Court Cases

A federal district court in California held on Wednesday that copyright owners must consider fair use before sending DMCA takedown notices to avoid liability for abuse of the law's procedures. The ruling is a huge victory for free speech advocates and may have far-reaching implications for the way content owners police infringement online.

The decision is just the latest highlight in a dispute that has drawn public attention from the start. In February 2007, Stephanie Lenz posted a video of her toddler son on YouTube. In the 29-second video, Lenz's son dances to Prince's "Let's Go Crazy," which is playing in the background. In June 2007, counsel for Universal Music sent YouTube a DMCA takedown notice pursuant to 17 U.S.C. § 512(c), claiming that the video infringed its copyrigh in the Prince song and requested that YouTube remove it from the website. YouTube complied and notified Lenz about the takedown. Lenz sent a counter-notification pursuant to 17 U.S.C. § 512(g), and the site put the video back up about six weeks later.

Going on the offensive, Lenz then sued Universal for violation of 17 U.S.C. § 512(f), which creates liability for knowingly making false claims in a DMCA takedown notice or counter-notice. The district court dismissed Lenz's orginal complaint back in April, finding that she had failed to allege facts showing that Universal knew that its copyright complaint was bogus. The court gave her permission to amend, however, and she came back with detailed factual allegations suggesting that Universal sent the takedown notice at Prince's behest "based not on the particular charateristics of [the video] or any good-faith belief that it actually infringed a copyright but on its belief that, as 'a matter of principle' Prince 'has the right to have his music removed.'" Sec. Am. Cmplt. ¶ 31.

When sending a takedown notice, copyright owners are required to state that they have a "good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law." 17 U.S.C. § 512(c)(3)(a) (emphasis added). The crux of Lenz's complaint is that Universal lacked this good-faith basis because it deliberately ignored whether her use of Prince's song was fair use.

Universal argued in its motion to dismiss that "copyright owners cannot be required to evaluate the question of fair use prior to sending a takedown notice because fair use is merely an excused infringement of copyright rather than a use authorized by the copyright owner or by the law." Lenz v. Universal Music Corp., No. 5:07-cv-03783, slip op. at 5 (N.D. Cal. Aug. 20, 2008). The court squarely rejected this argument, holding as follows:

Id. at 6. The court also dispensed with Universal's more sophisticated argument that courts shouldn't require copyright holders to engage in notoriously fact-intensive and uncertain fair use analysis before acting to protect their rights. The court pointed out that it was not asking copyright holders to get the fair use analysis right in close cases, but simply to take a look at fair use before firing off a takedown demand. In extreme cases like Lenz's video, even a cursory glance might have avoided the whole debacle. Then again, I'm sure Universal's well-paid lawyers have come up with some non-laughable arguments about why Lenz's video is not fair use, and in the end these arguments may be sufficient to establish the required good faith in sending the takedown in the first place.

In fact, under a close reading of the case, copyright owners may be able to establish good faith simply by going through the motions of a fair use assessment. Following precedent from the Ninth Circuit, the Lenz court ruled that the copyright holder's subjective belief about whether the use is fair determines section 512(f) liability, not an objectively reasonable assessment of what fair use permits. See id. at 6-7. This may create an escape hatch for copyright owners. Absent a "smoking gun" email or memo establishing that the copyright holder believed the challenged use to be fair but sent the demand anyway, or direct evidence that the copyright owner simply did not consider fair use at all, it is hard to imagine how plaintiffs can win these cases. Then again, future courts might accept the argument that some uses are so obviously fair that it would be impossible to subjectively believe otherwise. This is essentially what the court did in Online Policy Group v. Diebold, Inc., 337 F. Supp. 2d 1195 (N.D. Cal. 2004).

In any event, the decision should impact the practices of large content owners who use automated processes to identify "infringement" and send out rafts of takedown notices. It also calls into question filtering strategies discussed jointly by commercial copyright owners and hosting providers. If a copyright owner must make a fair use assessment in order to act in good faith, one imagines that human eyeballs are required.

Overall, I'm glad that the court embraced a pragmatic, common-sense approach to the question of fair use and takedown notices. To my mind, it is pure, arid formalism to argue that a copyright owner may willfully ignore fair use just because it is an "affirmative defense" to copyright infringement or an "excused" rather than an "authorized" use. As the court correctly points out: a fair use is a lawful use. That is what should count in the takedown context, just as it does in a full-blown lawsuit. Indeed, giving breathing space to fair use is probably more important in the takedown context. Sending a takedown notice is comparatively cheap and easy, and the volume of takedown demands vastly overshadows the number of copyright lawsuits actually pursued in court. It's good to see a court recognize the burden that takedowns place on creative expression and freedom of speech.

KAREN DUDNIKOV, and MICHAEL MEADORS, Plaintiffs-Appellants, v. CHALK & VERMILION FINE ARTS, INC., a Delaware corporation, and SEVENARTS, LTD., a British corporation, Defendants-Appellees

No. 06-1458

UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT

514 F.3d 1063; 2008 U.S. App. LEXIS 1870; 85 U.S.P.Q.2D (BNA) 1705; Copy. L. Rep. (CCH) P29,518

January 28, 2008, Filed

SUBSEQUENT HISTORY: Motion granted by Dudnikov v. Chalk & Vermilion Fine Arts, Inc., 2008 U.S. Dist. LEXIS 27230 (D. Colo., Mar. 24, 2008)

PRIOR HISTORY: [**1]

Appeal from the United States District Court for the District of Colorado. (D.C. No. 05-cv-02505-WDM-MEH).

CASE SUMMARY:

PROCEDURAL POSTURE: Appellants, e-bay sellers, sued appellees, copyright owners, in the United States District Court for the District of Colorado and sought a declaratory judgment that their prints did not infringe the owners copyrights. The owners filed a motion to dismiss and argued that the court lacked personal jurisdiction over them. The district court concurred and dismissed the sellers' complaint. The sellers appealed.

OVERVIEW: Neither the Copyright Act, 17 U.S.C.S. § 101 et seq., nor the Declaratory Judgment Act, 28 U.S.C.S. § 2201 et seq., provided for nationwide service of process, so Fed. R. Civ. P. 4(k)(1)(A) commanded the district court to apply the law of the state in which the district court sat. Colorado's long-arm statute conferred the maximum jurisdiction permissible consistent with the Due Process Clause. Thus, the first, statutory, inquiry effectively collapsed into the second, constitutional, analysis. The district court's dismissal of the sellers' action for lack of personal jurisdiction was reversed because the sellers met the minimum contacts and purposeful availment requirements where the owners sent a notice of claimed infringement (NOCI) to eBay expressly intending to suspend the sellers' auction in Colorado, the sellers' suit arose from, and was indeed an effort to reverse, the intended consequences of the owners' NOCI, which they incurred in Colorado, and the court had to assume that the owners knew that the sellers business was located in Colorado. Moreover, traditional notions of fair play or substantial justice would not have precluded suit in the district of Colorado

OUTCOME: The judgment of the district court was reversed, and the case was remanded for further proceedings not inconsistent with the opinion

COUNSEL: Gregory A. Beck, Public Citizen Litigation Group, Washington, D.C., for Plaintiffs-Appellants.

Scott C. Sandberg, Snell & Wilmer, LLP, Denver, CO, for Defendants-Appellees.

JUDGES: Before McCONNELL, EBEL, and GORSUCH, Circuit Judges.

OPINION BY: GORSUCH

OPINION

[*1067]

GORSUCH, Circuit Judge.

Plaintiffs are eBay "power sellers." Through the Internet auction site, they sell a variety of fabrics from their home in Colorado. This case concerns two of plaintiffs' prints, both of which play on famous images by the artist Erte, Symphony in Black and Ebony on White. While Erte's images depict elegant women walking aquiline dogs, plaintiffs' prints portray Betty Boop next to her aptly named canine companion, Pudgy.

Defendants, owners of the rights to the Erte images, saw plaintiffs' eBay auction page (which disclosed plaintiffs' Colorado location), and came to the conclusion that plaintiffs' prints infringed their copyrights. Defendants promptly contacted eBay in California and successfully suspended plaintiffs' auction, an action that allegedly had adverse consequences for plaintiffs' business and future dealings with the auction [**2] site. By e-mail, defendants also threatened plaintiffs with suit in federal court. Before defendants could carry out that threat, however, plaintiffs initiated this action in federal district court in Colorado seeking a declaratory judgment that their prints do not infringe defendants' copyrights. Defendants responded with a motion to dismiss, arguing that the court [*1068] lacked personal jurisdiction over them. The district court concurred and dismissed plaintiffs' complaint. For reasons we explore below, we reverse.

Taken in the light most favorable to plaintiffs, as they must be at this stage in the litigation, the facts of this case establish that Karen Dudnikov and Michael Meadors, a husband-and-wife team, operate a small and unincorporated Internet-based business from their home in Colorado. Together, they sell fabric and handmade crafts such as aprons, blankets, and placemats under the name "Tabber's Temptations." The majority of their income is derived from selling these products on eBay, whose operations are based in California. Tabber's Temptations is described by eBay as a "power seller," and has received over 6,000 "feedback messages" in the past year from its eBay customers, [**3] and over 13,000 positive feedback messages since 1998. Ms. Dudnikov's and Mr. Meadors's eBay auction pages clearly list the location of their merchandise as Hartsel, Colorado, and link to their personal website which contains more information about their business, including its location in Colorado.

In October 2005, Ms. Dudnikov and Mr. Meadors launched an auction on eBay offering fabric for sale with the imprint of the cartoon character Betty Boop wearing various gowns. One of these gowns, Ms. Dudnikov and Mr. Meadors concede for purposes of defendants' motion to dismiss, is easily recognizable as a design of the artist known as Erte, a 20th century Russian-born French artist and fashion designer. In Erte's original works, Symphony In Black and Ebony On White, a tall, slender woman is pictured wearing a floor length form-fitting dress that trails her feet, and holding the leash of a thin, regal dog. The fabric offered for sale by Ms. Dudnikov and Mr. Meadors replaced the rather elegant woman in Erte's images with the rather less elegant Betty Boop, and substituted Erte's svelte canine with Betty Boop's pet, Pudgy.

SevenArts, a British corporation, owns the copyright in these Erte works. [**4] Chalk & Vermilion, a Delaware corporation with its principal place of business in Connecticut, is SevenArts' American agent. Chalk & Vermilion is also a member of eBay's "Verified Rights Owner" ("VeRO") program. ¹ Under this program, eBay will automatically terminate an ongoing auction when it receives a notice of claimed infringement ("NOCI") from a VeRO member stating, under penalty of perjury, that it has a good-faith belief that an item up for auction infringes its copyright. The complaint, if unresolved, can also result in the suspension of the seller's account. Under the VeRO program, a targeted seller may file a "counter notice" with eBay contesting the validity of the copyright claim. Upon receipt of such a filing, eBay notifies the initial complainant that it will reinstate the contested auction in 10 days unless it is notified that there is pending legal action seeking to adjudicate the parties' rights. [*1069] If the complaining party does initiate legal proceedings within 10 days, eBay will continue to suppress the contested auction pending the outcome of litigation.

1 Ms. Dudnikov and Mr. Meadors contend that the VeRO program was created to take advantage of the safe harbor provision [**5] of the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. § 512, which absolves an Internet Service Provider ("ISP") of liability for infringing material posted by a user as long as the ISP takes down the allegedly infringing copyrighted material in response to a notice of claimed infringement. Despite the similarities between the DMCA requirements and the VeRO program, defendants assert that "eBay makes no reference to the DMCA in its statement of the VeRO program." We need not resolve this issue, however, as the origins of the VeRO program are irrelevant for this appeal.

Invoking the VeRO program on behalf of SevenArts, Chalk & Vermilion filed a NOCI with eBay contesting plaintiffs' sale of the Betty Boop fabric. In turn, eBay cancelled the auction and notified Ms. Dudnikov and Mr. Meadors of the NOCI. Ms. Dudnikov then contacted Chalk & Vermilion and SevenArts by e-mail to ask that the NOCI be withdrawn. Ms. Dudnikov indicated that she would voluntarily refrain from relisting the disputed fabric, but said that she was worried about having a black mark on her eBay record as a result of having a NOCI filed against her. "I make my living on eBay. I have a 99.9% satisfaction rating [**6] . . . . Your action puts my business in danger of going under. Nothing to you perhaps but everything to me." Applt's App. at 39. When SevenArts declined to withdraw the NOCI, plaintiffs submitted a counter notice to eBay contesting the validity of SevenArts' copyright claim. In response, SevenArts notified Ms. Dudnikov by e-mail that, in order to prevent the auction from being reinstated under eBay procedures, it intended to "file an action in the federal court[s]" within 10 days. Id. at 44.

Six days after receiving this notice, and before defendants followed through on their threat to sue, Ms. Dudnikov and Mr. Meadors filed a pro se complaint in the United States District Court for the District of Colorado. Their suit sought a declaratory judgment clarifying that their sale of the contested Betty Boop fabric did not infringe defendants' copyrights, and an injunction preventing defendants from interfering with future sales of the fabric.

SevenArts and Chalk & Vermilion responded by entering a special appearance and moving to dismiss for lack of personal jurisdiction. ² In a very thorough opinion, the magistrate judge assigned the case for a recommended disposition, see 28 U.S.C. § 636(b)(1)(A), [**7] reasoned that, while the court lacked general jurisdiction over defendants, specific jurisdiction did exist. Defendants objected to the magistrate judge's recommendation and the district court sustained their objection, held that neither specific nor general jurisdiction existed, and thus granted defendants' motion to dismiss. Ms. Dudnikov and Mr. Meadors now appeal the dismissal of their action, though they contest only the district court's disposition of the specific jurisdiction question.

2 Defendants also moved to dismiss for improper venue, but the only basis for challenging venue in copyright actions is that the absence of personal jurisdiction in a forum renders venue improper. See N. Am. Philips Corp. v. Am. Vending Sales, Inc., 35 F.3d 1576, 1577, n. 1 (Fed. Cir. 1994). Accordingly, the question of venue is essentially swallowed by the jurisdictional analysis.

In conducting our review, we are mindful that [HN1] plaintiffs bear the burden of establishing personal jurisdiction. Intercon, Inc. v. Bell Atl. Internet Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir. 2000). The extent of their burden, and the scope of our appellate review, however, depend in part on the nature of the district [**8] court's response to defendants' motion seeking dismissal for lack of personal jurisdiction. A district court has discretion to resolve such a motion in a variety of ways -- including by reference to the complaint and affidavits, a pre-trial evidentiary hearing, or sometimes at trial itself. ³

3 Of course, even if personal jurisdiction is contested and found initially on the pleadings and by affidavit, it may be reviewed again at subsequent stages in the trial court proceedings as evidence accumulates. See FDIC v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992).

[*1070] [HN2] When, as here, personal jurisdiction is found wanting on the basis of the complaint and affidavits, our review of the district court's dismissal is de novo, taking as true all well-pled (that is, plausible, non-conclusory, and non-speculative, see Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1964-65, 167 L. Ed. 2d 929 (2007)) facts alleged in plaintiffs' complaint. Similarly, any factual disputes in the parties' affidavits must be resolved in plaintiffs' favor. FDIC v. Oaklawn Apartments, 959 F.2d 170, 174 (10th Cir. 1992). We have further held that, at this stage, plaintiffs need only make a prima facie showing of personal jurisdiction. Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir. 1995). [**9] ⁴

4 Few such solicitous rules apply in the district court when personal jurisdiction is assessed in an evidentiary hearing or at trial; in such cases, the plaintiff generally must establish, by a preponderance of the evidence, that personal jurisdiction exists. Dennis Garberg & Assocs. v. Pack-Tech Int'l Corp., 115 F.3d 767, 773 (10th Cir. 1997).

[HN3] Turning to the test for personal jurisdiction to which these rules of review apply, our analysis begins with two questions. First, we ask whether any applicable statute authorizes the service of process on defendants. Second, we examine whether the exercise of such statutory jurisdiction comports with constitutional due process demands. Trujillo v. Williams, 465 F.3d 1210, 1217 (10th Cir. 2006).

On the first of these scores, neither the federal Copyright Act, 17 U.S.C. § 101 et seq., nor the Declaratory Judgment Act, 28 U.S.C. § 2201 et seq, provides for nationwide service of process, so Fed. R. Civ. P. 4(k)(1)(A) commands the district court (and us) to apply the law of the state in which the district court sits. Colorado's long-arm statute, in turn, confers the maximum jurisdiction permissible consistent with the Due Process Clause. Archangel Diamond Corp. v. Lukoil, 123 P.3d 1187, 1193 (Colo. 2005). [**10] Thus, in our case, the first, statutory, inquiry effectively collapses into the second, constitutional, analysis.

[HN4] The Supreme Court has held that, to exercise jurisdiction in harmony with due process, defendants must have "minimum contacts" with the forum state, such that having to defend a lawsuit there would not "offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945) (internal quotation marks omitted). Because a state's sovereignty is territorial in nature, a defendant's contacts with the forum state must be sufficient such that, notwithstanding its lack of physical presence in the state, the state's exercise of sovereignty over it can be described as fair and just. A venerated principle to be sure, it is also one that has long eluded a definitive legal test and proven fertile ground for debate by law students, lawyers, and judges alike. ⁵ Because plaintiffs do not appeal [*1071] the district court's adverse ruling on general jurisdiction, however, we are able at least to cabin our inquiry in this case to what "minimum contacts" means for purposes of specific jurisdiction.

5 See, e.g., Kevin C. McMunigal, Desert, Utility, and [**11] Minimum Contacts: Toward a Mixed Theory of Personal Jurisdiction, 108 Yale L.J. 189, 189 (1998) ("Ambiguity and incoherence have plagued the minimum contacts test for the more than five decades during which it was served as a cornerstone of the Supreme Court's personal jurisdiction doctrine."); Christopher D. Cameron and Kevin R. Johnson, Death of a Salesman? Forum Shopping and Outcome Determination Under International Shoe, 28 U.C. Davis L. Rev. 769, 809-15 (1995) (discussing the "mysterious origins" of the minimum contacts test).

In this arena, the Supreme Court has instructed that the "minimum contacts" standard requires, first, that the out-of-state defendant must have "purposefully directed" its activities at residents of the forum state, and second, that the plaintiff's injuries must "arise out of" defendant's forum-related activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985). Additionally, exercising personal jurisdiction over defendants must always be consonant with traditional notions of fair play and substantial justice. Int'l Shoe, 326 U.S. at 316. While these elements afford some shape to the due process inquiry, each is, as we shall see, not without its [**12] own interpretative difficulties.

III

[HN5] The first element can appear in different guises. In the tort context, we often ask whether the nonresident defendant "purposefully directed" its activities at the forum state; in contract cases, meanwhile, we sometimes ask whether the defendant "purposefully availed" itself of the privilege of conducting activities or consummating a transaction in the forum state. See Bell Helicopter Textron, Inc. v. Heliqwest Int'l, Ltd., 385 F.3d 1291, 1296 (10th Cir. 2004); Pro Axess, Inc. v. Orlux Distrib., Inc., 428 F.3d 1270, 1277 (10th Cir. 2005); OMI Holdings, Inc. v. Royal Ins. Co. of Canada, 149 F.3d 1086, 1092 (10th Cir. 1998). In all events, the shared aim of "purposeful direction" doctrine has been said by the Supreme Court to ensure that an out-of-state defendant is not bound to appear to account for merely "random, fortuitous, or attenuated contacts" with the forum state. Burger King, 471 U.S. at 475 (internal quotations omitted).

Because this rule of law is more aspirational than self-defining, courts have often retreated to analogizing individual cases to discrete Supreme Court personal jurisdiction precedents. Indeed, this feature of due process [**13] personal jurisdiction litigation has led many commentators to complain of the lack of predictability and certainty in this area of law. See Int'l Shoe, 326 U.S. at 322-26 (Black, J. concurring in the judgment) (referring to the majority's approach to jurisdiction as consisting of "elastic standards" and "vague Constitutional criteria"); see also C. Douglas Floyd and Shima Baradaran-Robinson, Toward a Unified Test of Personal Jurisdiction in an Era of Widely Diffused Wrongs: The Relevance of Purpose and Effects, 81 Ind. L. J. 601, 638 (2006). Happily, at least in this case, plaintiffs have fixed their focus on a single precedential analogy that, they argue, controls the outcome of the "purposeful direction" inquiry in this case: the Supreme Court's disposition in Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984). While we do not imagine that Calder necessarily describes the only way to satisfy the purposeful direction test, because plaintiffs assert it provides the key to unlocking the courthouse door for them, we are able to limit our attention in this case to Calder's demands.

In Calder, Shirley Jones, of Partridge Family fame, brought suit in California against the National Enquirer, the Enquirer's [**14] local distributor, and the writer and editor of an allegedly libelous article published in the Enquirer. Id. at 785-86. While the Enquirer and its distributor chose not to contest jurisdiction, both the writer, John South, and the [*1072] editor, Iain Calder, challenged the authority of the California courts to hear Ms. Jones's suit, stressing that the article was written and edited in Florida and, though the Enquirer was distributed nationally, the individual defendants had few contacts with California. Id. at 785-86, 789. The Court found specific jurisdiction in California was nonetheless appropriate because the defendants had not engaged in "mere untargeted negligence. Rather, their intentional, and allegedly tortious, actions, were expressly aimed at California." Id. at 789. The Court added that "Petitioner South wrote and petitioner Calder edited an article that they knew would have a potentially devastating impact upon respondent. And they knew that the brunt of that injury would be felt by respondent in the State in which she lives and works [California] . . . ." Id. at 789-90. (emphases added).

Distilling Calder to its essence, [HN6] we thus understand the Court to have found purposeful direction [**15] there because of the presence of (a) an intentional action (writing, editing, and publishing the article), that was (b) expressly aimed at the forum state (the article was about a California resident and her activities in California; likewise it was drawn from California sources and widely distributed in that state), with (c) knowledge that the brunt of the injury would be felt in the forum state (defendants knew Ms. Jones was in California and her career revolved around the entertainment industry there). At plaintiffs' invitation, we turn our attention to examining the presence or absence of these same factors in their case.

In Calder, the Court emphasized in the first instance that the defendants undertook "intentional, and allegedly tortious, actions . . . ." Id. at 789. Plaintiffs argue, and defendants do not dispute, that the sending of the NOCI was an intentional act. However, the parties disagree over whether under Calder plaintiffs must also allege that the act itself was wrongful or tortious in some sense, and whether in this case plaintiffs have done so successfully.

In favor of the view that any intentional act, wrongful or not, suffices under Calder, plaintiffs point to [**16] the Ninth Circuit's decision in Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199 (9th Cir. 2006) (en banc). In Yahoo!, a majority of a Ninth Circuit en banc panel effectively overruled that court's earlier holding in Bancroft & Masters. Inc. v. Augusta Nat'l Inc., 223 F.3d 1082 (9th Cir. 2000), and held that "we do not read Calder necessarily to require in purposeful direction cases that all (or even any) jurisdictionally relevant effects have been caused by wrongful acts." 433 F.3d at 1208; see also id. at 1230 n.2 (O'Scannlain, J. concurring only in the judgment). Such a requirement, the court suggested, would improperly conflate the jurisdictional analysis with the merits. Id. at 1208. And indeed, this view has support in Calder itself. There, the Court "reject[ed] the suggestion that First Amendment concerns enter into the jurisdictional analysis" in a situation in which the First Amendment was available as a defense on the merits of Ms. Jones's defamation claim. Calder, 465 U.S. at 790.

Defendants, unsurprisingly, disagree (as did the district court), arguing that jurisdiction should be denied because their conduct in terminating plaintiffs' auction -- [**17] and thereby vindicating their putative intellectual property rights -- cannot be fairly described as "wrongful" conduct. On this score, defendants could point to a considerable [*1073] dissent in Yahoo! arguing that in non-contract cases allegations of wrongful behavior are necessary, see 433 F.3d at 1228-32 (O'Scannlain, J., concurring only in the judgment), ⁶ as well as the prior panel decision of the Ninth Circuit in Bancroft, 223 F.3d at 1089 (Sneed, J., concurring), and decisions by other circuits holding that under Calder the intentional act must be tortious, see, e.g., Marten v. Godwin, 499 F.3d 290, 297 (3d Cir. 2007).

6 Yet, as a wrongful or tortious act concededly is not necessary in contract cases, one might (as plaintiffs do) ask why such an act would be required in a declaratory judgment action (like this one) that is not itself premised on a question of tort.

As it happens, we are able to avoid entering this thicket. Even if Calder can be properly read as requiring some form of "wrongful" intentional conduct, we agree with plaintiffs that their complaint complies. Plaintiffs allege that defendants intentionally sent a letter to eBay invoking the VeRO procedures. Compl. PP 14, 22-23, [**18] 33, Ex. 2, 4; Plaintiffs' Response to Motion to Dismiss P 9. They allege that defendants took this action with the intent of terminating plaintiffs' auction -- thereby causing them lost business and a damaged business reputation. They further allege that defendants took this action on the basis of an erroneous copyright claim, asserting that the fabric in question was perfectly lawful in light of the fair use doctrine, and that defendants were well aware of this fact. 17 U.S.C. § 107; Compl. P 45 et seq. Finally, plaintiffs allege that, in light of the foregoing, defendants' claim that they were innocently seeking to protect their copyright was "simply a smoke-screen attempt to justify unwarranted interference in the lawful sale of an item." Compl. P 60. [HN7] While conclusory allegations, or a mere "formulaic recitation of the elements of a cause of action," will not suffice to defeat a Fed. R. Civ. P. 12(b) motion, Twombly, 127 S. Ct. at 1965, crediting the complaint as true as we must at this stage of the litigation, and further giving it the solicitous construction due a pro se filing, see Van Deelen v. Johnson, 497 F.3d 1151, 1153 n.1 (10th Cir. 2007), ⁷ the facts described above are [**19] sufficient to permit an inference that defendants tortiously interfered with plaintiffs' business. Plaintiffs' allegations go beyond "labels and conclusions," Twombly, 127 S. Ct. at 1965, to include facts detailing what defendants did (sending the NOCI), what they knew would happen when they sent the NOCI (the cancellation of plaintiffs' auction and its ramifications for plaintiffs' business), and the basis for that knowledge (the specifics of the VeRO program and defendants' participation in that program).

7 The fact that plaintiffs were represented by counsel during this appeal does not affect the solicitous construction we must afford their earlier pro se filings. See Van Deelen, 497 F.3d at 1153 n.1.

Defendants separately object that plaintiffs seek jurisdiction based not on defendants' intentional actions, as they must, but instead based on plaintiffs' own, unilateral conduct. In this vein, defendants emphasize it was plaintiffs who chose to sell allegedly infringing material through eBay, and they remind us of our legion case law holding that [HN8] "the unilateral activity of another party 'is not an appropriate consideration when determining whether a defendant has sufficient contacts [**20] with a forum State to justify an assertion of jurisdiction.'" Doe v. National Medical Services, 974 F.2d 143, 146 (10th Cir. 1992) (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984)); see [*1074] also Melea, Ltd. v. Jawer SA, --F.3d--, 511 F.3d 1060, 2007 U.S. App. LEXIS 29789, 2007 WL 4510263 at *4 (10th Cir. 2007).

Unilateral acts, however, occur in at least two analytically distinct ways. First, as in World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980), a plaintiff might purchase a product in one forum and carry it into another forum. Absent at least the seller's foreknowledge that the buyer was going to take the product into a particular forum, the defendant cannot reasonably be said to have purposefully directed its activities at the forum. The defendant's only contact, the presence of its product in the forum, is the result of the act of someone else and not the defendant's own intentional conduct. A second type of unilateral activity appears where the defendant has purposefully directed its activities at the forum, but the plaintiff's injury nonetheless "arises out of" the plaintiff's or a third party's unilateral acts, rather than the defendant's. See, e.g., Kuenzle v. HTM Sport-Und Freizeitgerte AG, 102 F.3d 453, 456-57 (10th Cir. 1996) [**21] (holding that "[r]egardless of any contacts that exist between [the defendant] and the forum," the suit arose from the activities of the plaintiff). We believe this second sort of unilateral act, with something of a supervening causation flavor to it, is more appropriately addressed at the second ("arising out of") stage of the minimum contacts inquiry, and so we defer discussion of it until then. See infra, Part IV.

With respect to the first type of unilateral act, we have no difficulty determining that plaintiffs have alleged an intentional and wrongful act by defendants on which jurisdiction may permissibly be founded. Plaintiffs do not argue, and we do not remotely hold, that jurisdiction is proper simply based on plaintiffs' decision to hold an eBay auction of materials that allegedly infringe upon defendants' copyrights. ⁸ Rather, it is essential to our analysis that it was defendants who in this case took the intentional action of sending a NOCI specifically designed to terminate plaintiffs' auction, and defendants who followed that act with an express threat to sue within 10 days in order to prevent the revival of plaintiffs' auction.

8 In Marschke v. Wratislaw, 743 N.W.2d 402, 2007 SD 125, 2007 WL 4277436 (S.D. 2007), [**22] the South Dakota Supreme Court held that exercising personal jurisdiction in South Dakota over a Montana car dealer who had posted a car for sale on eBay that was subsequently bought by the South Dakota plaintiff violated due process. In Winfield Collection, Ltd. v. McCauley, 105 F. Supp. 2d 746 (E.D. Mich. 2000), the court held similarly in a case involving a defendant who sold crafts through eBay that used patterns allegedly infringing the plaintiff's copyrights.

Calder, of course, required more than an intentional action. It also stressed that the defendants' conduct was "expressly aimed at California." 465 U.S. at 789. In the sentences immediately following its introduction of this concept, the Court emphasized that California was the "focal point" of the allegedly tortious story. Id. ⁹ To be sure, there is some overlap between this test and Calder's additional [*1075] requirement, discussed below (see infra Part III.C), that a defendant must know that the "harm . . . was suffered" in the forum state. But the overlap is far from complete, as the "express aiming" test focuses more on a defendant's intentions -- where was the "focal point" of its purposive efforts -- while the latter requirement [**23] concentrates on the consequences of the defendant's actions -- where was the alleged harm actually felt by the plaintiff.

9 Some courts have held that the "expressly aimed" portion of Calder is satisfied when the defendant "individually target[s] a known forum resident." See Bancroft, 223 F.3d at 1087. We have taken a somewhat more restrictive approach, holding that the forum state itself must be the "focal point of the tort." See Far West Capital, Inc. v. Towne, 46 F.3d 1071, 1080 (10th Cir. 1995) (internal quotations omitted); see also Remick v. Manfredy, 238 F.3d 248, 259-60 (3d Cir. 2001). Any difference between these standards is immaterial to the resolution of this case, however, as plaintiffs succeed under either.

Defendants submit that plaintiffs have failed to meet the "expressly aiming" standard, pointing to the uncontested fact that they sent their NOCI invoking eBay's VeRO procedures not to plaintiffs in Colorado but to eBay in California. Such focus on the physical direction of defendants' NOCI, however, does not tell the whole story. It overlooks, for example, the fact that eBay's VeRO procedures allow a NOCI filer to terminate another party's auction automatically, as [**24] well as plaintiffs' allegation that defendants intended to halt their auction. Compl. PP 14, 22-23, 33, Ex. 2, 4; Plaintiffs' Response to Motion to Dismiss P 9. It overlooks, too, the fact that the NOCI at issue in this case itself attests to this alleged intent: the NOCI explicitly requests eBay to "act expeditiously to remove or disable access to the material or items claimed to be infringing." Applt's App. at 40. Defendants' affidavits themselves do not contest, but instead tend to confirm, that they intended to halt plaintiffs' auction. The presidents of both Chalk & Vermilion and SevenArts state that "[t]he NOCI was submitted to protect copyrights in the Erte design, and was not submitted with the knowledge or intent that eBay would impose any penalty upon Plaintiffs beyond the sale of the fabric specifically referenced in the NOCI." Applt's App. at 138, 140 (emphasis added). Further, in an e-mail responding to the possibility that the allegedly infringing fabric would be relisted as a result of plaintiffs' counter notice, SevenArts instructed Chalk & Vermilion to "have E Bay remove the item again if that is possible." Id. at 43. And when plaintiffs did not acquiesce, defendants [**25] e-mailed plaintiffs directly in Colorado threatening them with suit in federal court to prevent the future sales of the fabric in question. Id. at 44.

Thus, while, as defendants emphasize, the NOCI formally traveled only to California, it can be fairly characterized as an intended means to the further intended end of cancelling plaintiffs' auction in Colorado. In this way, it is something like a bank shot in basketball. A player who shoots the ball off of the backboard intends to hit the backboard, but he does so in the service of his further intention of putting the ball into the basket. Here, defendants intended to send the NOCI to eBay in California, but they did so with the ultimate purpose of cancelling plaintiffs' auction in Colorado. Their "express aim" thus can be said to have reached into Colorado in much the same way that a basketball player's express aim in shooting off of the backboard is not simply to hit the backboard, but to make a basket.

Our view finds support in Burger King, as well as in a pair of cases from a sister circuit. In Burger King, the Supreme Court found jurisdiction in Florida appropriate over a Michigan franchisee who breached an agreement with, and infringed [**26] the trademark of, a Florida franchisor. Foreshadowing the Internet age, the Court noted that [HN9] "it is an inescapable fact of modern commercial life that a substantial amount of business is transacted solely by mail and wire communications. . . . So long as a commercial actor's efforts are 'purposefully directed' toward residents of another State, we have consistently rejected the notion that an absence of physical [*1076] contacts can defeat personal jurisdiction there." 471 U.S. at 476. Such is the case before us. Defendants' express aim in acting was to halt a Colorado-based sale by a Colorado resident, and neither the lack of defendants' physical presence in Colorado nor the fact that they used a California-based entity to effectuate this purpose diminish this fact.

In Bancroft, a case perhaps even more analogous to ours, a small California company that sold computer and networking products and services, Bancroft & Masters, registered the domain name masters.com with Network Solutions Inc. ("NSI"), a company based in Virginia. Augusta National, which operates the Augusta National Golf Club and sponsors the Masters golf tournament, sent a letter from its headquarters in Georgia to NSI in Virginia, [**27] asserting that Bancroft & Masters had violated its trademark. Much as under the VeRO procedures at issue here, Augusta National's complaint had the effect, under NSI policy, of prohibiting Bancroft & Masters from retaining its domain name unless it obtained a declaratory judgment that it was not infringing on Augusta National's marks. Bancroft & Masters brought such a suit in California and our sister circuit held that, because Augusta National's purpose was specifically to target a known California business, it satisfied Calder's "express aiming" test despite the fact that letter was formally sent to Virginia rather than California. 223 F.3d at 1087-88. Precisely the same reasoning applies here.

Informative in its contrast, Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797 (9th Cir. 2004), dealt with a car dealer in Ohio whose local Akron advertisements encouraged potential buyers to "terminate" their current car leases in favor of a new Martin auto. The advertisement featured a photograph of Arnold Schwarzenegger in The Terminator (1984), one of his most popular film roles in which he appears as a murderous cyborg, "(a cybernetic organism; i.e., a robot whose mechanical parts [**28] are encased in living tissue . . .)." Id. at 799. When Mr. Schwarzenegger sought to sue the car dealership in California for the unauthorized use of his likeness, the Ninth Circuit refused jurisdiction, stressing that, unlike the defendants in Calder, the car dealership's advertisements were not "expressly aimed" at Mr. Schwarzenegger in the forum state (California). Id. at 807. While Mr. Martin perhaps knew Mr. Schwarzenegger lived in California, this was insufficient to convey jurisdiction there because the intentions behind his advertisement was solely to entice local market Ohioans, not Californians, "to buy or lease cars from Fred Martin." Id. By contrast, defendants in our case are alleged to have intended their extra-forum conduct to reach and affect plaintiffs' business operations in Colorado.

While defendants do not deny that they sought to terminate plaintiffs' auction, they do deny that they knew plaintiffs' business was located in Colorado, and therefore that their conduct could have been expressly aimed at Colorado. But, while defendants are of course free to pursue that defense in later stages of this litigation, plaintiffs have alleged that defendants knew the location [**29] of their business. Plaintiffs' Response to Motion to Dismiss P 10. Neither does this allegation rest on conjecture or supposition, but on well-pled and record facts. Compare id. and Compl. with Twombly, 127 S. Ct. at 1962-63. Plaintiffs' location is clearly disclosed on their eBay auction page, as is the fact that Colorado residents had to pay sales tax for any purchases from plaintiffs. Applt's App. at 88, 92-94. And for their part, defendants' statements about what they saw are very carefully drafted to avoid [*1077] disputing that they viewed plaintiffs' eBay auction page -- indeed, it was presumably seeing this page that induced defendants to contact eBay about halting plaintiffs' auction.

In assessing the question of "purposeful direction," Calder stressed the fact that the Enquirer defendants "knew that the brunt of th[e] injury would be felt" in the forum state. Calder, 465 U.S. at 789-90. Meanwhile, in Keeton v. Hustler Magazine, 465 U.S. 770, 104 S. Ct. 1473, 79 L. Ed. 2d 790 (1984), issued the same day as Calder and also written by then-Justice Rehnquist, the Court found jurisdiction proper in a libel action brought in New Hampshire even though "the bulk of the harm done to petitioner occurred outside" the forum state. [**30] Id. at 780; see also Yahoo!, 433 F.3d at 1207 (discussing this tension). In our case, the question where the brunt or bulk of harm need take place makes little difference, as there is no meaningful dispute that plaintiffs' injury was suffered entirely in the forum state, Colorado. Also, for reasons we have just discussed, see supra Part III.B, plaintiffs have satisfied their burden of establishing, at this stage, that defendants knew plaintiffs' business and auction were based in Colorado, and therefore knew the effects of the NOCI would be felt there.

Defendants do, however, contend, just as the unsuccessful defendants in Calder did, 465 U.S. at 789, that the "mere foreseeability" that the NOCI would have effects in Colorado is insufficient to support jurisdiction, and that plaintiffs have failed to allege the "something more" than foreseeability required to establish personal jurisdiction, see, e.g., Asahi Metal Indus. Co., Ltd. v. Superior Court, 480 U.S. 102, 111, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987) (O'Connor, J.) (plurality op.); Trierweiler v. Croxton & Trench Holding Corp., 90 F.3d 1523, 1534 (10th Cir. 1996). We surely agree that under Calder [HN10] the mere foreseeability of causing an injury in the forum state [**31] is, standing alone, insufficient to warrant a state exercising its sovereignty over an out-of-state defendant. But under the Calder test plaintiffs have invoked, they must establish, and have established for purposes of a motion to dismiss decided on the pleadings and affidavits, not only that defendants foresaw (or knew) that the effects of their conduct would be felt in the forum state, but also that defendants undertook intentional actions that were expressly aimed at that forum state. That is, in satisfying Calder's first two prongs, plaintiffs have established that defendants acted with more than foresight (or knowledge) that effects would be felt in Colorado.

Indeed, at the end of the day our case is an easier one than Calder itself. There, the defendants intended to write an article, the "focal point" of which was California, for the Enquirer to publish and distribute in California. 465 U.S. at 789. Yet, the effects of which the plaintiff complained likely were not bound up in the defendants' intentions. The defendant writer and editor were professionals presumably interested chiefly in the sale of newspapers, not in doing intentional harm to Ms. Jones; that is, while they knew [**32] their article would have adverse effects on her in California, those effects were to them perhaps no more than foreseeable side-effects. By contrast, defendants here more than foresaw or knew the harm alleged to have befallen forum residents; indeed, they do not dispute that they intended to cause the cancellation of plaintiffs' auction, and it is that precise alleged harm that plaintiffs seek to have redressed through this suit. As our sister circuit has [*1078] said, [HN11] actions that "are performed for the very purpose of having their consequences felt in the forum state" are more than sufficient to support a finding of purposeful direction under Calder. Finley v. River North Records, Inc., 148 F.3d 913, 916 (8th Cir. 1998) (quotation omitted) (holding jurisdiction proper where an out-of-state defendant sent fraudulent material into the forum state with the purpose of inducing plaintiff's reliance, and such reliance was the harmful effect for which plaintiff sought redress).

Having determined that defendants "purposefully directed" their activities at the forum state, due process requires us next to ask whether plaintiffs' injuries "arise out of" defendants' contacts with the forum jurisdiction. [**33] [HN12] Many courts have interpreted this language to require some sort of causal connection between a defendant's contacts and the suit at issue. Of course, as Prosser and Keeton have noted, "[t]here is perhaps nothing in the entire field of law which has called forth more disagreement, or upon which the opinions are in such a welter of confusion," as causation doctrine, Prosser and Keeton on the Law of Torts 263 (5th ed., 1984), and this arena is no exception. Some courts have interpreted the phrase "arise out of" as endorsing a theory of "but-for" causation, see, e.g., Mattel, Inc. v. Greiner and Hausser GmbH., 354 F.3d 857, 864 (9th Cir. 2003), while other courts have required proximate cause to support the exercise of specific jurisdiction, see, e.g., Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass'n, 142 F.3d 26, 35 (1st Cir. 1998). Under the former approach, any event in the causal chain leading to the plaintiff's injury is sufficiently related to the claim to support the exercise of specific jurisdiction. The latter approach, by contrast, is considerably more restrictive and calls for courts to "examine[s] whether any of the defendant's contacts with the forum are relevant to the [**34] merits of the plaintiff's claim." O'Connor v. Sandy Lane Hotel Co., 496 F.3d 312, 319 (3d Cir. 2007). Yet a third approach, departing somewhat from these causation-based principles, instead asks whether there is a "substantial connection" or "discernible relationship" between the contacts and the suit. See id. at 319-20 (collecting cases). Under this theory, the relationship between the contacts and the suit can be weaker when the contacts themselves are more extensive. See Shoppers Food Warehouse v. Moreno, 746 A.2d 320, 335-36 (D.C. 2000).

The parties point us to no case in which we have had occasion to announce a test as to when a contact is sufficiently related to a claim to support the exercise of jurisdiction, but [HN13] we agree with our sister circuit that the "substantial connection" test inappropriately blurs the distinction between specific and general personal jurisdiction. See Sandy Lane Hotel Co., 496 F.3d at 321. General jurisdiction is based on an out-of-state defendant's "continuous and systematic" contacts with the forum state, Trujillo, 465 F.3d at 1218 n.7 (quoting Helicopteros, 466 U.S. 408, 104 S. Ct. 1868, 80 L. Ed. 2d 404), and does not require that the claim be related to those contacts. Specific jurisdiction, [**35] on the other hand, is premised on something of a quid pro quo: in exchange for "benefitting" from some purposive conduct directed at the forum state, a party is deemed to consent to the exercise of jurisdiction for claims related to those contacts. A relatedness inquiry that varies the required connection between the contacts and the claims asserted based on the number of the contacts improperly conflates these two analytically distinct approaches to jurisdiction. By eliminating the distinction between contacts that are sufficient to support [*1079] any suit and those that require the suit be related to the contact, it also undermines the rationale for the relatedness inquiry: to allow a defendant to anticipate his jurisdictional exposure based on his own actions. See Linda Sandstrom Simard, Meeting Expectations: Two Profiles For Specific Jurisdiction, 38 Ind. L. Rev. 343, 366 (2005).

As between the remaining but-for and proximate causation tests, we have no need to pick sides today. On the facts of this case, we are satisfied that either theory adopted by our sister circuits would support a determination that plaintiffs' cause of action arises from the defendants' contact with Colorado. That [**36] defendants' contact with Colorado, the sending of the NOCI to eBay and the ensuing e-mail exchange in which defendants threatened plaintiffs with suit, is a but-for cause of this action is clear. After all, if defendants had not claimed that plaintiffs were infringing their copyright, plaintiffs would have had no reason to seek a declaratory judgment that their actions did not run afoul of defendants' rights. The NOCI was also the cause in fact of the real world harm that plaintiffs seek to have remedied: the cancellation of their auction and the black mark on their eBay record. In the absence of the NOCI, plaintiffs would not have had to contend with either of those effects, and thus would have had no reason to attempt to hale defendants into court.

We believe that the NOCI can also fairly be considered the proximate cause of plaintiffs' claim. In the NOCI, defendants swore under penalty of perjury that they had a good faith belief that plaintiffs' auction infringed their rights. The merits of plaintiffs' declaratory judgment action addresses the exact same question, and their claim for injunctive relief seeks to prevent future interference with plaintiffs' business, interference which [**37] defendants have threatened. More specifically, plaintiffs argue that defendants' infringement claim contained in the NOCI is incorrect, and that therefore their auction was improperly cancelled and their sales record erroneously smeared. The NOCI is thus at the very core of plaintiffs' suit.

Defendants' chief argument against finding plaintiffs' suit sufficiently related to the NOCI is (once again) that plaintiffs' suit is based on plaintiffs' unilateral conduct. Even if the NOCI was purposefully directed at Colorado, defendants argue that because plaintiffs are seeking a judgment that their own actions are legal, their claim does not arise out of any activity of defendants. This argument, however, neglects the fact that plaintiffs filed suit in direct response to defendants' suppression of their auction and threat to bring a suit in less than two weeks. While plaintiffs' actions are admittedly also a but-for cause of this suit, that does not change the fact that what plaintiffs seek is relief from defendants' actions and the ensuing consequences following directly from those actions.

Our case is, in this respect, akin to Red Wing Shoe Co. v. Hockerson-Halberstadt, Inc., 148 F.3d 1355, 1360 (Fed. Cir. 1998), [**38] and CompuServe v. Patterson, 89 F.3d 1257 (6th Cir. 1996). In Red Wing Shoe, [HN14] the Federal Circuit held the threat of an infringement suit carried by a cease-and-desist letter acts as a restraint on the free flow of goods, and a declaratory judgment action by the purveyor of allegedly non-infringing goods arises from (and is an attempt to eliminate) that restraint. 148 F.3d at 1360. ¹⁰ Neither is the restraint [*1080] here based on threats alone, although defendants did indeed threaten litigation; rather, defendants affirmatively interfered with plaintiffs' business, and this suit arises directly from that interference. See also Silent Drive, Inc. v. Strong Industries, Inc., 326 F.3d 1194, 1202 (Fed. Cir. 2003).

10 To be sure, Red Wing Shoe ultimately held that jurisdiction was inappropriate on the reasonableness prong of our due process analysis because of policy concerns unique to the intellectual property context, a question we take up in Part V, infra. But for purposes of the relatedness prong of our analysis, plaintiffs' suit attacks the very type of restraint that Red Wing Shoe held gives rise to a suit seeking a declaration of non-infringement.

Similarly, in CompuServe, a Texas defendant [**39] had threatened to sue an Ohio corporation for trademark infringement if it did not pay him $ 100,000 to settle his claim. The Ohio corporation thereafter filed a preemptive declaratory judgment suit in Ohio. After holding that the defendant's threat constituted a contact with Ohio, the court applied a proximate cause standard to determine whether the plaintiff's claim arose from that contact. 89 F.3d at 1267. The court noted that there, as here, the defendant's actions threatened harm to the economic livelihood of the plaintiff, and it was that threat the plaintiff sought to eliminate through its suit. Id. Indeed, the instant case is an even clearer case for jurisdiction than CompuServe because Ms. Dudnikov and Mr. Meadors seek relief not merely from threats, but from actual restraints on their business resulting from defendants' NOCI.

Having determined that plaintiffs met their burden, at this stage of the litigation, of establishing "minimum contacts" -- that defendants' conduct was "purposefully directed" at Colorado and that this lawsuit arose out of defendants' contacts with Colorado -- we must still inquire whether the exercise of personal jurisdiction would "offend traditional [**40] notions of fair play and substantial justice." Int'l Shoe, 326 U.S. at 316 (internal quotation omitted). In doing so, we are cognizant of the fact that, [HN15] with minimum contacts established, it is incumbent on defendants to "present a compelling case that the presence of some other considerations would render jurisdiction unreasonable." Pro Axess, 428 F.3d at 1280 (internal quotation omitted).

In making such an inquiry courts traditionally consider factors such as these:

(1) the burden on the defendant, (2) the forum state's interests in resolving the dispute, (3) the plaintiff's interest in receiving convenient and effectual relief, (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and (5) the shared interest of the several states [or foreign nations] in furthering fundamental social policies.

OMI, 149 F.3d at 1095; see also TH Agric. & Nutrition, LLC v. Ace European Group Ltd., 488 F.3d 1282, 1292 (10th Cir. 2007). But see International Shoe and the Legacy of Legal Realism, 2001 Sup. Ct. Rev. 347, 368 (2001) (arguing that considering factors such as these "imposes all of the costs of case-by-case adjudication without conferring any [**41] benefits in the form of predictable outcomes").

None of these factors, separately or in combination, seem to weigh definitively in favor of defendants. With respect to the burden on them associated with litigating in Colorado, defendants' threat to litigate in federal court indicates a willingness to litigate in some federal court in the United States. As far as we can tell, there are a finite number of possible fora in this country in which this case might be litigated, including perhaps Connecticut or Delaware, [*1081] Chalk & Vermilion's home state and state of incorporation; Colorado, the plaintiffs' home state; or California, eBay's home state.

California has virtually nothing to do with this litigation: eBay is not a party to this suit, we have been pointed to no specific witnesses or evidence located in California, and the merits of this dispute are wholly unrelated to California substantive law. Thus, we are left to consider the burden on the parties of litigating this suit in Colorado rather than, say, Connecticut or Delaware. As in any case in which the parties reside in different fora, one side must bear the inconvenience of litigating "on the road." While admittedly a burden, defendants [**42] have not indicated that their defense of this case would be hindered by the territorial limits on the Colorado district court's power to subpoena relevant witnesses, or indeed hampered in any other significant way.

To be sure, on the other side of the coin, [HN16] while "[s]tates have an important interest in providing a forum in which their residents can seek redress for injuries caused by out-of-state actors," OMI, 149 F.3d at 1096, and while they surely consider federal district court in Colorado a convenient and effective forum, plaintiffs have suggested no reason to think that federal courts in Connecticut or Delaware, for example, would be unable to adjudicate their claims under federal law with equal fairness and effectiveness. Cf. id. at 1097 (noting that plaintiff's interest in convenient and effective relief "may weigh heavily in cases where a Plaintiff's chances of recovery will be greatly diminished by forcing him to litigate in another forum because of that forum's laws or because the burden may be so overwhelming as to practically foreclose pursuit of the lawsuit").

The only traditional factor that does loom large for either side in this case is the potential policy interests [**43] of a foreign nation. See Pro Axess, Inc., 428 F.3d at 1281 (considering this interest under the fifth factor concerning the substantive social policy interests of states or nations). While Chalk & Vermilion is based in Connecticut, SevenArts is a British corporation, and thus we would be remiss if we did not consider whether British substantive social policies are implicated by an exercise of jurisdiction over SevenArts. In this particular case, however, we have little trouble concluding that they are not. Nowhere have defendants disputed that this case will be decided solely under federal copyright law, and indeed, the NOCI itself states that it is defendants' rights under "state, federal, or United States law," not British law, that are being infringed. Applt's App. at 40. SevenArts has been exposed to jurisdiction in the United States by the actions of its American agent, actions of which, the record is clear, SevenArts not only approved but appears to have directed. See id. at 36 ("Please have E Bay remove the item again . . ."); id. at 28 ("The fabric is a violation of our rights and we insist on its withdrawal whenever it appears on E Bay."). Furthermore, in its correspondence [**44] with Ms. Dudnikov, SevenArts itself threatened to file suit in federal court in the United States to block plaintiffs' counter notice from taking effect. Id. at 44. Given these facts, there would seem to be no substantive British interest in this litigation to be protected, and, apart from pointing to SevenArts' British citizenship, defendants themselves identify none.

Defendants do submit, however, that an entirely different sort of policy interest does weigh strongly in its favor -- namely, the federal interest in allowing federal copyright holders to alert potential infringers of their rights and encouraging the settlement of such potential disputes. By way of support, they point us to Red [*1082] Wing Shoe. There, a Louisiana corporation sent a letter to a Minnesota corporation informing the latter that the former believed a shoe manufactured by the Minnesota corporation infringed the Louisiana corporation's patent, and offering to negotiate for a non-exclusive license. The Federal Circuit held that this "cease-and-desist" letter constituted a contact purposefully directed at Minnesota, and that the case arose out of that contact. See supra Part IV. Yet, the court held that a patent holder [**45] would not "subject itself to personal jurisdiction in a forum solely by informing a party who happens to be located there of suspected infringement." Red Wing Shoe, 148 F.3d at 1361 (emphasis added). The court reasoned that such cease-and-desist letters are essential to promoting settlement of copyright disputes, and the promotion of settlement is a strong federal policy interest. Id.; see also Silent Drive, 326 F.3d at 1206; Wise v. Lindamood, 89 F. Supp. 2d 1187 (D. Colo. 1999).

Assuming without deciding that it would be unreasonable to found jurisdiction solely on a cease-and-desist letter, this case is readily distinguishable. Defendants' NOCI went well beyond providing notice to plaintiffs of the claimed infringement and seeking settlement; it purposefully caused the cancellation of their auction and allegedly threatened their future access to eBay and the viability of their business. Compl. PP 15, 30. Of course, plaintiffs' contact information was readily accessible from their eBay auction site and defendants thus had the option of sending a mere cease-and-desist letter directly to plaintiffs. Instead, however, they communicated their complaint to a third party with the intent [**46] that the third party take action directly against plaintiffs' business interests, something that thereafter occurred. On these facts, we cannot say that the exercise of jurisdiction would be either unfair or unjust, and again our inquiry profits by analogy to Bancroft. The court there held that cases involving cease-and-desist letters were inapposite because the plaintiff's case arose "principally out of [the defendant]'s letter to [the third party], and that letter did more than warn or threaten [the plaintiff]." 223 F.3d at 1089. Instead, the letter initiated procedures under which the plaintiff either had to give in to the defendant's demands (thereby losing use of its domain name), or take legal action. See supra Part III.B. Such is the situation with which we are faced. Defendants did not merely inform plaintiffs of their rights and invite settlement discussions prior to potential litigation, but took affirmative steps with third parties that suspended plaintiffs' ongoing business operations. And under eBay's procedures, plaintiffs' only recourse, other than capitulation, was litigation. In such circumstances, we cannot say that requiring defendants to answer for their actions [**47] in Colorado is unfair.

* * *

Defendants sent a NOCI to eBay expressly intending (and effectually acting) to suspend plaintiffs' auction in Colorado. Plaintiffs' suit arises from, and is indeed an effort to reverse, the intended consequences of defendants' NOCI which they incurred in Colorado. For purposes of this motion, moreover, we must assume defendants knew plaintiffs' business was located in Colorado. And defendants point us to no basis in traditional notions of fair play or substantial justice that would preclude suit in that forum. Accordingly, the judgment of the district court is reversed, and this case is remanded for further proceedings not inconsistent with this opinion.

So ordered.

ROBERT HENDRICKSON, Plaintiff, v. EBAY INC., LUCKYBOY ENTERTAINMENT, STEVEN REILLY, and DOES 1 through X, Defendants. and related cases

Case No. CV 01-0495 RJK (RNBx) Consolidated with Case Nos. CV 01-3412 RJK and CV 01-3412 RJK

165 F. Supp. 2d 1082; 2001 U.S. Dist. LEXIS 14420; 60 U.S.P.Q.2D (BNA) 1335; Copy. L. Rep. (CCH) P28,313

DISPOSITION: [**1] EBay Defendants' motion for summary judgment on the copyright claims GRANTED. EBay and Richter's motion for summary judgment on the Lanham Act claim GRANTED.

PROCEDURAL POSTURE: Plaintiff, copyright owner of a movie, sued defendant, an Internet auction web service and two employees, for copyright infringement and a Lanham Act violation. The website defendants moved for summary judgment relying in part on the "safe harbor" provisions of the Digital Millennium Copyright Act (DMCA).

OVERVIEW: The issue was whether defendant website was secondarily liable for providing services, however limited or automated in nature, to sellers of counterfeit copies of plaintiff's movie. The court first looked to whether defendant website was shielded from copyright liability by the DMCA. A safe harbor was available under 17 U.S.C.S § 512(c) if defendant met its three-prong test. Defendant had no duty to act under the third-prong because plaintiff failed to meet the notice requirements of claimed infringement. As to the other two prongs, based on the limited information provided by plaintiff, defendant did not have, as a matter of law, actual or constructive knowledge of the alleged infringing activity nor did it have the right and ability to control the infringing activity at issue. Thus, the test was met, and defendant website was entitled to judgment on the copyright claims. The protection extended likewise to defendant employees. The Lanham Act claim was moot because only injunctive relief was available, since defendants were "innocent infringers," and it had already been provided.

[*1083] ORDER GRANTING DEFENDANTS EBAY INC., MARGARET C. WHITMAN AND MICHAEL RICHTER'S MOTION FOR SUMMARY JUDGMENT OR, ALTERNATIVELY, MOTION FOR PARTIAL SUMMARY JUDGMENT

This case involves a matter of first impression in the federal courts: whether one of the "safe harbor" provisions of the Digital Millennium Copyright Act ("DMCA") affords protection to the operator of the popular Internet auction web service, www.ebay.com, when a copyright owner seeks to hold the operator secondarily [*1084] liable for copyright infringement by its sellers. On August 20, 2001, the Court heard Defendants eBay, Inc. ("eBay"), Margaret Whitman and Michael Richter's (collectively, the "eBay Defendants") motion for summary judgment on the copyright and trademark [**2] claims in the consolidated Hendrickson v. eBay, Inc. et al. cases. After the hearing, the Court took the motion under submission. After considering the papers submitted by the parties, the case file and oral argument, the Court hereby GRANTS the motion.

eBay provides an Internet website service where over 25 million buyers and sellers of consumer goods and services have come together to buy and sell items through either an auction or a fixed-price format. Pursuant to their agreement with eBay, users set up user IDs or "screen names" to conduct business on eBay's website in a semi-anonymous fashion. ¹ Buyers and sellers reveal their real identities to each other in private communications to complete sales transactions.

1 This is akin to what users of CB radios do when they give themselves a handle that identifies themselves over the radio waves. Some eBay user IDs referenced in the records of this case include "emailtales" and "luckyboyentertainment," and "vidjointyc."

eBay's [**3] website allows sellers to post "listings" (or advertisements) containing descriptions of items they wish to offer for sale; and it allows buyers to bid for items they wish to buy. People looking to buy items can either browse through eBay's 4,700 categories of goods and services or search for items by typing words into eBay's search engine. Every day, eBay users place on average over one million new listings on eBay's website. At any given time, there are over six million listings on the website. ²

2 In this case, eBay repeatedly characterizes its website as merely an online venue that publishes "electronic classified ads." (See, e.g., Motion at 3.) However, eBay's description grossly oversimplifies the nature of eBay's business. A review of eBay's website shows eBay operates far more than a sophisticated online classified service. (To the extent some of the descriptions about eBay's website are not in the record, the Court takes judicial notice of www.eBay.com and the information contained therein pursuant to Federal Rule of Evidence 201.) Indeed, eBay's website is known first and foremost as an Internet auction website. See, e.g., Leslie Walker, Ebay Goes Off-Line To Train Its Next Block of Dealers, Wash. Post, Aug. 9, 2001, available at 2001 WL 23185584 ("eBay, the giant Internet auction house"); Pradnya Joshi & Charles V. Zehren, Bidders' Remorse Online Auctions Now No. 1 Source of Internet Fraud, Newsday, Aug. 30, 2000, available at 2000 WL 10031214 ("eBay, the world's largest online auction service"). eBay's own website describes itself as "the world's largest online marketplace." See "Overview" page, at http://pages.ebay.com/community/aboutebay/overview/index.html. eBay "enables trade on a local, national and international basis" and "features a variety of . . . sites, categories and services that aim to provide users with the necessary tools for efficient online trading in the auction-style and fixed price formats." Id. eBay's Internet business features elements of both traditional swap meets -- where sellers pay for use of space to display their goods -- and traditional auction houses -- where goods are sold via the highest bid process.

[**4] On or about December 20, 2000, eBay received a "cease and desist" letter from pro se Plaintiff Robert Hendrickson. The letter advised eBay that Plaintiff dba Tobann International Pictures is the copyright owner of the documentary "Manson." The letter also stated that pirated copies of "Manson" in digital video disk ("DVD") format were being offered for sale on eBay. However, the letter did not explain which copies of "Manson" in DVD format were infringing copies; nor did it fully describe Plaintiff's copyright interest. The letter demanded that eBay cease and [*1085] desist "from any and all further conduct considered an infringement(s) of [Plaintiff's] right" or else face prosecution "to the fullest extend provided by law." (See Richter Decl., Ex. C.)

Promptly after receiving this letter, eBay sent Plaintiff e-mails asking for more detailed information concerning his copyright and the alleged infringing items. (See id., Exs. D-G.) eBay advised Plaintiff that he has to submit proper notice under the DMCA. For example, on December 20, 2000, eBay sent the following e-mail to Plaintiff:

Recognizing that some posted items may infringe certain intellectual property rights, [**5] we have set up specific procedures which enable verified rights owners to identify and request removal of allegedly infringing auction listings. These procedures are intended to substantially comply with the requirements of the [DMCA], 17 U.S.C. section 512. Click on the following link to access the [DMCA]

(Id., Ex. D.) In that e-mail, eBay also encouraged Plaintiff to join its Verified Rights Owner ("VeRO") program, by submitting eBay's Notice of Infringement form. ³ As eBay explained, some of the benefits of the VeRO program include, among other things: (1) access to a customer support group dedicated to servicing the VeRO participants; (2) dedicated priority email queues for reporting alleged infringing activities; and (3) ability to use a special feature called "Personal Shopper," which allows users to conduct automatic searches for potentially infringing item. (Id., Ex. D.)

3 eBay's Notice of Infringement form quotes the notification provision of the DMCA, as set forth in 17 U.S.C. § 512(c)(3)(A). (See Richter Decl., Ex. B.)

[**6] On December 28, 2000, Defendant Richter, eBay's Intellectual Property Counsel, followed up with another e-mail:

We have tried to contact you numerous times concerning your letter dated December 14, 2000. [P] We would like to assist you in removing items listed by third parties on our site which you claim infringe your rights. However, in order to do so, we would need proper notice under the [DMCA]. Specifically, we would need you to, among other things, identify the exact items ⁴ which you believe infringe your rights. In addition, we would need a statement from you, under penalty of perjury, that you own (or are the agent of the owner) the copyrights in the documentary. As you can understand, a statement that we immediately CEASE and DESIST from any and all further conduct considered an infringement(s) of my right granted under Copyright and other laws of the land' gives us no indication of what your rights are, and gives us no indication as to which items infringe such rights.

(Id., Ex. G.) Plaintiff refused to join eBay's VeRO program and refused to fill out eBay's Notice of Infringement form. ⁵ Before filing suit, Plaintiff never provided eBay the specific [**7] item numbers that it sought.

5 In his response to eBay's First Set of Requests for Admissions, Plaintiff explained why he refused to join the VeRO program:

Knowing that EBAY's so called VeRO program is nothing more than a wickedly concealed scheme to defraud unknowledgeable proprietors of Copyrights, out of their LAWFUL rights, Plaintiff refuses to join in, become a member of, participate in, act in concert with, be associated with, lend his name to, or in any way, be a part of a scheme intended to deprive anyone of their hard earned LAWFUL rights.

On January 17, 2001, Plaintiff filed the first of three lawsuits against eBay. In CV 01-0495 ("Case No. 1"), Plaintiff sued eBay and two eBay sellers, asserting a claim for copyright infringement. The Complaint in Case No. 1 alleges, among other things, that eBay is liable for the sale of unauthorized copies of the film "Manson" [**8] by users on eBay's website.

On February 12, 2001, Plaintiff filed the second lawsuit. In CV 01-1371 ("Case No. 2"), Plaintiff sued eBay, David Durham (another third party seller) and Margaret C. Whitman ("Whitman"), eBay's President and CEO. In this case, Plaintiff alleges that eBay and Whitman are liable for copyright infringement because they allowed Defendant Durham to sell unauthorized copies of the film "Manson" on or after January 17, 2001, the date Plaintiff filed Case No. 1.

On April 13, 2001, Plaintiff filed his third lawsuit against eBay. In CV 01-3412 ("Case No. 3"), Plaintiff added several other defendants, including eBay's Senior Intellectual Property Counsel, Michael Richter ("Richter"). Plaintiff alleges, among other things, that eBay and Richter are liable for copyright infringement because they wrongfully continued to allow the sale of unauthorized copies of the film "Manson" by eBay users after February 25, 2001, the date Plaintiff commenced Case No. 2. In addition, Plaintiff alleges a Lanham Act claim and a state claim for tortious interference with prospective economic advantage.

On April 30, 2001, the Court denied Plaintiff's motion for preliminary injunction [**9] in Case No. 1. On the same day, the Court granted eBay's motion to consolidate the three actions for all purposes. On July 2, 2001, the Court issued an order granting, in part, the eBay Defendants' first motion for summary judgment. The Court denied the eBay Defendants' motion for summary judgment on the copyright claims without prejudice to its refiling. However, the Court granted eBay and Richter's motion for summary adjudication of the application of the Lanham Act's "innocent infringer" provision. The Court also granted the motion for summary judgment on Plaintiff's state claim on the ground that it is preempted by the Copyright Act.

On July 27, 2001, the eBay Defendants filed the pending motion for summary judgment. Plaintiff filed his opposition on August 6, 2001 and the eBay Defendants filed their reply on August 13, 2001.

[HN1] Summary judgment is proper if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). A fact is material [**10] only if it is relevant to a claim or defense and its existence might affect the suit's outcome. See T.W. Elec. Serv., Inc. v. Pacific Elec. Contractors Assoc., 809 F.2d 626, 630 (9th Cir. 1987). A court may not, on a motion for summary judgment, evaluate the credibility of the evidence submitted by the parties. See Leslie v. Grupo ICA, 198 F.3d 1152, 1157-59 (9th Cir. 1999).

[HN2] The moving party bears the burden of demonstrating the absence of a genuine issue of material fact for trial. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). "The burden on the moving party may be discharged by 'showing' -- that is, pointing out to the district court -- that there is an absence of evidence to support the nonmoving party's case." Celotex [*1087] Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986); see Musick v. Burke, 913 F.2d 1390, 1394 (9th Cir. 1990). To demonstrate that the non-moving party lacks sufficient evidence to entitle it to judgment, the moving party must affirmatively show the absence of such evidence in the record, either by deposition [**11] testimony, the inadequacy of documentary evidence or by any other form of admissible evidence. See Celotex, 477 U.S. at 322. The moving party has no burden to negate or disprove matters on which the opponent will have the burden of proof at trial. See id. at 325.

[HN3] A non-moving party's allegation that factual disputes persist between the parties will not automatically defeat an otherwise properly supported motion for summary judgment. See Fed. R. Civ. P. 56(e) (non-moving party "may not rest upon the mere allegations or denials of the adverse party's pleadings, but . . . must set forth specific facts showing that there is a genuine issue for trial."). "[A] mere 'scintilla' of evidence will be insufficient to defeat a properly supported motion for summary judgment; instead, the nonmoving party must introduce some 'significant probative evidence tending to support the complaint.'" Fazio v. City and County of San Francisco, 125 F.3d 1328, 1331 (9th Cir. 1997), quoting Anderson, 477 U.S. at 249, 252. In judging evidence at the summary judgment stage, courts must draw all reasonable inferences in favor of the party [**12] against whom summary judgment is sought. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986); Chaffin v. United States, 176 F.3d 1208, 1213 (9th Cir. 1999).

Plaintiff alleges that eBay participated in and facilitated the unlawful sale and distribution of pirated copies of "Manson" DVDs by providing an online forum, tools and services to the third party sellers. (See Opp. at 3; see also Complaint in Case No. 1, PP 18, 20, 21 & 30.) Plaintiff does not allege that the advertisements that sellers posted on eBay's website violate his copyright in "Manson." The type of secondary liability that Plaintiff seeks to impose on the eBay Defendants is similar to the type of secondary liability the Ninth Circuit allowed in Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259 (9th Cir. 1996). There, the court held that the complaint stated causes of action for vicarious and contributory copyright infringement against the operators of a traditional swap meet for sales of counterfeit recordings by independent [**13] vendors. ⁶ Thus, the issue raised by Plaintiff's copyright claim is not whether eBay can be held secondarily liable for "third party advertisements." (See Reply at 3.) Rather, the question is whether eBay can be held secondarily liable for providing the type of selling platform/forum and services that it provided, however limited or automated in nature, to sellers of counterfeit copies of the film "Manson." Before the Court reaches the merits of [*1088] that question, the Court must address a preliminary issue: whether the DMCA shields eBay from liability for copyright infringement.

6 In April of this year, the Ninth Circuit in A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001) extended Fontovisa to the Internet context. Napster operates an Internet service that facilitates the transmission and retention of digital audio files by its users. The Ninth Circuit affirmed the district court's conclusion that the plaintiffs -- record companies and music publishers -- have demonstrated a likelihood of success on the merits of their contributory and vicarious copyright infringement claims against Napster under the standards set forth in Fontovisa. The Ninth Circuit declined to reach the question of whether the safe harbor provisions of the DMCA applied, concluding that "this issue will be more fully developed at trial." 239 F.3d at 1025.

The DMCA "is designed to facilitate the robust development and world-wide expansion of electronic commerce, communications, research, development, and education." S. Rep. No. 105-190, at 1 (105th Congress, 2d Session 1998). [HN4] Title II of the DMCA, set forth in 17 U.S.C. § 512, "protects qualifying Internet service providers from liability for all monetary relief for direct, vicarious and contributory infringement." Id. at 20. "Title II preserves strong incentives for service providers and copyright owners to cooperate to detect and deal with copyright infringements that take place in the digital networked environment." Id. at 40.

There is no dispute over whether eBay is an Internet "service provider" within the meaning of Section 512. eBay clearly meets the DMCA's broad definition of online "service provider." See [HN5] 17 U.S.C. § 512(k)(1)(B) ("the term 'service provider' means a provider of online services or network access, or the operator of facilities therefor").

[HN6] To qualify for one of the safe harbor provisions, the service provider's activities at issue must involve functions described in one of four [**15] separate categories set forth in subsections (a) through (d) of Section 512. See 17 U.S.C. § 512(n). eBay argues that it qualifies for protection under the third and fourth categories. Because the record establishes that eBay qualifies for protection under Section 512(c), the Court need not address the applicability of Section 512(d).

[HN7] Subsection (c) limits liability for "infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider." 17 U.S.C. § 512(c) (emphasis added). This section applies where a plaintiff seeks to hold an Internet service provider responsible for either (1) infringing "material" stored and displayed on the service provider's website or (2) infringing "activity using the material on the [service provider's computer] system." 17 U.S.C. § 512(c)(1)(A)(i). Here, because the focus of the copyright claims against eBay concerns infringing activity -- the sale and distribution of pirated copies of "Manson" -- using "materials" [**16] posted eBay's website, Section 512(c) would provide eBay a safe harbor from liability if eBay meets the conditions set forth therein.

[HN8] Three requirements for safe harbor are delineated in Section 512(c)(1). First, the service provider must demonstrate that it does not have actual knowledge that an activity using the material stored on its website is infringing or an awareness of "facts or circumstances from which infringing activity is apparent." 17 U.S.C. § 512(c)(1)(A)(i)-(ii). Alternatively, the service provider must show that it expeditiously removed or disabled access to the problematic material upon obtaining knowledge or awareness of infringing activity. See 17 U.S.C. § 512(c)(1)(A)(iii). Second, the service provider must show it "does not receive a financial benefit directly attributable to the infringing activity" if the service provider has "the right and ability to control such activity." 17 U.S.C. § 512(c)(1)(B). Third, the service provider must show that it responded expeditiously to remove the material that is the subject of infringing activity upon receiving notification of the claimed infringement [**17] in the manner described in Section 512(c)(3). 17 U.S.C. § 512(c)(1)(C).

[*1089] a. The Third Prong of the Test: Notification of the Alleged Infringing Activity

[HN9] Under the third prong of the test, the service provider's duty to act is triggered only upon receipt of proper notice. See id. Section 512(c)(3) sets forth the required elements for proper notification by copyright holders. First, rights holders must provide written notification to the service provider's designated agent. See 17 U.S.C. § 512(c)(3). [HN10] In addition, the notification must include "substantially" the following six elements:

(1) a physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive right that is allegedly infringed

(3) identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material;

[HN11] (4) information reasonably sufficient [**18] to permit the service provider to contact the complaining party;

(5) a statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law; and

(6) a statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the copyright owner.

Preliminary, the Court rejects Plaintiff's argument that he need not submit written notification in the manner described above (i.e., provide the notification referenced in the third prong of the safe harbor test) as long as other facts show the service provider received actual or constructive knowledge of infringing activity. (See Opp. at 8.) Plaintiff refers to the first prong of the safe harbor test set forth in Section 512(c)(1)(ii) and (iii) in support of this argument. Plaintiff's argument has no merit.

[HN12] The DMCA expressly provides that if the copyright holder's attempted notification fails to "comply substantially" with the elements of notification described in subsection (c)(3), that notification "shall not [**19] be considered" when evaluating whether the service provider had actual or constructive knowledge of the infringing activity under the first prong set forth in Section 512(c)(1). 17 U.S.C. § 512(c)(3)(B)(i) (emphasis added). Here, Plaintiff does not dispute that he has not strictly complied with Section 512(c)(3). (See, e.g., Opp. at 8-9.) The question is whether Plaintiff's imperfect attempts to give notice satisfy Section 512(c)(3)'s "substantial[]" compliance requirement.

Plaintiff's pre-suit "cease and desist" letter and e-mails to eBay do not include several of the key elements for proper notice required by Section 513(c)(3). (See Richter Decl., Exs. C, E, F, H & I.) None of these writings includes a written statement under "penalty of perjury" attesting to the fact "that the information in the notification is accurate . . . [and] the complaining party is authorized to act on behalf of the owner" of the copyright at issue. 17 U.S.C. § 512(c)(3)(A)(vi). Additionally, none of these writings includes a written statement that Plaintiff "has a good [**20] faith belief that use of the material in the manner complained of is not authorized." 17 U.S.C. § 512(c)(3)(A)(v). The complete failure to include these key elements in his written communications to eBay, even after eBay specifically asked [*1090] for these items, renders Plaintiff's notification of claimed infringement deficient under Section 512(c)(3).

(2) Inadequate Identification of Material Claimed to be the Subject of Infringing Activity

Moreover, the record shows that Plaintiff failed to comply substantially with the requirement that he provide eBay with sufficient information to identify the various listings that purportedly offered pirated copies of "Manson" for sale. See 17 U.S.C. § 512(c)(3)(A)(iii). It is true that Plaintiff has informed eBay in writing that counterfeit copies of "Manson" were being offered and sold on eBay's website. However, when eBay requested that Plaintiff identify the alleged problematic listings by the eBay item numbers, Plaintiff refused. (See, e.g., Kim Decl., Ex. P [Plaintiff's Response to First Request for Admissions], RFA Nos. 21 and 22.) Plaintiff contends that it is not his job to [**21] do so once he has notified eBay of the existence of infringing activity by eBay sellers. (See id. at 3.)

The Court recognizes that there may be instances where a copyright holder need not provide eBay with specific item numbers to satisfy the identification requirement. For example, if a movie studio advised eBay that all listings offering to sell a new movie (e.g., "Planet X,") that has not yet been released in VHS or DVD format are unlawful, eBay could easily search its website using the title "Planet X" and identify the offensive listings. However, the record in this case indicates that specific item numbers were necessary to enable eBay to identify problematic listings.

Plaintiff has never explained what distinguishes an authorized copy of "Manson" from an unauthorized copy. Initially, in his December 2000 cease and desist letter, Plaintiff only complained about pirated copies of "Manson" in DVD format. (See Richter Decl., Ex. C.) Plaintiff did not inform eBay that all DVD copies were unauthorized copies; he merely asserted that pirated copies of "Manson" DVDs were being sold on eBay. (See id.) Subsequently, Plaintiff sent an e-mail to eBay complaining [**22] about a seller who was selling a pirated copy of "Manson" in VHS format. (See id. at P 24 & Ex. I.) ⁷ But Plaintiff's e-mail did not identify the basis for his claim that the seller was selling a pirated copy of "Manson."

7 On January 4, 2001, Plaintiff sent eBay an e-mail complaining about a seller named "vidjointnyc@hotmail.com" who was "still selling pirated copies of my film MANSON in YOUR "Thieves Market'." (See Richter Decl., Ex. I.) After receiving Plaintiff's e-mail, eBay discovered that this seller had one active listing on eBay's website; that listing offered "Charles Manson Family Footage VHS New!!" (See id. at P 24 & Ex. J.) Nowhere in the listing did the seller state he was offering a copy of a film entitled "Manson." (See id.) eBay removed the listing at the risk of exposing itself to a lawsuit from the seller even though up until that time Plaintiff had only complained about pirated DVDs, the seller was clearly offering a VHS tape for sale, and the listing made no reference to the title "Manson." (See id. at P 24 & n.1.)

[**23] During oral argument, Plaintiff stated that he notified eBay that all copies of "Manson" in DVD format are unauthorized. However, the undisputed record in this case shows that Plaintiff did not provide this notification in writing before filing suit. ⁸ [HN13] A copyright holder must comply [*1091] with the "written communication" requirement. See 17 U.S.C. § 512(3)(A). The writing requirement is not one of the elements listed under the substantial compliance category. See id. Therefore, the Court disregards all evidence that purports to show Plaintiff gave notice that all DVDs violate his copyright in "Manson." ⁹

8 Plaintiff contends that during a January 2001 telephone conversation (shortly after he commenced suit), he told Richter that all copies of "Manson" in DVD format infringe on his copyright because he has never authorized the release of this movie on DVD. (Hendrickson Decl., P 11.) There is a dispute in the record as to when Plaintiff orally advised eBay that all copies of "Manson" in DVD format were unauthorized. (Compare id. with Kim Decl., P 7.) However, the dispute over the dates is immaterial. It is undisputed that Plaintiff has never provided this information in a written communication to eBay as required by Section 512(c)(3).

9 The Court notes that even though Plaintiff failed to submit proper notice of his claim that all "Manson" in DVD format are unauthorized, since March 2001, eBay has voluntarily searched its website on a daily basis for all copies of "Manson" in DVD format, removed all such listings and suspended repeat offenders. (See April 13, 2001 Declaration of Michael Richter filed in support of the eBay Defendants' Opp. to Motion for Prelim. Injunction, P 24.) eBay has represented to the Court that it plans to continue to take such action during the pendency of this lawsuit. (See id.)

With respect to "Manson" VHS tapes, Plaintiff has admitted that authorized copies of "Manson" have been released in VHS format. (See Hendrickson Decl., P 11 ("certain VHS tapes were infringing[] because some of those had been authorized"; Kim Decl., P 7.) Therefore, authorized copies of "Manson" in VHS format are available in the marketplace. Plaintiff has offered no explanation to eBay or this Court as to how eBay could determine which "Manson" VHS tapes being offered for sale are unauthorized copies. ¹⁰

10 Plaintiff states that during a January 2001 telephone conversation, he informed Richter that all VHS tapes labeled "new" had to be counterfeit. (Hendrickson Decl., P 11.) Because Plaintiff did not provide this information to eBay in writing, the Court need not consider the deficient notice. Nevertheless, the Court notes that Plaintiff's contention that all "new" VHS tapes must be counterfeit is wholly unsubstantiated. Perhaps Plaintiff has not authorized the release of new VHS copies in recent years. However, it is certainly possible that a seller advertises a "Manson" VHS tape as "new" because the tape remains sealed in its original package. Such a VHS tape could be an authorized copy.

[**25] Plaintiff raises two more arguments in support of his claim that he need not provide eBay with specific item numbers to satisfy the "identification" requirement under the DMCA. Neither argument has merit.

First, Plaintiff points out that he has sent an e-mail to eBay identifying the eBay user IDs of four alleged infringers. Plaintiff asserts that the identification of user names provides eBay with sufficient information to locate the listings that offer pirated copies of "Manson." (See Hendrickson Decl, P 9(b).) The e-mail in question, dated December 21, 2000, does not satisfy the DMCA's identification requirement. (See id., Ex. G.) ¹¹ The e-mail does not identify the listings that are claimed to be the subject of infringing activity; it does not even describe the infringing activity. Moreover, it contains none of the other requisite elements of a proper notification under Section 512(c)(3)(A), e.g., a statement attesting to the good faith and accuracy of the allegations.

Hi, Kai, this is Robert Hendrickson, the copyright owner of the motion picture MANSON. Because of the copyright infringement activity conducted by the following Ebay User Names: emailtales, luckyboyentertainment, stoonod and vidjointnyc via your website, please email me any and ALL information you have on these criminals. Thanks.

[**26] Second, Plaintiff contends that eBay can identify listings offering infringing copies of "Manson" for sale without particular item numbers because eBay previously removed two listings even though Plaintiff did not provide the item numbers. (See Hendrickson Decl., PP 7 & 10.) The first [*1092] listing, item number 1401275408, was the one that offered a VHS for sale by the seller "vidjointnyc@hotmail.com." (See id.; Richter Decl., Ex. J.) As discussed above, eBay found and removed this listing after Plaintiff sent an email complaining about this seller; this seller only had one active advertisement at the time. (See Richter Decl., P 24.) At the time, eBay had no evidence that seller vidjointnyc@hotmail.com was engaging in infringing activity; eBay simply removed the listing out of an abundance of caution. (See id.) With respect to the second listing, item number 525181519, the record is not clear as to why eBay removed the listing. Plaintiff's only "evidence" concerning this listing is a single page printout from some unidentified Internet message board that contains a post submitted by an unknown user. (See Hendrickson Decl., P 10 & Ex. J.) Plaintiff's evidence is inadmissable [**27] and his conclusion is unsubstantiated.

In sum, the record in this case shows that proper identification under Section 512(c)(3)(A)(iii) should include the specific item numbers of the listings that are allegedly offering pirated copies of "Manson" for sale. It is undisputed that Plaintiff refused to provide specific item numbers of problematic listings before filing suit. ¹² Accordingly, the Court holds that Plaintiff failed to comply substantially with Section 512(c)(3)'s identification requirement. ¹³

12 Plaintiff provided eBay a list of specific eBay item numbers of allegedly problematic listings on one occasion -- he identified them in his March 5, 2001 written response to the eBay Defendants' request for production of documents. This discovery response pre-dates the filing of Case No. 3, To the extent Plaintiff contends this discovery response constitutes sufficient notice of claims alleged in Case No. 3, the Court rejects Plaintiff's contention. The response was not under oath, it does not attest to a good faith belief that the items identified in the list are pirated copies of "Manson," and it does not attest to the accuracy of the allegations. Such a writing, without more, does not constitute adequate notice under Section 512(c)(3)(A).

13 In light of the above ruling, the Court need not address whether Plaintiff's notification satisfied the other elements set forth in Section 512(c)(3)(A), e.g., whether Plaintiff notified eBay's "designated agent." However, during the hearing on this motion, Plaintiff raised a new argument involving the "designated agent" requirement. Plaintiff argued, for the first time, that eBay should not be able to avail itself of the protections of the DMCA because its website failed to identify a "designated agent" until recently. Based on the comments made during oral argument, the Court surmises that Plaintiff's contention is premised on the belief that eBay cannot simply designate "VeRO Department" for the submission of notices of infringement; rather, eBay must identify on its website the name of an individual "agent." Because Plaintiff failed to raise this argument in his papers and failed to submit evidence in support of this argument, the Court declines to consider it. Nevertheless, the Court notes that the record shows that at all relevant times, eBay advised Plaintiff that the notices of infringement should be submitted to the attention of eBay's "VeRO Program." In its emails to Plaintiff, eBay provided a hypertext link to the notice of infringement form on eBay's website. That form identifies the address and fax number for the VeRO Program. Nothing in the DMCA mandates that service providers must designate the name of a person as opposed to a specialized department to receive notifications of claimed infringement. See 17 U.S.C. § 512(c)(2).

[**29] Consequently, eBay did not have a duty to act under the third prong of the safe harbor test. See 17 U.S.C. § 512(c)(1)(C). Thus, if eBay establishes that it meets the remaining prongs of the safe harbor test, eBay would be entitled to judgment in its favor on the copyright claims.

Under the DMCA, a notification from a copyright owner that fails to comply substantially with Sections 512(c)(3)(A)(ii), (iii) [*1093] or (iv) "shall not be considered under [the first prong of the safe harbor test] in determining whether a service provider has actual knowledge or is aware of the facts or circumstances from which infringing activity is apparent." See 17 U.S.C. § 512(c)(3)(B)(i) & (ii) (emphasis added). As discussed above, Plaintiff's written notifications do not comply substantially with Section (c)(3)(A)(ii)'s adequate identification requirement. Therefore, the Court does not consider those notices when evaluating the actual or constructive knowledge prong of the safe harbor test.

eBay's evidence shows that prior to this lawsuit, it did not have actual or constructive [**30] knowledge that particular listings were being used by particular sellers to sell pirated copies of "Manson." The limited information that Plaintiff provided to eBay cannot, as a matter of law, establish actual or constructive knowledge that particular listings were involved in infringing activity. Accordingly, the Court holds that eBay has satisfied the first prong of the safe harbor test under Section 512(c). See 17 U.S.C. § 512(c)(1)(A).

c. The Second Prong of the Test: Right and Ability to Control Infringing Activity

To satisfy the second prong of the test, eBay must show that it "does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity." 17 U.S.C. § 512(c)(1)(B) (emphasis added). Because the undisputed facts establish that eBay does not have the right and ability to control the infringing activity, the Court need not evaluate the financial benefit element of this prong.

Plaintiff's only argument on the "ability to control" issue centers on eBay's ability to remove infringing listings (1) after [**31] it receives proper notification of infringing activity and (2) upon detecting an "apparent" infringement on its own. ¹⁴ (See Opp. at 7.) Plaintiff argues that the record shows eBay has the right and ability to control the infringing activity because it has removed the listings for the sale of various items in the past, including the listings offering pirated copies of "Manson" (in response to Plaintiff's complaints). Plaintiff's argument has no merit.

14 In December 2000, eBay voluntarily began searching its website daily, on a limited basis, for listings that appear on their faces to be infringing -- "apparent" infringements. (See Richter Decl., P 13.) eBay conducts these searches using generic key words such as "bootleg," "pirated," "counterfeit," and "taped off TV" that may indicate potentially infringing activity. If eBay's staff determines that a seller appears to be offering infringing goods for sale, eBay would remove the listing from its website, notify the seller that the listing has been removed, refund the fees paid for that listing and review the seller's account for possible suspension. (See id.)

[**32] First, the "right and ability to control" the infringing activity, as the concept is used in the DMCA, cannot simply mean the ability of a service provider to remove or block access to materials posted on its website or stored in its system. To hold otherwise would defeat the purpose of the DMCA and render the statute internally inconsistent. [HN14] The DMCA specifically requires a service provider to remove or block access to materials posted on its system when it receives notice of claimed infringement. See 17 U.S.C. §§ 512(c)(1)(C). The DMCA also provides that the limitations on liability only apply to a service provider that has "adopted and reasonably implemented . . . a policy that provides for the termination in appropriate circumstances of [users] of the service provider's system or network who are repeat infringers." See 17 U.S.C. § 512(i)(1)(A). Congress could not have intended for [*1094] courts to hold that a service provider loses immunity under the safe harbor provision of the DMCA because it engages in acts that are specifically required by the DMCA.

Second, eBay's voluntary practice of engaging in limited monitoring of its [**33] website for "apparent" infringements under the VeRO program cannot, in and of itself, lead the Court to conclude that eBay has the right and ability to control infringing activity within the meaning of the DMCA. The legislative history shows that Congress did not intend for companies such as eBay to be penalized when they engage in voluntary efforts to combat piracy over the Internet:

This legislation is not intended to discourage the service provider from monitoring its service for infringing material. Courts should not conclude that the service provider loses eligibility for limitations on liability under section 512 solely because it engaged in a monitoring program.

Moreover, as Plaintiff acknowledges, the infringing activities at issue are the sale and distribution of pirated copies of "Manson" by various eBay sellers -- which are consummated "offline" -- and not the display of any infringing material on eBay's website. (Reply at 3.) Viewing the term "infringing activity" in this context, the undisputed facts demonstrate that eBay does not have the right and ability to control such activity.

Unlike a traditional auction [**34] house, eBay is not actively involved in the listing, bidding, sale and delivery of any item offered for sale on its website. eBay's evidence shows that it does not have any control over the allegedly infringing items -- the pirated films. (See Richter Decl., PP 7, 33 & 34.) The evidence also shows that eBay never has possession of, or opportunity to inspect, such items because such items are only in the possession of the seller. (See id.) When auctions end, eBay's system automatically sends an email to the high bidder and the seller identifying each other as such. (See id. at P 7.) After that, all arrangements to consummate the transaction are made directly between the buyer and seller. (See id.) eBay has no involvement in the final exchange and generally has no knowledge whether a sale is actually completed (i.e., whether payment exchanges hands and the goods are delivered). (See id.) If an item is sold, it passes directly from the seller to the buyer without eBay's involvement. (See id.) eBay makes money through the collection of an "insertion fee" for each listing and a "final value fee" based on a percentage of the highest bid amount at the end of the [**35] auction. (See id. at P 8.)

Plaintiff offers no evidence that establishes the existence of a triable issue of fact on the "ability to control the infringing activity" issue. Accordingly, the Court hold that the record shows that eBay does not have the right and ability to control the infringing activity at issue.

Because eBay has established that it meets the test for safe harbor under Section 512(c), eBay is entitled to summary judgment in its favor on the copyright claims.

The copyright claims against eBay's employees, Richter and Whitman, are based solely on alleged acts and omissions committed in the course and scope of their employment with eBay. Consequently, eBay's immunity from liability for copyright infringement should also extend to Defendants Richter and Whitman. To hold that the safe harbor provision of the DMCA protects the company but not its employees for the same alleged bad acts [*1095] would produce an absurd result. Congress could not have intended to shift the target of infringement actions from the Internet service providers to their employees when it enacted the safe harbor provisions. Accordingly, [**36] the Court holds that Richter and Whitman are also entitled to summary judgment in their favor.

In Case No. 3, Plaintiff alleges that eBay, Richter and over a dozen third party sellers violated his rights under the Lanham Act, 15 U.S.C. § 1125. This claim is premised on a "printer-publisher" liability for trademark/trade dress infringement. The Court recently held that eBay and Defendant Richter would be "innocent infringers" within the meaning of 15 U.S.C. § 1114(2) even if Plaintiff were to establish infringement. See July 3, 2001 Order at 17. The Court reached this ruling in part because the undisputed facts showed that eBay had no knowledge of a potential trade dress violation before Plaintiff filed suit. See id. Because eBay and Richter [HN15] are "innocent infringers," Plaintiff's remedy is limited to an injunction against the future publication or transmission of the infringing advertisements on eBay's website. See 15 U.S.C. § 1114(2)(B).

Now, eBay argues that Plaintiff's need for such an injunction has been obviated because eBay has [**37] stopped running all the advertisements claimed to be infringing and it has no intention of running the identified advertisements in the future. See, e.g., Brown v. Armstrong, 957 F. Supp. 1293, 1303 n.8 (D. Mass 1997) (Lanham Act false advertisement claim for injunctive relief based on false statements in an infomercial was moot where the infomercial had stopped running and there were no plans to air it in the future); Stephen W. Boney Servs. Inc., 127 F.3d 821, 827 (9th Cir. 1997) (grocery store operator's claim for declaratory judgment that it had priority in use of trade name was moot where the competitor had announced that it would rename its stores). eBay's evidence shows that it has removed from its website the allegedly false and misleading advertisements identified by Plaintiff. (See Richter Decl., PP 38-44.) Plaintiff has offered no evidence that contradicts this showing.

Rather, Plaintiff argues that he is entitled to an injunction that restrains eBay "from any further displaying and or transmitting of any false and or misleading advertisements in connection with the sale/distribution of 'counterfeit' MANSON DVD's via its websites. [**38] " (Opp. at 11 (emphasis added).) In short, Plaintiff seeks an injunction enjoining any and all false and/or misleading advertisements that may be posted on eBay's website by users in the future, regardless of whether they are the basis of this lawsuit and whether they have been identified by Plaintiff.

No authority supports Plaintiff's position. Indeed, such an injunction would effectively require eBay to monitor the millions of new advertisements posted on its website each day and determine, on its own, which of those advertisements infringe Plaintiff's Lanham Act rights. As the Court previously noted, "no law currently imposes an affirmative duty on companies such as eBay to engage in such monitoring." July 3, 2001 Order at 15. Further, the Court's recent "innocent infringer" ruling was premised on the Court's determination that eBay has no affirmative duty to monitor its own website for potential trade dress violation and Plaintiff had failed to put eBay on notice that particular advertisements violated his Lanham Act rights before filing suit. The Court holds that Plaintiff is not entitled to the remedy that he seeks. The undisputed facts show that Plaintiff's Lanham Act claim [**39] for injunctive relief is moot.

Because no triable issues of material fact exist with respect to the eBay Defendants' entitlement to immunity under the DMCA, the Court hereby GRANTS the eBay Defendants' motion for summary judgment on the copyright claims. Additionally, because the undisputed facts establish that Plaintiff's Lanham Act claim is now moot, the Court hereby GRANTS eBay and Richter's motion for summary judgment on the Lanham Act claim

Michael J. ROSSI, dba Internet Movies.Com, Plaintiff-Appellant, v MOTION PICTURE ASSOCIATION OF AMERICA INC.; et al., Defendants-Appellees.

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION

The parties have filed cross-motions for summary judgment seeking a determination as to what constitutes proper use of the internet service provider safe harbor provisions of the Digital Millennium Copyright Act. The Court has read the briefing submitted by the parties and has considered the oral arguments of counsel. For the reasons set forth below, both motions will be granted in part and denied in part.

Defendants Diebold, Inc. and Diebold Election Systems, Inc. (collectively “Diebold”) produce electronic voting machines. The machines have been the subject of critical commentary.¹ Both the reliability and verification procedures of the machines have been called into question, in part because not all of the machines provide a means for verifying whether a voter’s choice has been recorded correctly. It is undisputed that internal emails exchanged among Diebold employees (the “email archive”) contain evidence that some employees have acknowledged problems associated with the machines. See Plaintiffs’ Motion for Summary Judgment, pp. 3–4. According to Diebold, the email archive also contains discussion of “the development of Diebold’s proprietary computerized election systems, as well as Diebold trade secret information, and even employees’ personal information such as home addresses and cell phone numbers.” Defendants’ Motion for Summary Judgment, p. 9. At some point early in 2003, the entire email archive was obtained and reproduced on the internet by unknown persons, giving rise to the events pertinent to the present motions.

Plaintiffs Nelson Chu Pavlosky (“Pavlosky”) and Luke Thomas Smith (“Smith”) are students at Swarthmore College(“Swarthmore”). Using internet access provided by Swarthmore, which for present purposes is considered their internet service provider (“ISP”), Pavlosky and Smith posted the email archive on various websites. See Declaration of NelsonChu Pavlosky in Support of Plaintiff’s [sic] Application for Temporary Restraining Order and for

¹ See, e.g., “Voting Machines: Good Intentions, Bad Technology,” THE ECONOMIST, Jan. 24, 2004, pp. 30–31; “Securing Electronic Voting: California Takes Steps to Safeguard System,” SAN JOSE MERCURY NEWS, Feb. 6, 2004; Tom Zeller, Jr., “Ready or Not, Electronic Voting Goes National,” NEW YORK TIMES, Sep. 19, 2004

http://www.nytimes.com/2004/09/19/politics/campaign/19vote.html?ex=1096611569&ei=1&en =c490a5e466b682e3. See also American Ass ’n of People with Disabilities v. Shelley, 324 F.Supp.2d 1120, 1128 (C.D. Cal. 2004) (upholding the decision of the Secretary of State of California to decertify and withdraw approval of some Diebold electronic voting machines on the ground that the machines were not yet “stable, reliable and secure enough to use in the absence of an accessible; voter-verified, paper audit trail”); Stuart Pfeifer, “State Joins Suit over Voting Machines,” LOS ANGELES TIMES, Sept. 8, 2004,

Preliminary Injunction (“Pavlosky PI Decl.”), ¶ 5. An on-line newspaper, IndyMedia, published an article criticizing Diebold’s electronic voting machines and containing a hyperlink to the email archive. See Plaintiffs’ Motion for Summary Judgment, p. 5. Plaintiff Online Policy Group (“OPG”) provides IndyMedia’s internet access.² OPG, in turn, obtains internet access from an upstream ISP, Hurricane Electric (“Hurricane”).

In response to the activities of Pavlosky, Smith, and IndyMedia, and in an alleged effort to prevent further public viewing of the email archive, Diebold sent cease and desist letters to many ISPs, including Swarthmore, OPG, and Hurricane, pursuant to the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”).³ Swarthmore, OPG, and Hurricane were advised that pursuant to these provisions they would be shielded from a copyright infringement suit by Diebold if they disabled access to or removed the allegedly infringing material. Swarthmore thereafter required Pavlosky and Smith to remove the email archive from their website. At the same time, Hurricane notified OPG that it might be required to terminate OPG’s internet access if IndyMedia’s hyperlink to the email archive was not removed. Hurricane agreed, however, not to act during the pendency of the present action, and consequently OPG did not disable access to or remove any material.

² OPG asserts that the “IndyMedia website resides on a webserver co-located with OPG. ‘Colocation’ means that the San Francisco IndyMedia server is not owned or controlled by OPG; it simply resides in physical premises leased from OPG alongside OPG’s own servers and utilizes OPG’s Internet connection.” Complaint, p. 3:24–27. OPG further asserts that, because it did not control the IndyMedia server, “instead only providing Internet connectivity to that computer through colocation, OPG could not comply by merely disabling or removing the hyperlink and related information demanded by Diebold. OPG’s only option to comply with the demand was to cut off IndyMedia’s Internet connectivity entirely.” Id.at 5:1–5. OPG also asserts the same reasoning with respect to its relationship with Hurricane. Id at 5:25–28. The parties do not dispute that OPG and Hurricane could have utilized the DMCA’s safe harbors had they disabled IndyMedia’s and OPG’s internet connectivity, respectively. Accordingly, for the purposes of the present litigation, the Court will assume without deciding that OPG is IndyMedia’s ISP and Hurricane is OPG’s ISP. The technical distinction does serve to illustrate the ramifications for free speech of Diebold’s demands.

³ PUB. L. NO. 105-304, 112 Stat. 2860 (1998); 17 U.S.C. § 512; Section 202 of the DMCA.

Diebold has not filed any lawsuits related to publication of the email archive. Plaintiffs Smith, Pavlosky, and OPG nonetheless seek injunctive, declaratory, and monetary relief from this Court, alleging that Diebold’s claim of copyright infringement was based on knowing material misrepresentation and that Diebold interfered with Plaintiffs’ contractual relations with their respective ISPs.⁴ Plaintiffs seek a judicial declaration that publication of the email archive, hosting or providing colocation services to websites that link to allegedly infringing material, and providing internet services to others who host websites that link to allegedly infringing material are lawful activities. They request an injunction to prevent Defendants from threatening or bringing any lawsuit for copyright infringement with respect to the email archive arising from the publication, linking, or hosting services described in the complaint and a judgment barring Defendants from enforcing any copyright in the email archive unless and until Defendants’ alleged copyright misuse has ceased. They also seek $5,185.50 in damages⁵ and attorneys’ fees pursuant to 17 U.S.C. § 512(f) for Diebold’s alleged misrepresentation or as otherwise allowed by law, as well as costs and disbursements.

A motion for summary judgment should be granted if there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c)); Anderson v. Liberty Lobby, Inc., 477 U.S 242, 247–48 (1986). Material facts are those that may affect the outcome of the case. Anderson, 477 U.S.at 248. There is a genuine dispute if there is sufficient evidence for a reasonable jury to return a verdict for the nonmoving party.

⁴ The complaint also includes a claim for alleged copyright misuse. Diebold argues that copyright misuse may be asserted solely an affirmative defense to a claim of copyright infringement. Plaintiffs cite no legal authority, and the Court is aware of none, that allows an affirmative claim for damages for copyright misuse. Plaintiffs appear to have withdrawn this cause of action. See Transcript of Law & Motion Hearing, February 9, 2004, p. 7:2–5.

Id. Summary judgment thus is not appropriate if the nonmoving party presents evidence from which a reasonable jury could resolve the material issue in his or her favor. Barlow v. Ground, 943 F.2d 1132, 1136 (9th Cir. 1991). However, the more implausible the claim or defense asserted by the nonmoving party, the more persuasive its evidence must be to avoid summary judgment. Jackson v. Bank of Hawaii, 902 F.2d 1385, 1389 (9th Cir. 1990).

The moving party bears the initial burden of informing the Court of the basis for the motion, and identifying portions of the pleadings, depositions, answers to interrogatories, admissions, or affidavits that demonstrate the absence of a triable issue of material fact. Celotex Corp. v. Catrett, 477 U.S.317, 323 (1986). If the moving party meets its initial burden, the burden shifts to the nonmoving party to present specific facts showing that there is a genuine issue of material fact for trial. FED. R. CIV. P. 56(e); Celotex Corp., 477 U.S. at 324. The evidence and all reasonable inferences therefrom must be viewed in the light most favorable to the nonmoving party. T. W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass ’n, 809 F.2d 626, 630–31 (9th Cir. 1987).

Copyright laws are enacted pursuant to Article 1, Section 8 of the Constitution, which provides that “[t]he Congress shall have Power . . . to Promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.” The elements of a copyright infringement claim are: (1) ownership of a valid copyright and (2) copying⁶ of expression protected by that copyright. See 17 U.S.C. § 106(1); Triad Sys. Corp. v. Southeastern Express Co., 64 F.3d 1330, 1335 (9th Cir. 1995). To be liable for direct infringement, one must “actively engage in” and “directly cause” the copying. See Religious Tech. Ctr. v. Netcom On-Line Communication Servs., Inc., 907 F.Supp. 1361 (N.D. Cal.1995).

⁶ Distribution, preparation of derivative works, performance, and public display also may constitute copyright infringement. See 17 U.S.C. § 106. The modes of infringement listed in 17 U.S.C. § 106 may “overlap” in the cyberspace context. See Mark A. Lemley, Dealing with Overlapping Copyrights on the Internet, 22 U. DAYTON L. REV. 547 (1997).

There is no statutory rule of liability for contributory infringement. However, courts recognize such liability when the defendant “with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another.” Gershwin Publ ’g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2nd Cir. 1971). “Such participation must be substantial.” Religious Tech. Ctr., 907 F.Supp. at 1361. The party alleging contributory infringement must show “(1) direct infringement by a primary infringer, (2) knowledge of the infringement, and (3) material contribution to the infringement.” Metro-Goldwyn-Mayer Studios, Inc. v. Grokster Ltd., 380 F.3d 1154, 1160 (9th Cir. 2004). A defendant may be liable under a vicarious liability theory if the plaintiff demonstrates “(1) direct infringement by a primary party, (2) a direct financial benefit to the defendant, and the right and ability to supervise the infringers.” Id.at 1164.

Copyright protection sometimes appears to conflict with First Amendment protections. This conflict is ameliorated in part by various copyright doctrines. For example, consistent with the “idea-expression” dichotomy, expression, but not an idea, is copyrightable. See 17 U.S.C. § 102(b); Eldred v. Ashcroft, 537 U.S.186, 219 (2003); Baker v. Seldin, 101 U.S.99 (1879). Similarly, copyright law protects only creative works, not facts. See, e.g., Feist Publ ’ns, Inc. v. Rural Tel. Serv. Co., Inc., 499 U.S.340, 349 (1991). Finally, fair use is not infringement of a copyright. See 17 U.S.C. § 107; Campbell v. Acuff-Rose Music, Inc., 510 U.S.569 (1994); Harper & Row Publishers, Inc. v. Nation Enters., 471 U.S.539 (1985). Section 107 provides:

Notwithstanding the provisions of sections 106 and 1 06A, the fair use of a copyrighted work, including such use by reproduction in copies or phonorecords or by any other means specified by that section, for purposes such as criticism,

comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include--

(1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes;

(3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and

(4) the effect of the use upon the potential market for or value of the copyrighted work

The Supreme Court has clarified that copyright laws should be designed to promote creativity by protectingonly creative work and, then, only for a limited time.

A limited grant is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.

Sony Corp. of Am. v. Universal City Studios, Inc., 464 U.S.417, 429 (1984); see also Eldred, 537 U.S.186.

Section 202 of the DMCA contains various nonexclusive⁷ safe harbors designed to limit the liability of ISPs⁸ for incidental acts of copyright infringement. It provides immunity to ISPs that satisfy the conditions of eligibility, see 17 U.S.C. § 5 12(i),⁹ “from copyright infringement liability for ‘passive,’ ‘automatic’ actions in which [an ISP’s] system engages through a technological process initiated by another without the knowledge of the” ISP. ALS Scan, Inc. v. RemarQ Communities, Inc., 239 F.3d 619, 625 (4th Cir. 2001). Once the ISP has actual knowledge of the infringing material, it loses the safe harbor protections unless it complies with the DMCA.

⁷ Nothing in the DMCA suggests that Congress intended this statute to constitute the exclusive legal basis for protecting a copyright or defending against allegations of infringement. In fact, 17 U. S.C. § 512(l) provides that “failure to . . . qualify for limitation of liability under this section shall not bear adversely upon the consideration of . . . any other defense.”

⁸ The DMCA provides two definitions of “service provider.” The first, which applies to section 512(a), is “an entity offering the transmission, routing, or providing connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received.” 17 U.S.C. § 512(k)(1)(A). The second, which applies to the rest of section 512, is “a provider of online services or network access, or the operator of facilities therefor, and includes an entity described in [17 U.S.C. § 512(k)(1)(A)].” 17 U.S.C. § 512(k)(1)(B). “Service provider” thus is defined more narrowly with respect to the “conduit” safe harbor provision.

⁹ The parties do not dispute that Hurricane, OPG, and Swarthmore had valid section

5 12(i) policies. See, e.g., Complaint, p. 5:20–23 & Ex. D (email from Ralph E. Jocke), although there is no evidence in the record as to this point with respect to OPG and Swarthmore. The Court will assume without deciding that all parties had valid section 5 12(i) policies.

17 U.S.C. § 512(a)—the “conduit” safe harbor—does not require notice and takedown of any content. Instead, an ISP is not liable for “transmitting, routing, or providing connections, for material through a system or network controlled or operated by or for the service provider” if the ISP did not (1) initiate the transmission, (2) select the material in a nonautomatic way, (3) select the recipients in a nonautomatic way, (4) retain a copy for longer than necessary to transmit it, and (5) modify the material. 17 U.S.C. § 512(a). In contrast, section 512(c)—the “storage” safe harbor—does require notice and takedown of allegedlyinfringing material. This provision

gives Internet service providers a safe harbor from liability for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider as long as the service provider can show that: (1) it has neither actual knowledge that its system contains infringing materials nor an awareness of facts or circumstances from which infringement is apparent, or it has expeditiously removed or disabled access to infringing material upon obtaining actual knowledge of infringement; (2) it receives no financial benefit directly attributable to infringing activity; and (3) it responded expeditiously to remove or disable access to material claimed to be infringing after receiving from the copyright holder a notification conforming with requirements of § 512(c)(3).

ALS Scan, Inc., 239 F.3d at 623 (internal citation omitted). 17 U.S.C. § 512(d) provides a similar safe harbor from liability for copyright infringement resulting from use of “information location tools,” which include “hypertext links” (“hyperlinks”). Section 512(g) provides for replacement of the removed material upon counter-notice by the alleged infringer. Upon counter-notice of noninfringement by an ISP subscriber, the ISP may reestablish access to the content without fear of liability. Such replacement generally must be performed within approximately fourteen days. See 17 U.S.C. § 512(g)(2)(C).¹⁰

¹⁰ Although section 512(g) refers to section 512(c), it does not refer expressly to section 512(d). Courts nonetheless have held that the replacement procedure of section 512(g) applies to takedown pursuant to section 5 12(d). See, e.g., Perfect10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146, 1179 (C.D. Cal. 2002).

(2) that material or activity was removed or disabled by mistake or misidentification,

shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright owner's authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the removed material or ceasing to disable access to it.

Thus, any person who sends a cease and desist letter with knowledge that claims of infringement are false may be liable for damages.

Diebold has represented to the Court that it has withdrawn and in the future will not send a cease and desist letter pursuant to the DMCA to any ISP concerning the email archive. See Response to Plaintiffs’ Post-Hearing Letter and Supplemental Ng Declaration, dated November 24, 2003, p. 1; Transcript of Law & Motion Hearing, February 9, 2004, pp. 3:24–4:3. Because no actual controversy remains¹¹ with respect to prevention of publication of the email archive, see 28 U.S.C. § 2201; Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, 300 U.S. 227 (1937), Plaintiffs’ claims for an injunction and declaratory relief are moot.¹² However, Plaintiffs’ claims

¹¹ Plaintiffs appear to have conceded at oral argument that their claims for injunctive and declaratory relief are moot and that a decision on their claims for damages will be a sufficient adjudication of their rights. See Transcript of Law & Motion Hearing, February 9, 2004, pp. 5:21–23, 6:22–24, 7:6–12, 10:4–9.

¹² The Court also notes that in view of Grokster, a general declaration that hyperlinking to infringing material does not amount to contributory infringement or subject one to vicarious liability would be improper. Although hyperlinking per se does not constitute direct copyright infringement because there is no copying, see, e.g., Ticketmaster Corp. v. Tickets.com, Inc., 2000 WL 525390 (C.D. Cal., March 27, 2000), in some instances there may be a tenable claim of contributory infringement or vicarious liability. See, e.g., Grokster, 2004 WL 1853717 at *3 (9th Cir., Aug. 19, 2004) at *6 (If an alleged contributory infringer is a “true access provider[], failure to disable . . . access after acquiring specific knowledge of a user’s infringement might be material contribution.”); Religious Tech. Ctr., 907 F.Supp. at 1361; A&M Records, Inc. v. Napster, Inc., 139 F.3d 1004, 1021–22 (9th Cir. 2001). In this context, it is notable that the DMCA provides ISPs a safe harbor (17 U.S.C. § 5 12(d)) from liability for copyright infringement resulting from “information location tools.”

At the hearing on Plaintiffs’ motion for preliminary injunction, Diebold’s counsel asserted that portions of the email archive contain material that is copyrighted and has no “public interest” value. Transcript of Law and Motion Hearing, November 17, 2003, p. 8:7–12. However, Diebold did not identify and has never identified specific emails that contain copyrighted content, and thus it has not provided evidence to support its counsel’s assertion. See, e.g., id. at 10. At the same time, Diebold appears to have acknowledged that at least some of the emails are subject to the fair use doctrine. See, e.g., id. at 12:8–9 & 14–16.

The purpose, character, nature of the use, and the effect of the use upon the potential market for or value of the copyrighted work all indicate that at least part of the email archive is not protected by copyright law. The email archive was posted or hyperlinked to for the purpose of informing the public about the problems associated with Diebold’s electronic voting machines. It is hard to imagine a subject the discussion of which could be more in the public interest. If Diebold’s machines in fact do tabulate voters’ preferences incorrectly, the very legitimacy of elections would be suspect. Moreover, Diebold has identified no specific commercial purpose or interest affected by publication of the email archive, and there is no evidence that such publication actually had or may have any affect on the putative market value, if any, of Diebold’ s allegedly copyrighted material. Even if it is true that portions of the email archive have commercial value, there is no evidence that Plaintiffs have attempted or intended to sell copies of the email archive for profit. Publishing or hyperlinking to the email archive did not prevent Diebold from making a profit from the content of the archive because there is no evidence that Diebold itself intended to or could profit from such content. At most, Plaintiffs’ activity might have reduced Diebold’s profits because it helped inform potential customers of problems with the machines. However, copyright law is not designed to prevent such an outcome. See, e.g., Acuff-Rose, 510 U.S.at 59 1–92. Rather, the goal of copyright law is to protect creative works in order to promote their creation. To the extent that Diebold argues that publication of the entire email archive diminished the value of some of its proprietary software or systems information, it must be noted that there is no evidence that Plaintiffs published or linked to the archive in order to profit.¹³ Finally, Plaintiffs’ and IndyMedia’s use was transformative: they used the email archive to support criticism that is in the public interest, not to develop electronic voting technology. Accordingly, there is no genuine issue of material fact that Diebold, through its use of the DMCA, sought to and did in fact suppress publication of content that is not subject to copyright protection. ¹⁴

Plaintiffs argue that Diebold “knowingly materially misrepresented” that publication of the email archive constituted copyright infringement and thus is liable for damages pursuant to 17 U.S.C. § 512(f). The parties dispute the meaning of the phrase “knowingly materially misrepresents.” Plaintiffs argue that a type of preliminary injunction standard should be applied. That is, the Court should conclude that Diebold violated section 512(f) if it did not have a

¹³ The fact that Diebold had not published the email archive is not dispositive. The “first publication right” permits the creator to control the final expression of the published work. There is no such interest here, in the context of an archive of fact-based or proprietary emails. Because Diebold clearly has indicated that it never intended to publish the emails, the fact that the email archive was unpublished does not obviate application of the fair use doctrine.

¹⁴ Even if Diebold is correct that some individual emails may contain only proprietary software code or information concerning Diebold’s voting systems and thus is subject to copyright protection, there nonetheless is no genuine issue of material fact that publication of some of the email archive does not amount to copyright infringement. Plaintiffs additionally have argued that they were required to post the entire email archive because Diebold has accused Plaintiffs and others of taking individual emails out of context. See Plaintiffs’ Motion for Summary Judgment, p. 12. Significantly, Diebold does not identify which of the more than thirteen thousand emails support its argument.

“likelihood of success” on the merits of a copyright infringement claim when it sent the DMCA letters. Diebold contends that the Court should apply a type of Federal Rule of Civil Procedure 11 (“Rule 11”) standard and thus conclude that Diebold did not violate section 512(f) unless sending the DMCA letters was “frivolous.” Because the DMCA is of relatively recent vintage, the issue appears to be one of first impression.

The Court concludes that neither standard is appropriate. A requirement that a party have an objectively measured “likelihood of success on the merits” in order to assert claims of copyright infringement would impermissibly chill the rights of copyright owners. At the same time, in requiring a showing of “knowing material misrepresentation,” Congress explicitly adopted a standard different from that embodied in Rule 11, which contains a variety of other requirements that are not necessarily coextensive with those set forth in section 12(f). The Court concludes that the statutory language is sufficiently clear on its face and does not require importation of standards from other legal contexts. A party is liable if it “knowingly” and “materially” misrepresents that copyright infringement has occurred. “Knowingly” means that a party actually knew, should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith, that it was making misrepresentations. See BLACK’S LAW DICTIONARY (8th ed. 2004) (definitions of “knowledge,” in particular, “actual” and “constructive” knowledge). “Material” means that the misrepresentation affected the ISP’s response to a DMCA letter. See id.

Applying this standard and in light of the evidence in the record, the Court concludes as a matter of law that Diebold knowingly materially misrepresented that Plaintiffs infringed Diebold’s copyright interest, at least with respect to the portions of the email archive clearly subject to the fair use exception. No reasonable copyright holder could have believed that the portions of the email archive discussing possible technical problems with Diebold’s voting machines were protected by copyright, and there is no genuine issue of fact that Diebold knew—and indeed that it specifically intended¹⁵—that its letters to OPG and Swarthmore would result in prevention of publication of that content. The misrepresentations were material in that they resulted in removal of the content from websites and the initiation of the present lawsuit. The fact that Diebold never actually brought suit against any alleged infringer suggests strongly that Diebold sought to use the DMCA’s safe harbor provisions—which were designed to protect ISPs, not copyright holders—as a sword to suppress publication of embarrassing content rather than as a shield to protect its intellectual property.

Plaintiffs also claim that, through its inappropriate use of the DMCA, Diebold interfered with their contractual relations with their respective ISPs. Under California law, the elements of intentional interference with contractual relations are: (1) a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of this contract; (3) intentional acts designed to induce a breach or disruption of the contractual relationship; (4) actual breach or disruption of the relationship; and (5) resulting damage. See Quelimane Co. v. Stewart Title Guar. Co., 19 Cal.4th 26 (1998). As an affirmative defense to a charge of tortious interference with contract, a defendant may show that its actions were justified. See A.F. Arnold & Co. v. Pacific Prof’l Ins., Inc., 104 Cal.Rptr. 96, 99 (1972).

One who, by asserting in good faith a legally protected interest of his own or threatening in good faith to protect the interest by appropriate means, intentionally causes a third person not to perform an existing contract or enter into a prospective contractual relation with another does not interfere improperly with the other’s relation if the actor believes that his interest may otherwise be impaired or destroyed by the performance of the contract or transaction.

The test of whether there is justification for conduct which induces a breach of contract turns on a balancing of the social and private importance of the objective advanced by the interference against the importance of the interest interfered with, considering all the circumstances including the nature of the actor’s conduct and the relationship between the parties.

¹⁵ Indeed, Diebold’s counsel stated that “the DMCA provides the rapid response, the rapid remedies that Congress had in mind.” Law & Motion Hearing, November 17, 2003, p. 30:6–8.

Diebold argues that Plaintiffs cannot prevail on their interference with contract claim because: (1) Pavlosky and Smith have not shown that they had a contract with Swarthmore; (2) Swarthmore’s compliance with the DMCA does not constitute breach of contract; (3) OPG has not demonstrated that there has been any breach or disruption of its contract with Hurricane; (4) Hurricane’s contract with OPG permits it to comply with the DMCA; (5) seeking to protect one’s copyright does not constitute interference with a contract; and (6) the state law is preempted if it is applied in such a manner as to prevent a party from complying with the DMCA.

The Court agrees with Diebold that on the facts of this case the claim is preempted. Preemption occurs “when compliance with both state and federal [laws] is a physical impossibility or when state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” Hillsborough County Fla. v. Automated Med. Labs. Inc., 471 U.S.707, 713 (1985) (internal citations omitted); see also In re Cybernetics Servs., Inc., 252 F.3d 1039, 1045 (9th Cir. 2001) (internal citation omitted).

Even if a copyright holder does not intend to cause anything other than the removal of allegedly infringing material, compliance with the DMCA’s procedures nonetheless may result in disruption of a contractual relationship: by sending a letter, the copyright holder can effectuate the disruption of ISP service to clients. If adherence to the DMCA’s provisions simultaneously subjects the copyright holder to state tort law liability, there is an irreconcilable conflict between state and federal law. To the extent that Plaintiffs argue that there is no conflict because Diebold’s use of the DMCA in this case was based on misrepresentation of Diebold’s rights, their argument is undercut by the provisions of the statute itself. In section 512(f), Congress provides an express remedy for misuse of the DMCA’s safe harbor provisions. It appears that Congress carefully balanced the competing interests of copyright holders, ISPs, and the public, by providing immunity subject to relief for any misuse of the statute. Accordingly, Diebold’s motion will be granted as to Plaintiffs’ state law claim.

(1) Plaintiffs’ causes of action for injunctive and declaratory relief and for copyright misuse are deemed moot;

(2) Plaintiffs’ motion is GRANTED with respect to their claim pursuant to 17 U.S.C. § 512(f) and otherwise is DENIED;

(3) Diebold’s motion is GRANTED as to Plaintiffs’ state law claim for tortious interference with contractual relations and otherwise is DENIED; and

(4) Within ten (10) days of the date that this Order is filed, Plaintiffs shall submit a brief addressing the monetary relief, including attorneys’ fees and costs, to which they belief they are entitled pursuant to 17 U.S.C. § 512(f) . Diebold may file an opposition brief within ten (10) days after service of Plaintiffs’ brief. Plaintiffs may file a reply brief within five (5) days after service of Diebold’s opposition brief. The matter thereafter shall stand submitted.