Supreme Court’s opinion in this case:

It is not only that encouraging a particular consumer to infringe a copyright can give rise to second-ary liability for the infringement that results. Inducement liability goes beyond that, and the distri-bution of a product can itself give rise to liability where evidence

131a shows that the distributor intend-ed and encouraged the product to be used to infringe. In such a case, the culpable act is not mere-ly the encouragement of infringe-ment but also the distribution of the tool intended for infringing use.

Grokster, 545 U.S. at 940 n. 13, 125 S.Ct. 2764. In effect, the “culpable act,” which

induces third parties to infringement, certainly manifests itself once two com-ponents are present--distribution and promotion/ encouragement. See Ama-zon.com, 487 F.3d at 727 n. 11; Visa, 494 F.3d at 800-01. It is important to recog-nize that the Supreme Court did not im-pose any strict timing relationship be-tween specific acts promoting infringe-ments, distribution, and the direct in-fringements themselves. For a party to be liable for inducement, distribution may begin prior to any promotion of in-fringement, distribution and promotion can occur at the same time, and most critically, distribution can follow past promotion. This highlighted por-tion of the above sentence is crucial. As a matter of common sense, a successful inducer will sometimes have no need to repeat the infringing message ad infini-tum. This is especially likely to be the case where the product in question is overwhelmingly used for infringing pur-poses, and requires little or no special-

132a ized training to operate. At a certain point, the inducer can simply continue to distribute the product without any addi-tional active encouragement, recognizing that the marketplace will respond in turn.

Thus, once the market has internal-ized the inducer’s promotion of in-fringement, the resulting infringements should be attributable to that defendant even though he/she no longer chooses to actively promote that message. There is no difference between these infringe-ments and those that are consummated while the defendant is still engaging in the active promotion of infringement.

Critically, Justice Souter recognized the importance of this relationship be-tween past promotion and future distri-bution during the Supreme Court’s oral argument in this case:

But I don’t ... understand how you can separate the past from the pre-sent in that fashion. One, I suppose, could say, “Well, I’m going to make inducing remarks Monday through Thursday, and I’m going to stop, Thursday night.” The sales of the product on Friday are still going to be sales which are the result of the in-ducing remarks Monday through Wednesday. And you’re asking, in ef-fect--you’re asking us—to ignore Monday through Thursday.

133a Metro-Goldwyn-Mayer Studios, Inc., v. Grokster, Ltd., No. 04-480, Mar. 29, 2005 (“Oral Argument Transcript”), at 30. Thus, distribution of a product capa-ble of substantial noninfringing uses, even after the promotion/encouragement of infringement ceases, can by itself con-stitute inducement. StreamCast’s future distribution is undoubtedly connected to past promotional efforts. In its Septem-ber 27, 2006 Order, this Court recounted in detail, among other undisputed facts, StreamCast’s efforts to promote its software to the Napster market as a mechanism for infringing Plaintiffs’ copyrighted works. Grokster, 454 F.Supp.2d at 985-86. These promotional efforts proved to be wildly successful, especially because StreamCast market-ed itself to Napster users at a particu-larly important juncture--while Napster was in imminent legal jeopardy. End-user infringement exponentially in-creased, evidencing that StreamCast’s express and implied messages of promo-tion were received, absorbed, and re-sponded to by the market. Or as more recently stated by the Ninth Circuit:

The software systems in ... Grok-ster were engineered, disseminat-ed, and promoted explicitly for the purpose of facilitating piracy of copyrighted music and reducing legitimate sales of such music to that extent. Most ... users under-

134a stood this and primarily used those systems to purloin copy-righted music. Further, the ... op-erators explicitly targeted then-current users of the Napster pro-gram by sending them ads for its OpenNap program.

Visa Int’l Serv. Ass’n, 494 F.3d at 801. StreamCast’s revenues skyrocketed as a result. Furthermore, StreamCast could not reasonably claim ignorance of the infringements perpetrated by Morpheus endusers. Grokster, 454 F.Supp.2d at 992.

StreamCast has etched its niche in the market for infringement. Under the facts of this case, and the doctrinal point raised by Justice Souter, neither the simple passage of time nor the entry of judgment in this case can remedy StreamCast’s past promotion as the “next Napster.” The fact that a perma-nent injunction is imposed also does not leave Morpheus magically reborn as a product safe for unfiltered distribution under Sony. As stated by Justice Scalia to Stream-Cast’s counsel at oral argument, “the point is that those past acts [of encour-agement] are what have developed your client’s current clientele.” Oral Argu-ment Transcript at 29. . . .

135a StreamCast is not being “punished”

for its past actions; rather, StreamCast’s past activity is relevant to what future actions constitute inducement going forward. An unfiltered Morpheus, which Stream-Cast intends to distribute if provided the opportunity, necessarily capitalizes on and remains inexorably linked to its historical efforts to promote infringe-ment. The bell simply cannot be unrung. Accordingly, Morpheus’s connection to the past promotion of infringement means that StreamCast’s continued dis-tribution of Morpheus alone constitutes inducement. This Court is empowered to regulate Morpheus under 17 U.S.C. § 502(a) in order to prevent this distribu-tion from causing future harm to Plain-tiffs’ rights.

Grokster V, 518 F. Supp. 2d at 1233-35. D. Public Interest

Finally, the Court agrees that the public interest will be served with a permanent injunction, since it will protect Plaintiffs’ copyrights against increased and unrestrained infringement. Id. at 1222. Although Defendants argue that the BitTorrent “ecosystem” would be harmed by the present injunction, Defend-ants have not introduced any evidence to show the harmful “wider implications” of this injunction, nor have they shown that further discovery is warranted because the relevant evidence is exclusively within Plaintiffs’ possession. (See Opp. at 15-17.) In addition, this injunction is aimed solely at Defendants’ unlawful

136a use of BitTorrent and similar technology, not at third parties’ lawful use of BitTorrent and similar technolo-gy. The public interest will not be harmed by the in-junction.

E. Summary The Court thus finds that the four part eBay test

favors the imposition of a permanent injunction to re-strain Defendants’ infringement. In its discretion, the Court deems it appropriate for a permanent injunction to issue.

In issuing the injunction, the Court is cognizant that “[t]he fact that absolutely perfect compliance is unattainable does not of itself preclude an injunction.” Withrow v. Concannon, 942 F.2d 1385, 1388 (9th Cir. 1991). “If a violating party has taken ‘all reasonable steps’ to comply with the court order, technical or in-advert[e]nt violations of the order will not support a finding of civil contempt.” Gen. Signal Corp. v. Donall-co, Inc., 787 F.2d 1376, 1379 (9th Cir. 1986) (citation omitted). Ultimately, Defendants have the option — and the burden — of deciding how they will comply with the following injunction. Triad Systems Corp. v. Southeastern Exp. Co., 64 F.3d 1330, 1337 (9th Cir. 1995) (“Putting this burden on Southeastern is appro-priate because Southeastern is the infringer.”), over-ruled on other grounds by Gonzales v. Texaco Inc., 344 Fed. Appx. 304, 306 (9th Cir. 2009).

III. INJUNCTION It is therefore ORDERED, ADJUDGED, and

DECREED that: 1. For the purposes of this Permanent Injunction, the following definitions shall apply:

(a) “Defendants” shall mean Gary Fung and Iso-

137a hunt Web Technologies, Inc., whether acting joint-ly or individually. (b) “Isohunt System” shall mean the websites www.isohunt.com, www.podtropolis.com, www.torrentbox.com, and www.ed2k-it.com, and shall further include any servers, trackers, soft-ware, and electronic data that make up or support such websites. (c) “Comparable System” shall mean any website, system or software that provides users access to Plaintiffs’ Copyrighted Works, using BitTorrent or any peer-to-peer or other file-sharing or content delivery technology. (d) “Copyrighted Works” shall mean each of those works, or portions thereof, whether now in exist-ence or later created, in which any Plaintiff (or parent, subsidiary or affiliate of any Plaintiff), at the time of Defendants’ conduct in question, owns or controls a valid and subsisting exclusive right under the United States Copyright Act, 17 U.S.C. §§ 101 et seq., and which Plaintiffs have identified to Defendants by the title of the work. (e) “Dot-torrent or similar files” shall mean dot-torrent files, magnet links, hash links, or other functionally similar files, links or identifiers. (f) “Infringement-Related Terms” shall mean:

(i) terms that refer to the titles or common-ly understood names of Plaintiffs’ Copyrighted Works (for example, the full title or common name of a television series); (ii) the following terms: “warez,” “Axxo,” “Jaybob,” “DVD Rips,” “Cam,” “Telesync,” “Tel-ecine,” “Screener,” “PPV,” or “R5”;

138a (iii) Plaintiffs may request that this Court modify (ii) above to include additional terms upon competent proof that such terms should be included in Paragraph 1(f)(ii).

2. Subject to the terms of Paragraph 5 below, De-fendants shall be permanently enjoined from know-ingly engaging in any of the following activities in connection with the Isohunt System or any Compara-ble System:

(a) hosting, indexing, linking to, or otherwise providing access to any Dot- torrent or similar files that correspond, point or lead to any of the Copyrighted Works; (b) assisting with end-user reproductions or transmissions of any of the Copyrighted Works through a tracker server, or any other server or software that assists users in locating, identifying or obtaining files from other users offering any of the Copyrighted Works for transmission; or (c) hosting or providing access to any of the Copy-righted Works. Defendants shall be in knowing vi-olation of this paragraph if they fail to act in re-sponse to the list of titles as set forth in Para-graph 5.1.

3. Defendants shall immediately and permanent-ly be enjoined from knowingly engaging in any activi-ties having the object or effect of fostering infringe-ment of Plaintiffs’ Copyrighted Works, including without limitation, by engaging in any of the follow-ing activities:

(a) advertising or promoting access to or the avail-ability of Plaintiffs’ Copyrighted Works; (b) encouraging or soliciting users to reproduce or

139a distribute Plaintiffs’ Copyrighted Works; (c) encouraging or soliciting users to upload, post or index any Dot-torrent or similar files that cor-respond, point or lead to any of the Copyrighted Works; (d) encouraging or soliciting users to link to copies of Plaintiffs’ Copyrighted Works; (e) providing technical assistance or support ser-vices to users engaged in infringement of, or seek-ing to infringe, Plaintiffs’ Copyrighted Works; (f) creating, maintaining, highlighting or other-wise providing access to lists of “top” downloads of, or search terms for, Dot-torrent or similar files that include, refer to or signal the availability of Plaintiffs’ Copyrighted Works; (g) including Infringement-Related Terms in metadata for any webpages; (h) creating, maintaining or providing access to browsable website categories of Dot-torrent or similar files using or based on Infringement- Re-lated Terms; (i) organizing, harvesting or categorizing Dot-torrent or similar files using or based on In-fringement-Related Terms; (j) engaging in any of the following activities with regard to the “Sites” defined below:

(i) using the names of any of the Sites in meta tags on any web pages; (ii) bidding on, purchasing or using the names of any of the Sites as keywords in any advertising campaigns;

140a (iii) placing advertisements on any of the Sites; and (iv) advertising by referring to any of the Sites by name. For purpose of this provision, “Sites” shall mean: The Pirate Bay, Tor-rentspy, Aimster, Kazaa, Grokster, Morpheus, Newzbin, BT Junkie, Torrentreactor.net, kat.ph, torrents.net, SurftheChannel.com, Ki-no.to, Movie2k.to, and/or Dl4all.com. (v) Plaintiffs may request that this Court modify the injunction to include additional websites upon competent proof that such web-sites should be added to Paragraph 3(j).

(k) transferring or redirecting users of the Isohunt System to any other service that, directly or indi-rectly, provides access to unauthorized copies of Plaintiffs’ Copyrighted Works; (l) indexing or providing access to Dot-torrent or similar files harvested or collected from the follow-ing sites or services: The Pirate Bay, Torrentspy, BT Junkie, Torrentreactor.net, kat.ph or tor-rents.net;

(i) Plaintiffs may request that this Court modify the injunction to include additional source websites upon competent proof that such websites should be added to Paragraph 3(l).

(m) soliciting revenue from third party advertisers or advertising brokers based on (or by referring to or highlighting) the availability of Plaintiff’s Cop-yrighted Works.

4. The terms of Paragraphs 2 and 3 of this Per-manent Injunction shall not apply to any Copyrighted

141a Work for which Defendants have obtained express written authorization or license for the use being made of such Copyrighted Work from each Plaintiff that owns or controls the rights to such Copyrighted Work, provided such authorization or license is in force and valid at the time of Defendants’ use of the Copyrighted Work. 5. Defendants shall not be in violation of this Permanent Injunction as to Copyrighted Works that Plaintiffs, or representatives of Plaintiffs, have not (a) identified to Defendants by title of the work, and (b) represented to Defendants that, based on a rea-sonable review and good faith belief, a Plaintiff (or a parent, subsidiary or affiliate of a Plaintiff) owns or controls a valid and subsisting exclusive right under the United States Copyright Act, 17 U.S.C. §§ 101 et seq. in the work (a “list of titles”).

(a) Plaintiffs shall be permitted to supplement and update their list of titles without restriction, in-cluding without limitation with works soon-to-be but not yet released to the public. (b) Plaintiffs shall provide Defendants with the list of titles in electronic form. (c) Defendants shall promptly provide Plaintiffs with a valid email address to use for the lists of ti-tles, and Defendants shall immediately notify Plaintiffs in writing of any change in such email address. A list of titles shall be deemed delivered when sent to the most current email provided by Defendants. (d) With regard to the initial list of titles provided by Plaintiffs pursuant to this Permanent Injunc-tion, Defendants shall be required to comply with the terms of Paragraph 2 above no later than 14

142a calendar days from the date Plaintiffs deliver the initial list of titles. (e) For all subsequent lists of titles, Defendants shall be required to comply with the terms of Par-agraph 2 above no later than 24 hours from the time Plaintiffs deliver the list of titles. (f) In the event a commercial vendor or other third party becomes able to provide Defendants with a reliable list of Plaintiffs’ Copyrighted Works, Plaintiffs may apply to the Court for an order modifying this Permanent Injunction to re-lieve them of the obligation of providing Defend-ants with lists of titles, even if there is a cost to Defendants of securing the lists of titles from the commercial vendor or third party.

6. Prior to Defendants entering into any agree-ment or transaction whatsoever to sell, lease, license, assign, convey, give away, distribute, loan, barter, hypothecate, encumber, pledge or otherwise transfer, whether or not for consideration or compensation, any part of the software, source code, data files, other technology, domain names, trademarks, brands, or Dot-torrent or similar files used in connection with the Isohunt System or any Comparable System (a “Transfer of Isohunt-Related Assets”), Defendants shall require, as a condition of any such transaction, that the transferee:

(a) submit to the Court’s jurisdiction and venue; (b) agree to be bound by the terms herein; and (c) apply to the Court for an order adding it as a party to this Permanent Injunction.

Defendants shall not permit any Transfer of Isohunt-Related Assets to close until the Court has entered

143a such an order. Defendants further shall not engage in a Transfer of Isohunt-Related Assets with or to any person whom Defendants know to be engaged in, or intending to be engaged in, conduct that would vio-late the terms of Paragraphs 2 or 3 above. 7. This Permanent Injunction shall bind Gary Fung, individually, and Isohunt Web Technologies, Inc., and their officers, agents, servants, employees, attorneys, successors, and assigns, and all those in active concert or participation with any of them, who receive actual notice of this Permanent Injunction by personal service or otherwise. Defendants shall pro-vide a copy of this Permanent Injunction to each of their respective officers, agents, servants, employees, attorneys, principals, shareholders, current and fu-ture administrators or moderators for the Isohunt System (or Comparable System) or any online forums associated with the Isohunt System (or Comparable System), and any domain name registries or regis-trars responsible for any domain names used in con-nection with the Isohunt System (or Comparable Sys-tem). 8. Nothing in this Permanent Injunction shall limit the right of Plaintiffs to seek to recover damages under 17 U.S.C. § 504, or costs, including attorneys’ fees, under 17 U.S.C. § 505. 9. For purposes of clarity, as the Court has per-sonal jurisdiction over Defendants and has concluded that the conduct of Defendants induces infringement of Plaintiffs’ Copyrighted Works in the United States under the copyright laws of the United States, this Permanent Injunction enjoins the conduct of Defend-ants wherever they may be found, including without limitation in Canada.

144a 10. The Court further clarifies that this injunction covers any acts of direct infringement, as defined in 17 U.S.C. § 106, that take place in the United States. To the extent that an act of reproducing, copying, dis-tributing, performing, or displaying takes place in the United States, it may violate 17 U.S.C. § 106, subject to the generally applicable requirements and defens-es of the Copyright Act. As explained in the Court’s December 23, 2009 Order, “United States copyright law does not require that both parties be located in the United States. Rather, the acts of uploading and downloading are each independent grounds of copy-right infringement liability.” Summary Judgment Order at 19. Each download or upload of Plaintiffs’ copyrighted material violates Plaintiffs’ copyrights if even a single United States- based user is involved in the “swarm” process of distributing, transmitting, or receiving a portion of a computer file containing Plaintiffs’ copyrighted content. 11. Violation of this Permanent Injunction shall expose the Defendants, and all others properly bound by it, to all applicable penalties, including for con-tempt of Court. 12. The Court shall maintain jurisdiction over this action for the purposes of enforcing this Permanent Injunction and for amending the injunction in re-sponse to future changes in the law or factual circum-stances. See Grokster V, 518 F. Supp. 2d at 1239-40 (collecting cases). 13. Gary Fung, individually, shall not be deemed to be in violation of this injunction solely as a result of his being a bona fide employee or independent con-tractor of a third party entity that may be engaged in acts that violate this injunction or whose services

145a might be used by third parties to engage in infringe-ment, provided that Mr. Fung does not personally di-rect or participate in conduct that violates this in-junction.

IT IS SO ORDERED. DATED: August 5, 2013 _________________________

THE HON. STEPHEN V. WILSON UNITED STATES DISTRICT JUDGE