Canada: Court Finds Fung And Isohunt Liable For Inducing Copyright Infringement

Last Updated: February 23 2010
Article by Barry B. Sookman

Most Read Contributor in Canada, September 2018

A California District Court recently granted members of the Motion Pictures Association of America summary judgment in a copyright infringement action against Gary Fung and four websites operated by him, including Isohunt, one of Canada's largest BitTorrent sites.

BitTorrent is a popular Internet protocol that enables users to quickly share large software and media files. To download files using the BitTorrent protocol, users first visit an indexing site (such as Isohunt) to obtain a small pointer-file corresponding to the content they want to download. All users who have obtained the same pointer-file are then connected to a central BitTorrent tracker, which coordinates the sharing of pieces of the content files between all users until each user has a complete copy of the work.

In this case, the plaintiffs alleged that the users of Fung's websites had infringed the plaintiffs' copyright by downloading copyrighted content free of charge and without the plaintiffs' authorization. The plaintiffs contended that the defendants had facilitated their users' infringement and were liable under three secondary liability theories: inducement to infringe, material contribution to infringement, and vicarious liability. The district court premised the defendants' liability on the inducement doctrine because the "[d]efendants' inducement liability is overwhelming clear." Consequently, the court found it unnecessary to consider the other two theories.

As part of its secondary liability analysis, the court determined that it must first find direct infringement by a third party. Fung argued that, in order to establish violations of US copyright law, the plaintiffs had to provide evidence that both the transferor and the transferee were located in the US. However, the court rejected this contention, holding that the "acts of uploading and downloading are each independent grounds of copyright infringement and thus, liability." Accordingly, the plaintiffs only needed to prove that a copyrighted work was either uploaded or downloaded in the US. The court found that there was overwhelming evidence of acts of direct infringement in the US.

One interesting issue in the case was whether the US court had subject matter jurisdiction over the infringement given that Fung's four websites were hosted in Canada. The court held that it had jurisdiction based on the well-established principle in US law that, in the context of secondary liability, an actor may be liable for activity undertaken abroad that knowingly induces infringement within the US. Once a plaintiff has established that an act of infringement has taken place within the US, defendants may be held liable for conduct that constitutes inducement, material contribution, or vicarious infringement, even if the defendants' conduct took place abroad.

Addressing inducement to infringe, the district court quoted US Supreme Court Justice Souter, who said in Metro-Goldwyn-Mayer Studios, Inc. v. Grokster 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 to taken to foster infringement, is liable for the resulting act of infringement by other parties."

The district court went on to say that "liability may attach even if the defendant does not induce specific acts of infringement." Instead, the court can "infer [...] a patently illegal objective from statements and actions showing what [the defendant's] objective was."

In finding inducement, the court looked to the defendant's message to users, the defendant's assistance to users engaging in infringement, and the defendants' implementation of technical features promoting infringement. The court also found that the defendants' business model depended on infringing uses of copyrighted materials.

The defendants attempted, unsuccessfully, to rely on safe harbour provisions in the Digital Millennium Copyright Act (DMCA) to exclude their liability (e.g., for providers of information location tools). The court held that to rely on these defences, the defendants must satisfy three conjunctive elements:

  1. The defendant must not know or have reason to know of infringing activities or does not remove infringing materials upon receipt of such knowledge.
  2. The defendant does not profit from infringement where it has the power to control infringement.
  3. The defendant must, upon receiving notice (in the statutorily prescribed manner) from the copyright holder, remove the infringing materials.

In holding that the safe harbour provisions did not apply in this case, the court observed that:

  • The plaintiffs had established that the defendants had reason to know of their users' infringing activities and the defendants did not show otherwise.
  • The defendants did not introduce evidence that they had moved to expeditiously remove the infringing materials.
  • Fung himself engaged in unauthorized downloads of copyrighted materials, and therefore should have been aware that infringing materials were available on his websites.
  • Fung's sites contained features that displayed the top user searches, which listed numerous copyrighted works.

The court also noted that safe harbour defences "are based on passive good faith conduct aimed at a legitimate Internet business." They are not available to parties who actively induce infringement.

McCarthy Tétrault Notes:

The Isohunt case should be of particular interest to Canadians as we assess the amendments needed to our laws to enable Canadians to stem online infringements facilitated by unauthorized Canadian file-sharing sites and services. It is apparent from the court's decision that key legal doctrines played a major role in the findings of infringement. In particular, the following factors were central to the court's findings of liability:

  1. Liability for direct infringement based upon acts of uploading (e.g., making files available for distribution such as required by the World Intellectual Property Organization's (WIPO) Copyright Treaty (WCT) and Performances and Phonographs Treaty (WPPT) making-available and distribution rights), and downloading (e.g., creating reproductions of files).
  2. The existence of robust doctrines of secondary liability such as inducement.
  3. Service-provider safe harbours that (a) are narrowly tailored, (b) protect only legitimate innocent intermediaries (e.g., ISPs that do not participate in or induce infringement by users of their services), and (c) do not apply unless the service providers act responsibly and do what they can reasonably be asked to do to prevent the use of their service by repeat infringers.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions