Perfect 10, Inc. v. IWEB Group, Inc. et al

REPLY to Response to Motion re MOTION to Dismiss Complaint Pursuant to Fed. R. Civ. P. 12

S.D. Cal.June 20, 2013

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O ANDREW P. BRIDGES (CSB No. 122761) ILANA S. RUBEL (CSB No. 221517) LIWEN MAH (CSB No. 239033) KATHLEEN LU (CSB No. 267032) FENWICK & WEST LLP 555 California Street, 12th Floor San Francisco, CA 94104 Telephone: 415.875.2300 Facsimile: 415.281.1350 WILLIAM H. SHAWN, PRO HAC VICE JAMES E. KING (CSB NO. 90103) SHAWNCOULSON, LLP 1850 M St., NW. Suite 280 Washington, DC 20036 Telephone: (202) 331-7900 Facsimile: (202) 403-3747 Attorneys for Defendants IWEB GROUP, INC., IWEB INTELLECTUAL PROPERTY, INC., and IWEB TECHNOLOGIES, INC UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA PERFECT 10, INC., a California corporation, Plaintiff, v. IWEB GROUP, INC., a Canadian company d/b/a/ iWeb.com; IWEB INTELLECTUAL PROPERTY, INC., a Canadian company d/b/a iWeb.com; IWEB TECHNOLOGIES, INC., a Canadian company d/b/a/ iWeb.com; and DOES 1 through 100, inclusive Defendants. Case No. 13 CV 0328 BTM BLM REPLY MEMORANDUM IN SUPPORT OF DEFENDANTS’ MOTION TO DISMISS Judge: Hon. Barry Ted Moskowitz Court: 15B Date: June 28, 2013 Time: 11:00 A.M. NO ORAL ARGUMENT UNLESS REQUESTED BY COURT Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 1 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS i CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O TABLE OF CONTENTS Page I. MINIMUM CONTACTS FOR JURISDICTION ARE ABSENT. ................. 2 A. California Customers Do Not Establish General Jurisdiction. ............. 2 B. Arms-Length Customer Relationships with Purported Infringers Do Not Establish Specific Jurisdiction. ............................... 3 C. Not Only Does Perfect 10’s “Evidence” Fail to Meet Its Burden to Establish Personal Jurisdiction, It Is Also Unreliable. ............................................................................................. 4 D. Jurisdiction Is Not Proper Under Rule 4(k)(2). .................................... 5 II. P10 HAS LITIGATED IN CANADA AND COULD DO SO AGAIN. ........................................................................................................... 5 III. VENUE IS IMPROPER IN THE SOUTHERN DISTRICT. .......................... 6 IV. P10 PLED NO VOLITIONAL ACT OF DIRECT INFRINGEMENT. .......................................................................................... 6 A. P10 Alleges Nothing But Passive, Automated Conduct. ...................... 6 B. The Complaint Does Not Allege Distribution of Material Objects. .................................................................................................. 7 V. P10 INSUFFICIENTLY PLED INTENTIONAL INDUCEMENT OR ENCOURAGEMENT OF OTHERS TO INFRINGE. ............................. 8 Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 2 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS ii CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O TABLE OF AUTHORITIES Page(s) CASES Agee v. Paramount Commc’ns, Inc., 59 F.3d 317 (2d Cir. 1995) ................................................................................... 8 ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707 (4th Cir. 2002)..................................................................... 1, 3, 4, 5 Ashcroft v. Iqbal, 556 U.S. 662 (2009) ....................................................................................... 8, 10 Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), cert. denied 129 S. Ct. 2890 (2009) ...................... 6 Columbia Pictures Indus., Inc. v. Fung, 710 F.3d 1020 (9th Cir. 2013) ........................................................................ 9, 10 CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544 (4th Cir. 2004) ............................................................................ 6, 7 EcoDisc Tech. AG v. DVD Format/Logo Licensing Corp., 711 F. Supp. 2d 1074 (C.D. Cal. 2010) ................................................................ 5 Goodyear Dunlop Tires Operations, S.A. v. Brown, U.S., 131 S. Ct. 2846 (2011) ......................................................................................... 3 Hotaling v. Church of Jesus Christ of Latter-Day Saints, 118 F.3d 119 (4th Cir. 1997) ................................................................................ 8 Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936 (9th Cir. 2011) .......................................................................... 9, 10 Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218 (9th Cir. 2011) .......................................................................... 2, 4 Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005) ............................................................................................. 8 N.Y. Times Co. v. Tasini, 533 U.S. 483 (2001) ............................................................................................. 8 NationalEFT, Inc. v. Checkgateway, L.L.C., No. 12-cv-1498, 2013 WL 593759 (S.D. Cal. Feb. 15, 2013) ..................... 2, 3, 4 Perfect 10, Inc., v. Giganews, Inc., No. 11-cv-905, 2011 U.S. Dist. Lexis 157429 (S.D. Cal. Aug. 25, 2011) .......... 6 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 n.6 (9th Cir. 2007) .......................................................... 7, 8, 9, 10 Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 3 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS iii CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O Perfect 10, Inc. v. Giganews, Inc., No. 11-7098, 2013 WL 2109963 (C.D. Cal. Mar. 8, 2013) ......................... 2, 6, 7 Religious Tech. Ctr. v. Netcom On-line Commc’n Servs., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995) ................................................................. 6, 7 Shrader v. Biddinger, 633 F.3d 1235 (10th Cir. 2011) ............................................................................ 4 Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984) ............................................................................................. 9 TH Weiss, Inc. v. Newland N. Am. Foods, Inc., No. 13-1079, 2013 U.S. Dist. LEXIS 20039 (N.D. Ill. Feb 13, 2013) ................ 6 STATUTES 17 U.S.C. § 101 .......................................................................................................... 8 17 U.S.C. § 106(3) ..................................................................................................... 7 17 U.S.C. § 201(c) ..................................................................................................... 8 28 U.S.C. § 1391(c)(3) .............................................................................................. 6 RULES Fed. R. Civ. P. 4(k)(2) ............................................................................................... 5 Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 4 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 1 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O If Plaintiff (“P10”) truly sought to stop unauthorized use of its images, it would have sent DMCA notices to the website operators that allegedly host the infringing images-as iWeb Technologies (“iWeb”) suggested after P10 contacted it. But P10 does not pretend it ever notified those who actually control the websites. P10 instead seeks a windfall by staging claims against Defendants, who do not direct the content of those sites, in hopes that the cost and burden of litigating in a distant, foreign jurisdiction will force Defendants to pay P10 off. As P10 has neither a jurisdictional nor a substantive basis for its claims, this gambit fails. P10 seeks to hold iWeb liable for the actions of its customers and its customers’ customers. iWeb is a Canadian company that maintains computer servers only outside the United States, in Montreal, Canada. Over 20,000 customers worldwide operate these servers dedicated for their own use. iWeb itself does not develop or run any website P10 accuses of infringement (iWeb’s own website is merely a storefront for its server service). iWeb’s offices, employees, and facilities are solely in Montreal, Quebec, Canada. Toupin Decl. (Dkt. 14-5) ¶¶ 5-8. P10 alleges that iWeb customers who access iWeb servers in Montreal operate, or resell to those that operate, websites that allegedly copied P10’s pornographic images- without iWeb’s foreknowledge. In addition, no personal jurisdiction exists over Defendants because iWeb is an Internet service provider (“ISP”) that merely provides servers and bandwidth to persons that P10 accuses of disseminating infringing works, see ALS Scan, Inc. v. Digital Serv. Consultants, Inc., 293 F.3d 707, 709, 715 (4th Cir. 2002), and the other Defendants have no servers. P10 muddies the waters by refusing to withdraw allegations it knows to be false or unreliable, including false claims about now- dismissed New Dream Network (“NDN”) and the false claim, based on a defunct Ukrainian website, that iWeb has a California data center. Other than this misinformation and mischaracterizations in P10’s declarations (see Defendants’ Evidentiary Objections), P10 does not show Defendants have sufficient contacts in Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 5 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 2 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O this district or anywhere in the United States for personal jurisdiction. P10 also fails to plead a basis for substantive liability. P10 does not plead the volitional conduct that courts-including the most recent court to dismiss P10 claims against an ISP, Perfect 10, Inc. v. Giganews, Inc., No. 11-7098, 2013 WL 2109963, at *6 (C.D. Cal. Mar. 8, 2013)-have required for a claim of direct infringement. P10 instead incorrectly argues that passive automated processes make ISPs liable. But iWeb neither chooses nor controls any purported copying by its customers, and without any plausible facts showing that iWeb intended for infringement to occur, P10 fails to state a claim for contributory infringement. P10 tries to stretch the law to make any provider of general services liable if some downstream customer infringes, an absurd theory that would even make power companies liable for not turning the power off to any company accused of infringement. The Court need not accept P10’s absurd argument. I. MINIMUM CONTACTS FOR JURISDICTION ARE ABSENT. Even if Perfect 10’s allegations about Defendants’ business were all true- which they are not-no personal jurisdiction exists. A. California Customers Do Not Establish General Jurisdiction. No general jurisdiction exists over a defendant unless its contacts with the forum are so extensive that they “approximate physical presence.” See NationalEFT, Inc. v. Checkgateway, L.L.C., No. 12-cv-1498, 2013 WL 593759, at *4 (S.D. Cal. Feb. 15, 2013) (holding that business with 1,000 California merchants, including plaintiff, was insufficient for jurisdiction). California-based contracts and revenue signify “doing business with California, but not necessarily doing business in California,” especially where a defendant has “no offices, real property, or staff in California, is not licensed to do business in California, and pays no California taxes.” See Mavrix Photo, Inc. v. Brand Techs., Inc., 647 F.3d 1218, 1222, 1226 (9th Cir. 2011) (finding no general jurisdiction over out-of-state website operator that allegedly posted infringing celebrity photos). Even “numerous and Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 6 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 3 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O repeated electronic connections” with persons in the forum state do “not add up to the quality of contacts necessary” for jurisdiction. ALS Scan, 293 F.3d at 709, 715 (finding no jurisdiction over ISP that provided bandwidth to customers who posted infringing images to their websites). Thus, even accepting P10’s assertions that iWeb does extensive business with California entities, no general jurisdiction exists. B. Arms-Length Customer Relationships with Purported Infringers Do Not Establish Specific Jurisdiction. On facts mirroring those here, the court in ALS Scan also found no specific jurisdiction. See id. at 709. There, as here, the plaintiff alleged that the defendant ISP enabled customers to publish infringing images online by providing them with the bandwidth for operating their websites. See id. But the ISP, like iWeb, only had an “arms-length customer relationship” with the alleged infringers, did not select the images, and received no income from the websites’ subscribers. See id. The role of the ISP, like iWeb, was “at most passive” because it did not transmit the infringing photographs “specifically to [the forum state] with the intent of engaging in business or any other transaction in [the forum state],” so no jurisdiction existed regardless of whether the ISP continued to enable the websites after receiving notice of their infringement.1 See id. at 714-15. Nor do allegations and evidence that a defendant “does business with California businesses unrelated to the [claim] at issue” confer specific jurisdiction. See NationalEFT, 2013 WL 593759, at *9. “[S]pecific jurisdiction is confined to adjudication of issues deriving from, or connected with, the very controversy that establishes jurisdiction.” Id. (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, U.S., 131 S. Ct. 2846, 2851 (2011)). Here, any customer relationships that iWeb has in the United States are immaterial because P10 does not, and cannot, plead that iWeb entered into them to further infringement on its customers’ 1 P10 conflates third-party websites with iWeb’s business website, which like that of the ISP in ALS Scan is unrelated to Plaintiff’s claim because it “was not involved in the publication of any infringing photographs.” See ALS Scan, 293 F.3d at 715. Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 7 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 4 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O websites. See id. Mere foreseeability that such customer relationships could injure a plaintiff is insufficient for jurisdiction. See id.; see also Shrader v. Biddinger, 633 F.3d 1235, 1241 (10th Cir. 2011) (“maintenance of a web site does not in and of itself subject the owner or operator to personal jurisdiction, even for actions relating to the site, simply because it can be accessed by residents of the forum state”). Finally, iWeb is wholly different from the Mavrix defendant, a website owner that itself published allegedly infringing photos on a website accessible to users in the forum state. See Mavrix, 647 F.3d at 1228. In contrast, iWeb’s customers (or their customers), not iWeb, allegedly posted P10’s photos. C. Not Only Does Perfect 10’s “Evidence” Fail to Meet Its Burden to Establish Personal Jurisdiction, It Is Also Unreliable. Even if iWeb customers in the United States infringed as P10 alleges, jurisdiction over iWeb is absent, see ALS Scan, 293 F.3d at 715, so jurisdictional discovery is unwarranted. P10 admits that the alleged infringement, as in ALS Scan, is on “third-party” websites. See id. (finding no jurisdiction based on ISP’s passive transmission of infringing photos into forum state); Opp. at 7:19. Lacking any factual basis to allege that iWeb ran the allegedly infringing websites or intended that they infringe, P10 instead invents falsehoods about iWeb and proffers immaterial and unreliable “evidence” about its customers. P10’s Opposition entirely avoids the Complaint’s false allegation that iWeb controls or owns a San Diego data center. Compl. ¶ 7; Mot. at 5:6-21. Likewise, by dismissing NDN, P10 conceded that its allegations about NDN being an iWeb reseller in California were false. iWeb may do business with Californians, but P10 cannot truthfully allege that iWeb does business in California (or the United States) to establish jurisdiction. Toupin Decl. ¶ 8; see NationalEFT, 2013 WL 593759, at *9. P10 misleadingly calls allegedly infringing third-party websites stored on Montreal servers “California based” (Compl. ¶ 8). P10 does not allege that those specific customers (e.g., iNetReady or KT Tran, Opp. at 5:2-6) participated in any Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 8 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 5 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O infringement. But even if they were to have done so, whether operators or viewers of infringing websites are in California or the United States is irrelevant-the automated computer functions of a passive ISP whose servers store or transmit data do not create jurisdiction. See ALS Scan, 293 F.3d at 715. The location of operators or viewers is relevant only to jurisdiction over them, but P10 chose not to pursue any parties actually responsible for the alleged infringing acts. D. Jurisdiction Is Not Proper Under Rule 4(k)(2). Even assuming that P10’s factual allegations were true, Rule 4(k)(2) does not establish jurisdiction. “The due process analysis under Rule 4(k)(2) is identical to the traditional personal jurisdiction analysis, however, the contacts are measured with respect to the United States rather than an individual forum state.” EcoDisc Tech. AG v. DVD Format/Logo Licensing Corp., 711 F. Supp. 2d 1074, 1087 (C.D. Cal. 2010) (finding no jurisdiction in California or under Rule 4(k)(2) where the defendant’s alleged “aggregated contacts with the United States are no greater than, and not meaningfully different from, its contacts with California”). Here, P10’s allegations about iWeb’s contacts with the United States are as attenuated as its allegations about iWeb’s California contacts, based solely on iWeb doing business with American companies (e.g., “Communication Networks” and credit card processors) or customers (Compl. ¶¶ 9-11). P10 cannot allege that iWeb in Montreal has any more relevant contacts in the United States than in California, so no jurisdiction under Rule (4)(k)(2) exists. II. P10 HAS LITIGATED IN CANADA AND COULD DO SO AGAIN. As to forum non conveniens, P10 sued in Canada before and makes no showing that it cannot do so again. Canada is the suitable forum, since the records and acts of copying, if any, are on servers there. The iWeb witnesses who could testify about those records and copying are in Canada. P10 has previously insisted on litigating in Canada, even with a parallel case pending in the United States. There is no language barrier, and Canadian courts may apply United States law just Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 9 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 6 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O as United States courts often apply foreign laws. III. VENUE IS IMPROPER IN THE SOUTHERN DISTRICT. Section 1391(c)(3) on venue “cannot (and is not intended to) override the constitutional constraints that govern the propriety of asserting personal jurisdiction over a defendant.” TH Weiss, Inc. v. Newland N. Am. Foods, Inc., No. 13-1079, 2013 U.S. Dist. LEXIS 20039, at *2 (N.D. Ill. Feb 13, 2013). While iWeb is not subject to jurisdiction anywhere in the United States for P10’s claims, P10 tacitly concedes that venue here is improper and does not object to transfer to the Central District, where this Court previously transferred another case because of P10’s lack of connection with this District. Opp. at 3:13-14; Perfect 10, Inc., v. Giganews, Inc., No. 11-cv-905, 2011 U.S. Dist. Lexis 157429 (S.D. Cal. Aug. 25, 2011). IV. P10 PLED NO VOLITIONAL ACT OF DIRECT INFRINGEMENT. P10 concedes that Defendants do not engage in any volitional acts that directly infringe either the reproduction or public display rights; it argues only that iWeb “distributes” infringing images. See Opp. at 15. But P10 fundamentally misunderstands both the volition requirement and the Copyright Act’s definition of the copyright owner’s exclusive “distribution” right. A. P10 Alleges Nothing But Passive, Automated Conduct. P10 incorrectly claims that there is no volition requirement to direct infringement. Courts of Appeals that have squarely examined the issue, the Second and Fourth Circuits, require volitional conduct, and it is a longstanding doctrine of copyright law that emanated from Religious Tech. Ctr. v. Netcom On-line Commc’n Servs., Inc., 907 F. Supp. 1361 (N.D. Cal. 1995), a case from this Circuit.2 Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121, 131 (2d Cir. 2008), cert. denied 129 S. Ct. 2890 (2009); CoStar Group, Inc. v. LoopNet, Inc., 373 F.3d 544, 551 (4th Cir. 2004); see also Giganews, 2013 WL 2109963, at *6 (listing cases 2 As the court in Giganews noted, the Ninth Circuit’s silence thus far on the volitional requirement does not indicate disapproval. 2013 WL 2109963, at *7. Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 10 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 7 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O following Netcom)). The Fourth Circuit specifically held that failure to remove an allegedly infringing image is not a volitional act. LoopNet, 373 F. 3d at 556. P10 is thus incorrect that a defendant’s “refusal to remove identified infringing material from [its] servers and continue to directly distribute those images is clearly a volitional act” (Opp. at 15:19-20). P10 cites Perfect 10, Inc. v. Amazon.com, Inc., but there the Ninth Circuit explicitly disclaimed: “[W]e do not address whether an entity that merely passively owns and manages an Internet bulletin board or similar system violates a copyright owner’s display and distribution rights when the users of the bulletin board or similar system post infringing works.” 508 F.3d 1146, 1160 n.6 (9th Cir. 2007). What P10 actually alleges is “[w]hen an individual user . . . clicks on a link to access a particular image file, a request is sent to the server for that image file[.]” Opp. at 15:11-13; see also Opp. at 18:11-14 (arguing that a user’s uploading and downloading of copyrighted content violates P10’s distribution and reproduction rights respectively). P10 does not, and cannot, allege that iWeb did anything but provide servers. A user’s act leads to the alleged copying onto its dedicated server. This is not a volitional infringing act attributable to iWeb. See Giganews, 2013 WL 2109963, at *7 (finding no volition in providing virtual machines “that some [] users have used to create illegal copies”). And even if, arguendo, iWeb’s conduct is deemed volitional, it was extraterritorial, since all iWeb operations and personnel are in Canada (Toupin Decl. ¶ 5), something P10 no longer appears to dispute. B. The Complaint Does Not Allege Distribution of Material Objects. P10 argues a different construction of the “distribution” right from what the Copyright Act defines, which is the right “to distribute copies or phonorecords of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease, or lending.” 17 U.S.C. § 106(3) (emphasis added). “Copies” are “material objects, other than phonorecords, in which a work is fixed by any method now known or later developed, and from which the work can be perceived, Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 11 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 8 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O reproduced, or otherwise communicated, either directly or with the aid of a machine or device.” § 101 (emphasis added). Transmission of works over the Internet does not fall within this definition, as there is no transfer of ownership of the material objects (i.e., the physical servers) containing the work. See Agee v. Paramount Commc’ns, Inc., 59 F.3d 317, 325 (2d Cir. 1995) (broadcast transmission not a distribution because no material object changes hands). P10 cites no case that holds otherwise. In Amazon.com, though the court considered in dictum whether the Supreme Court in N.Y. Times Co. v. Tasini, 533 U.S. 483 (2001), indicated that an electronic transmission could constitute a public distribution, the court found that the defendant never had the material objects in the first place and therefore could not possibly have distributed them. Amazon.com, 508 F. 3d at 1162. The Tasini statement itself is dictum, as the only question was whether Section 201(c)’s collective works rule applied, and the Court never examined the “material objects” requirement of 17 U.S.C. § 101. 533 U.S. at 487-88. Hotaling v. Church of Jesus Christ of Latter-Day Saints, on the other hand, involved lending of a physical copy of the work at issue. 118 F.3d 119, 203 (4th Cir. 1997). Defendants undisputedly do not distribute any material objects, and the Court need not accept P10’s groundless legal conclusions. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). V. P10 INSUFFICIENTLY PLED INTENTIONAL INDUCEMENT OR ENCOURAGEMENT OF OTHERS TO INFRINGE. P10 mischaracterizes the law of contributory infringement. The Supreme Court definitively stated in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.: “One infringes contributorily by intentionally inducing or encouraging direct infringement.” 545 U.S. 913, 930 (2005). The classic example of intentional inducement or encouragement is advertising an infringing use, something P10 has not pled. Id. at 935. Contrary to P10’s assertion, the Supreme Court has never adopted an alternative, distinct test of “knowledge of infringement and material contribution.” Opp. at 17:6-10. After Grokster, the Ninth Circuit explained that a Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 12 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 9 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O court may impute intent to induce or encourage when a defendant “knowingly takes steps that are substantially certain to result in such direct infringement,” but it did not eliminate Grokster’s intent requirement. Amazon.com, 508 F.3d at 1171. P10 ignores the Ninth Circuit’s most recent jurisprudence on contributory liability. In Columbia Pictures Indus., Inc. v. Fung, 710 F.3d 1020, 1038 (9th Cir. 2013), the Ninth Circuit analyzed Grokster and Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S. 417 (1984), and re-emphasized that “proper proof of the defendant’s intent that its product or service be used to infringe copyrights is paramount.” Unlike the plaintiff in Fung, P10 has pled no facts that iWeb provided its services “with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” See id. at 1034. The Grokster rule “requires a high degree of proof of the improper object.” See id. “[M]ere knowledge of infringing potential or of actual infringing uses” is insufficient. Id. Further, “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 infringement.” Id. at 1035. P10 fails to allege any clear expression or other affirmative acts that constitute such evidence of intent. The circumstances in Louis Vuitton Malletier, S.A. v. Akanoc Solutions, Inc., 658 F.3d 936 (9th Cir. 2011) are not “almost identical” as P10 claims (Opp. at 16:10). Akanoc concerned two web hosting companies, one of whom (MSG) the Ninth Circuit held not liable even though each company’s manager knew of the alleged infringement by websites on their servers. Id. at 942. MSG owned the servers in question, which it leased, along with bandwidth and IP addresses, to Akanoc for web hosting. Id. Citing Amazon.com, the court in Akanoc noted that an ISP’s intent to contribute to infringement can be imputed. Id. at 943. But in Amazon.com, the Ninth Circuit held that such imputation requires that the defendant “has actual knowledge that specific infringing material is available using its system, and can take simple measures to prevent further damage to copyrighted Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 13 of 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 REPLY ISO DEFENDANTS’ RULE 12(b)(2), 12(b)(3) & 12(b)(6) MOTION TO DISMISS 10 CASE NO. 13 CV 0328 BTM BLM FE N W IC K & W E ST L L P A T T O R N E Y S A T L A W SA N F R A N C IS C O works, yet continues to provide access to infringing works.” Amazon.com, 508 F.3d at 1172 (emphasis added) (internal quotation marks and citations omitted). Accordingly, MSG was not contributorily liable because it lacked “reasonable means to withdraw services to the direct infringers,” Akanoc, 658 F.3d at 942, even though MSG could have physically pulled the plug or stopped leasing servers to Akanoc. Here, P10’s conclusory allegation that Defendants could have taken “simple” measures to stop infringement (Compl. ¶ 28), has no plausible factual basis in the Complaint. Without its wild (and abandoned) allegations regarding NDN (see Opp. at 1, n.1; Dkt. No. 8) , P10 alleges nothing more than that Defendants, like MSG, own and make available servers to others who may use them properly or improperly. A complaint with “naked assertion[s] devoid of further factual enhancement” is insufficient to survive a motion to dismiss. Iqbal, 556 U.S. at 678 (quotation marks omitted). P10 does not allege any “simple” method by which Defendants could have removed the images at issue.3 The Court should dismiss the Complaint on both jurisdictional and substantive grounds. Dated: June 20, 2013 FENWICK & WEST LLP By: /s/ Andrew P. Bridges Andrew P. Bridges Attorneys for Defendants IWEB GROUP, INC., IWEB INTELLECTUALPROPERTY, INC., and IWEB TECHNOLOGIES, INC. 3 P10 chided Defendants for failure to cite Akanoc. But Akanoc did not itself cite the controlling Grokster decision, and the Ninth Circuit’s recent decision in Fung did not refer at all to Akanoc. Grokster and Fung supply the current standards. Case 3:13-cv-00328-BTM-BLM Document 25 Filed 06/20/13 Page 14 of 14