Owning the bare right to sue isn’t enough for standing in a copyright infringement case; rather, one must be able to exercise, exclusively, one of the statutory rights of the author, such as the right to reproduce or distribute the work.
It is apparent from Plaintiff’s brief, the attached declaration, and the assignment agreement,however, that the assignment is not the only contract between Plaintiff and Hannibal Inc. involving the copyrighted work. All three documents refer to a related member services agreement under which Plaintiff provides “intellectual property rights management to Hannibal Pictures, including counter-piracy services and enforcement of copyrights, of Hannibal Pictures’ intellectual property.” Plaintiff has not provided the Court with this member services agreement, contrary to the Court’s previous order.
The plaintiff then provided the Contra Piracy Agreement. And, putting it all together, Contra Piracy didn’t have standing.
It was a valiant effort by Contra Piracy because it had, in fact, been granted an exclusive distribution right:
If you can’t read the image, it says “Assignor hereby grants to Contra Piracy the exclusive rights to copy and distribute the copyrighted Work or Works listed in Appendix 1 in the listed territories over internet-based peer-to-peer BitTorrent networks.”
So you’d think this might be good enough – the plaintiff was enforcing its exclusive right to distribute on BitTorrent against those downloading using BitTorrent. But the court wasn’t fooled; on examination there were a number of reasons that the assignment wasn’t what it appeared to be:
Plaintiff was assigned: (1) the right to enforce the copyright in the work; and (2) the right, which appears to be revocable (“revocable power of authorization”), to copy and distribute the work over peer-to-peer BitTorrent networks “in order to perform its tasks,” which tasks are exclusively enforcing the copyright to obtain income from out-of-court settlements to split with the copyright holder. The first, of course, does not confer standing. The second are exclusive rights in name only. In response to the Court’s further order requiring Plaintiff to file an additional declaration addressing the extent of commercial use of the P2P/BitTorrent protocol for distribution of copyrighted works, filed June 21, 2013, Plaintiff’s employee acknowledged that there is little to none and did not claim that Plaintiff engaged in any such commercial use. (Supp. Schneider Decl. ¶ 6 (stating that “it is exceedingly difficult to create a legitimate P2P/BitTorrent market in light of the overwhelming infringements utilizing the protocol” and that “the extent of legitimate commercial distribution via P2P/BitTorrent in a market sense is severely limited”). Plaintiff’s counsel further confirmed that this was the case at the hearing. Moreover, these purported rights appear to be revocable, as the Contra Piracy Agreement refers to a “revocable” power of authorization, which Plaintiff’s counsel could not explain at the hearing. Accordingly, the “exclusive rights” assigned to Plaintiff are illusory.
[T]he Assignment Agreement and Contra Piracy Agreement are silent as to a number of things one would expect to see in an assignment of exclusive rights. The agreements say nothing about the duration of the assignment. Plaintiff’s counsel stated that he assumes that Hannibal Pictures could revoke the assignment if Hannibal Pictures withdrew is membership in Plaintiff. The agreements say nothing about whether the assignment could be sublicensed. Plaintiff’s counsel stated that he assumes Plaintiff could sublicense its rights. The agreements say nothing about royalties if Plaintiff were to exploit its rights to distribute or copy the work over a BitTorrent network. Plaintiff stated that he assumes any royalties would be split. The only split discussed in the Contra Piracy Agreement, however, is how the Plaintiff and its members will divide proceeds of settlements with alleged infringers. That the only monetary division discussed in the agreements involves settlement proceeds is further evidence that the purpose of the assignment was to give Plaintiff the ability to sue. Finally, the agreements are noticeably devoid of any provision for the disposition of any revenues that could be obtained from verdicts or court orders of fees or costs upon success in court, suggesting a business model of using the information obtained from early discovery into the identities of individual defendants to negotiate quick settlements under the threat of embarrassing and expensive litigation without actually litigating claims on their merits.
The stated purpose of the assignment, the lack of indicia that it was a legitimate assignment of exclusive rights, and the admittedly negligible value, if any, of the rights assigned (other than to obtain revenue through out-of-court settlements) convince the Court that in reality Plaintiff only holds the bare right to sue for copyright infringement. Thus, Plaintiff lacks standing under 29 U.S.C. § 501(b). The case is dismissed with prejudice.
Contra Piracy v. Does 1-2919, No. C-13-01133 EDL (N.D. Cal. June 21, 2013) (Order on Plaintiff’s Brief for additional documents)
Contra Piracy v. Does 1-2919, No. C-13-01133 EDL (N.D. Cal. July 23, 2013) (Order of Dismissal)
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