The copyright holders who start these cases generally provide nothing more than an IP-address as evidence. They then ask the courts to grant a subpoena which allows them to request the personal details of the alleged offenders from their Internet providers.

The problem with this scheme, however, is that the person who pays the Internet bills may not be the person who pirating the movie or song in question. Several judges have noted that an IP-address is not a person, much to the disappointment of copyright holders.

To counter this argument copyright holders have introduced the “negligence” theory, arguing that Internet subscribers are liable when other people pirate files through their networks. This would allow copyright holders to sue people even when their targets haven’t committed an offense.

One of these cases was decided last week in favor of the Internet subscriber.

The case was started by adult video company AF Holdings who sued an Internet account holder called Josh Hatfield in a California federal court. AF Holdings claimed that Hatfield had a “duty to secure his Internet connection,” and that he “breached that duty by failing to secure his Internet connection.”

As a result, AF Holdings argued that Hatfield was liable for the copyright infringements that were committed by an unknown person. Mr. Hatfield disagreed with this claim, and argued that the copyright holder couldn’t prove that people are obliged to secure their wireless networks to prevent piracy.

In her verdict Judge Phyllis Hamilton sided with the defendant.

“AF Holdings has not articulated any basis for imposing on Hatfield a legal duty to prevent the infringement of AF Holdings’ copyrighted works, and the court is aware of none,” Hamilton writes.

“Hatfield is not alleged to have any special relationship with AF Holdings that would give rise to a duty to protect AF Holdings’ copyrights, and is also not alleged to have engaged in any misfeasance by which he created a risk of peril,” she adds.

In addition to this lack of duty of care, Judge Hamilton ruled that even if negligence could be proven then “personal injury” state law would be preempted by federal copyright law.

The ruling in the current case is similar to that of Judge Lewis Kaplan in New York earlier this year although perhaps even stronger – Judge Hamilton specifically rules that Internet subscribers don’t have an obligation towards copyright holders to secure their Wi-Fi.

The Electronic Frontier Foundation (EFF), who have helped out many alleged BitTorrent pirates over the years, are happy with the outcome.

“This ruling, along with the Tabora ruling in New York, send a strong judicial message that copyright owners can’t use legal tricks to bypass the law’s protections for Internet access points,” EFF’s Mitch Stolz writes.

“There are still many open cases in the federal courts where copyright owners are trying to use this bogus legal theory,” he adds.

The ruling is definitely a setback for the many copyright holders who jumped aboard the lucrative BitTorrent lawsuit bandwagon. Should more judges reach the same conclusion in future cases the end of this type of lawsuit in the U.S. may very well be near.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

From simple multiple PC locations to network-enabled storage devices and games consoles, effective home networking – wireless in particular – has gradually become a basic requirement.

In recent years, wireless routers – the now-commonplace devices enabling these networks – have become a conflict ground for lawyers working in file-sharing cases. When unauthorized (or at the least unidentified) people access them in order to engage in copyright infringement online, should their owners be held responsible?

In a landmark ruling yesterday which examined existing EU law, a District Court clarified the position in Finland following a near two-year long file-sharing case.

In 2010, anti-piracy group CIAPC obtained the identity of a local woman and sued her for copyright infringement. They claimed that she had used Direct Connect to infringe the rights of their entertainment industry members. Pay us 6,000 euros to make the case go away, they told her, or things will get much worse.

But instead of caving in the woman kicked back. The offense, which allegedly took place in a 12 minute time period on July 14th 2010, coincided with an event at the woman’s home attended by 100 people. Any one of them could have fired up a laptop, accessed the open WiFi, and been tracked by CIAPC.

“The applicants were unable to provide any evidence that the connection-owner herself had been involved in the file-sharing,” explains Ville Oksanen from Turre Legal, the law firm defending the woman.

“The court thus examined whether the mere act of providing a WiFi connection not
protected with a password can be deemed to constitute a copyright-infringing act.”

Oksanen notes that CIAPC had also requested an injunction to prevent the woman from infringing their clients’ copyrights in future. Had this have been granted the implications for anyone running open WiFi – domestically or in a commercial environment – could have been far-reaching. One instance of infringement could lead to an injunction, and the only way to be absolutely certain of avoiding a future breach would be to shut the system down completely.

In the event the court looked at the Finnish interpretations of several EU directives including Directive 2000/31/EC, Copyright Directive 2001/29/EC and the Copyright Enforcement Directive 2004/48/EC.

The District Court ruled that WiFi owners can not be held liable for the copyright infringing activities of third parties, an argument that still rages, for and against, in the United States.

While this ruling will be welcomed by Internet activists and network providers alike, it is still possible for CIAPC to take their case to appeal. However, should they choose to do so, Turre Legal say that taking the case to the European Court of Justice remains an option.

The ruling will be of concern to IFPI and Teosto, the Finnish Composers’ Copyright Society. They’re in the process of obtaining the identities of dozens of Pirate Bay users who allegedly shared the songs of Finland’s answer to Justin Bieber. If those alleged file-sharers are reading this story now, odds are that many of them will remember that their WiFi networks are wide open.

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

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As some of you may recall, Mr. Randazza and I recently wrote competing viewpoints on the extent of third-party liability for copyright infringement. As some of the comments noted, the two articles talked past each other a bit. My article focused on existing theories of copyright liability under the Copyright Act, while Mr. Randazza’s focused on a purportedly different, negligence-based theory of liability. According to Mr. Randazza, Plaintiff’s may sue the owner of an unsecured Wi-Fi connection based on a common law theory of negligence that is entirely distinct from existing theories of copyright liability.

Now that I’ve had an opportunity to read Mr. Randazza’s article, I’d like the opportunity to respond. Several commentators, including the Intellectual Property Director at the EFF,  Corynne McSherry, have begun to highlight very serious problems with the Mr. Randazza’s proposed theory, including statutory immunity via the CDA and/or DMCA and the fact that “copyright negligence” simply does not seem to exist. I would also point out that Mr. Randazza’s focus on the “open Wi-Fi liar” seems to concede the point that the “open Wi-Fi truth-teller” has a valid defense under copyright law.  Simply saying that people might lie to take advantage of a defense is not an adequate reason to eliminate the defense.  Self-defense is a defense to murder, and can also be lied about.  Should it be eliminated?

But I digress. I will now leave those discussions aside, and focus on yet another, probably fatal problem with Mr. Randazza’s negligence theory – federal preemption. If you take the time to read all of the legal mumbo jumbo that follows, you will hopefully be convinced that negligence is a state law claim and one that is, in this situation, preempted by the Copyright Act. Case law and common sense dictate that if Mr. Randazza would like to protect his clients’ copyrights, he must do so within the confines of the Copyright Act that I discussed in my prior article.

Section 301 of the Copyright Act

Preemption is a legal doctrine that essentially says that when state and federal laws cover the same topic, the federal law will trump (preempt) the state law, and a plaintiff will be barred from bringing the state law or common law claim.

In the context of copyright, the Section 301 of the Copyright Act is explicit about the scope of its preemption:

On and after January 1, 1978, all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State. 17 U.S.C. 301(a)(Emphasis Added)

Copyright preemption is extremely broad. Federal courts have recognized that:

  While the language of section 301 is quite clear,  Congress also reinforced its desire to sweep broadly in a report accompanying the legislation:

‘The declaration … in section 301 is intended to be stated in the clearest and most unequivocal language possible, so as to foreclose any conceivable misinterpretation of its unqualified intention that Congress shall act preemptively, and to avoid the development of any vague borderline areas between State and Federal protection. ‘ H.R.Rep. No. 1476, 94th Cong., 2d Sess. 130 (1976), reprinted in 1976 U.S.C.C.A.N. 5659, 5746 (quoted in Rosciszewski v. Arete Associates, 1 f.3d 225, 232 (4^th Cir. 1993).

Thus, Congress has clearly indicated that state-law claims which come within the subject matter of copyright law and which protect rights equivalent to any of the exclusive rights within the scope of federal copyright law … should be litigated only as federal copyright claims. Id.

Firoozye v. Earthlink Network, 153 F.Supp.2d 1151, 1121-22 (N.D. Cal. 2001)

In layman’s terms, these paragraphs emphasize that Congress has decided upon the extent of rights that are conferred by a copyright. The rights conferred are the section 106 exclusive rights, including the right to copy, to perform, to prepare derivative works, etc. The second part of section 301 emphasizes that because Congress is determining the extent of these rights, no person can claim an equivalent right under any common law cause of action or any state law. This prohibition includes negligence, a state common law tort.

The Copyright Preemption Test

The test for copyright preemption asks two questions:

1) Does the work at issue fall within the subject matter of copyright law; and

2) Does the state law attempt to protect rights which are equivalent to any of the exclusive rights granted by the Copyright Act.

The first part of this test yields an obvious answer – the allegedly pirated movies are certainly within the subject matter of copyright law. Mr. Randazza’s clients assert not only that the rights are within the theoretical scope of copyright, but claim to own the actual copyright in the subject works. The movies are claimed to be wholly protected by copyright law, and almost the entirety of Mr. Randazza’s complaint that includes the negligence claim (available here) is premised on copyright law and alleged copyright violations. This element would almost certainly be conceded by Mr. Randazza.

As such, we must move to the second part of the test and ask whether Mr. Randazza’s negligence claim attempts to protect rights that are equivalent to any of the exclusive rights granted by the Copyright Act. I believe the answer to this question must also be yes. Mr. Randazza seeks to protect his client’s copyrighted work from unauthorized copying and sharing. These areprecisely the rights protected by copyright law. Rather than just assert this as a fact, however, I’ll give you the legal nitty-gritty.

Extra Elements?

In analyzing this second prong of the preemption test, most courts have adopted some form of the “extra  element” test, which would ask whether the state negligence action seeks “to protect rights which are qualitatively different from copyright rights. The state claim must have an ‘extra element’ which changes the nature of the action.” Del Madera Properties v. Rhodes and Gardner, Inc., 820 F. 2d 973, 977 (9^th Cir. 1987).

The Second Circuit has also adopted this test, and described the inquiry as follows:

To determine whether a claim is qualitatively different, we look at what [the] plaintiff seeks to protect, the theories in which the matter is thought to be protected and the rights sought to be enforced.  Moreover, we take a restrictive view of what extra elements transform an otherwise equivalent claim into one that is qualitatively different from a copyright infringement claim.  Awareness or intent, for instance, are not extra elements that make a state law claim qualitatively different.  Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc. 373 F.3d 296, 306 (2d Cir. 2004)(Internal quotes/citations omitted).

Thus, we need to break down Mr. Randazza’s negligence claim, and look at

a) What it seeks to protect;

b) The theories in which the matter is thought to be protected; and

c) The rights sought to be enforced.

The negligence section (Section IX – Fourth Cause of Action) of Mr. Randazza’s recent complaint, provides the essential answers.  It asserts without reservation that the “negligent” owner of an open Wi-Fi network is responsible for

¶ 374 “unauthorized copying and sharing of Plaintiff’s Motion Picture”

¶377 “copying and sharing” and “interfering in Plaintiff’s exclusive rights in copyrighted work.”

¶ 378 “copying and sharing”

¶ 379 “negligently allowing others to unlawfully copy and share Plaintiff’s copyrighted Motion Picture, proximately causing financial harm…”

Under Part A of the preemption test, I think it’s fair to say that the negligence claim seeks to protect his client from unauthorized copying and sharing of his client’s copyrighted motion picture. This is precisely the point of copyright law, and describes precisely the interests that the Copyright Act seeks to protect. Exactly. As such, this factor comes down obviously in favor of preemption.

Under Part B of the analysis, Mr. Randazza seeks to protect against the unauthorized copying and sharing of his clients’ motion pictures under a theory that the owner of an open connection is legally responsible for the copyright infringement of a third-party. As my previous article in this series discussed, there is an entire body of copyright case law that addresses exactly who is (and is not) responsible for the infringements of third parties. It is a doctrine that is wholly based on Copyright Act jurisprudence, and liability under these theories is solely based on Copyright Act infringements.

Some may question the way that I’ve stated Mr. Randazza’s theory for this purpose, and argue that really the negligence theory does include additional elements – that the theory is based on a duty, a breach, causation, etc. Unfortunately for Mr. Randazza’s argument, these elements do notqualitatively alter the nature of the claim.  It is still a claim based on unauthorized copying. The federal court in the Northern District of California examined this question, and gave us the following oh-so appropriate quote:

Because the essential allegation is still that Defendants unlawfully copied Plaintiff’s ideas, it is still a copyright infringement claim. Moreover, recharacterization of the claim as one of ‘negligence’ does not add a legally cognizable additional element because a general claim for copyright infringement is fundamentally one founded on strict liability. The alteration of the required mental state does not add an ‘additional element’… Plaintiff’s negligence claim is preempted by federal copyright law.

Dielsi v. Falk, 916 F. Supp. 985, 992-993 (C.D. Cal 1996) (Emphasis added & internal citations omitted).

Obviously, the court in Falk recognized that simply rephrasing a claim does not change the essential nature of the claim. Despite how Mr. Randazza attempts to phrase it, he seeks to recover for the damage to his client’s copyright. Simply saying “negligence” caused the damage to the client’s copyrights does not change the fact that the actual nature of the damage is from alleged infringement. Mr. Randazza must concede that unless there is an act of infringement, he has no claim against a wireless network owner. The entire premise is the infringement.

Almost There…

Finally, let’s look at Part C of the analysis above, as I think this is perhaps the clearest indicator of why a negligence claim would be preempted in this situation. Part C examines “the rights sought to be enforced.”  Again, I hope I don’t get accused of twisting his words, but it seems obvious that the “rights sought to be enforced” by the Mr. Randazza’s negligence claim are his client’s copyrights in the works at issue.

Mr. Randazza references his client’s “exclusive rights in copyrighted works” in paragraph 377 and plaintiff’s “copyrighted Motion Picture” in 379.  Mr. Randazza thus finds himself in the awkward position of trying to enforce rights that exist solely because of the Copyright Act while simultaneously arguing that his common-law negligence claim is not affected by Section 301 of the same Act. As Section 301 states in absolutely clear terms “no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.” Unfortunately for Mr. Randazza, the rights that come from the Copyright Act go no further in their protections than the Copyright Act allows. In fact, as one court has stated “the shadow actually cast by the Act’s preemption is notably broader than the wing of its protection.”  Mr. Randazza cannot have his cake and eat it too – if he would like to enforce the rights granted by the Copyright Act, he must also live with the limitations of its protections.

A Counter-Factual to Close the Case

If Mr. Randazza is right, the entire DMCA Safe Harbor system is meaningless and totally moot.  Stay with me on this one.

An overlooked element of DMCA immunity is that it doesn’t actually give a qualifying entity immunity to conduct the key activities that it covers (routing, system caching, etc). It only prevents the imposition of copyright damages against a qualifying entity for those activities. For example, Section 512(a) states that “a service provider shall not be liable for monetary relief… for infringement of copyright by reason of the provider’s transmitting, routing…”)

In order to survive preemption, a court would have to find that Mr. Randazza’s negligence action is “qualitatively different” than the causes of action for copyright. If negligence is “qualitatively different” however, the damages would be for the negligence, not copyright infringement. It follows then, that an entity that qualified for a DMCA Safe Harbor would still potentially be liable for “negligence” damages for precisely the same activities (routing, system caching, etc.) that the Safe Harbors were designed to protect.

To put it another way, if an old lady with an open Wi-Fi connection could be held liable for its “negligent” provision of an internet connection to an internet “pirate”, why couldn’t Comcast be held liable for the same? Can Google be liable for “negligent failure to prevent infringement” for copyrighted videos on Youtube? If Comcast or Google can be liable under a negligence theory for EXACTLY the same conduct that is protected under the DMCA Safe Harbors, then the DMCA Safe Harbor system becomes totally meaningless. It’s hard to believe that legislators intended that the entire (carefully lobbied) safe harbor scheme was meant to do nothing.  Mr. Randazza knows better than to try to sue Comcast or Google on this theory. He might sue you though.

The Takeaway 

Mr. Randazza’s negligence theory does not hold up under scrutiny. It’s not just that the theory is based on an inappropriate analogy to a 1932 case about tugboats. It’s also that his theory is preempted by Section 301 of the Copyright Act and should be dismissed by any court that analyzes this issue. Mr. Randazza would have you believe that he has come up with a new theory (as in “without precedent”) that allows him to hold the owner of an unsecured wireless network liable, based upon state common law theories of negligence, for any copyright infringements that occurs on the network. Unfortunately for Mr. Randazza, the Copyright Act itself prohibits precisely the kind of common law theory that his article propounds: “no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.” 17 U.S.C. 301.

^{(Disclaimer: The legal analysis and opinion expressed herein are solely those of the author. Nothing herein is to be construed as legal advice and is not meant to replace the advice of an attorney with knowledge of the specific facts of your case. No attorney-client relationship is created, and you should not send me confidential information. Please just don’t try to sue me for offering my thoughts. Thank you.)}

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.

Now, a new judgment has come from the Frankfurt court of appeal. The judges have decided that the owner of an Internet connection is not responsible for copyright infringements carried out without their knowledge on their open WiFi. The same court already ruled that parents are not responsible for copyright infringements carried out by their children.

Lawyers representing copyright holders have long insisted that it is the responsibility of the bill payer to ensure that nothing illegal happens on his connection by taking technical measures to stop unauthorized access by a 3rd party. The plaintiff in this case stated that the IP address of the defendant was tracked making unauthorized uploads of copyright works and demanded damages. The defendant had insisted that not only was he innocent but also away on vacation at the time of the alleged offense.

Regular readers of TorrentFreak will know that lawyers Davenport Lyons in the UK have been sending out many letters which accuse people of copyright infringement when, through ignorance or simple generosity, have simply left their WiFi open for others to use. Davenport state that a previous German court decision has ruled that users are responsible for the infringing actions of others on their Internet connection, and in their opinion UK courts would rule the same. This is the ruling that the Frankfurt court has just over-ruled.

Given this decision, further recipients of Davenport letters should expect to see these comments about open-WiFi liability removed, at least until the highest court in Germany has had the opportunity to review the situation. Describing the decision in Frankfurt as “sensational”, Christian Solmecke, a lawyer currently defending around 500 file-sharers told TorrentFreak: “The future will show us what the highest court in Germany – the Bundesgerichtshof – says to this difficult question.”

Source: TorrentFreak, for the latest info on copyright, file-sharing and anonymous VPN services.