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Studios Win Court Victory in Peer-to-Peer Piracy Case

A federal court has ruled that websites that facilitated
peer-to-peer file sharing of illegal content were secondarily liable for copyright

The U.S. Court of Appeals for the Ninth Circuit Thursday
upheld a Central California District Court's summary judgment that Gary Fung
and Isohunt Web Technologies were
liable for contributory copyright infringement.

Pointing to the Supreme Court decision in the Grokster case,
the Ninth Circuit said the defendant was liable under the inducement theory
because the studios established that the defendant had as an object of the
sites promoting the use of the BitTorrent file-sharing protocol to infringe
copyrighted TV shows and movies.

The court found that the defendant was not entitled to
protection from liability under any safe harbor provisions of the Digital
Millennium Copyright Act.

"[I]f 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," said the Court. That intent included not
taking any steps to filter infringing content and promoting the site for the
purposes of infringing.

The district court had held that Fung was not covered by
safe harbors because the files resided on his servers. The appeals court said
that was wrong, but found other reasons to deny the harbors.

The Ninth Circuit said that while the "torrents"
of files reside on Fung websites, if they were uploaded by users of the site
rather than the site itself, Fung would, at least facially, be eligible for
safe harbor assuming other criteria.

But he was not eligible because he had "red flag"
knowledge that the content was infringing. "[T]he record is replete with
instances of Fung actively encouraging infringement, by urging his users to
both upload and download particular copyrighted works, providing assistance to
those seeking to watch copyrighted films, and helping his users burn
copyrighted material onto DVDs," said the court It also concluded that
Fung had ample ability to control the infringement, but did not exercise it.

The film and TV studios who sought the summary judgment
included Columbia Pictures, Disney, Paramount, Tristar, Twentieth Century Fox,
Universal and Warner Bros.

"Today's ruling represents an important step
toward realizing the enormous potential of the Internet as a platform for
legitimate commerce and job creation -- including millions of workers in the
creative industries," said Henry Hoberman, VP and global general counsel for
the Motion Picture Association of America, in a statement. "This ruling affirms
a core principle of copyright law: Those who build businesses around
encouraging, enabling, and helping others to commit copyright infringement are
themselves infringers, and will be held accountable for their illegal
actions.  It also strikes an important blow in the fight to preserve the
jobs of millions of workers in the creative industries, whose hard work and
investments are exploited by rogue websites for their own profit."

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.