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I really really really can't wait to tell you about this case we're Charter Cable like the cable company charter is being sued by everyone this is a community supported legal education channel find out how you can support our mission at the links in the description below this is in the district of Colorado this is a federal district court and just go through this with me here for a moment I'm just gonna zoom in a little we'll zoom back out but go with go through this with me here for a second we've got Warner Brothers and then all of these corporations all of these plaintiffs suing Charter Communications and this is the recommendation of United States and Magistrate Judge Michael E Haggerty a United States Magistrate Judge is not the judge for your case they will issue a report and recommendations or something like that so these are the recommendations of the Magistrate Judge Michael Haggerty this action arises out of the alleged secondary infringement by the defendant of the plaintiffs copyrighted musical compositions and sound recordings plaintiffs allege defendant infringed on their copyrighted works by contributing to its subscribers remember this is Charter its subscribers direct infringement which they then call contributory infringement so yes okay so how what do they mean they're the subscribers direct infringement was contributed to by charter is the accusation so that's called contributory infringement and by profiting from subscribers infringement while declining to stop or limit it and they're calling that vicarious infringement on a motion to dismiss the vicarious infringement claims it seems like only for the reasons that follow this court respectfully recommends that the defendants motion to dismiss be denied so the vicarious infringement claim would be allowed to continue and that is the recommendation the judge is already telling you that he's going to deny the dismissal of the vicarious infringement claim meaning the vicarious infringement claims stands along with the contributory infringement claim but we're still at the beginning of the lawsuit statement effects remember we're on a motion to dismiss so we are taking facts to be true if the facts have inferences that need to be read if there's some ambiguity or something it's going to be read in favor of the plaintiff the non-moving party plaintiffs are record companies and music publishers that produce a manufacture distribute sell licensed commercial sound recordings and musical compositions through substantial investments of money time and creative effort plaintiffs and the recording artists and songwriters they represent all of them have developed and marketed the music and recordings listed on the attachments to the complaint all of which have been registered with the Copyright Office collectively plaintiffs owner control millions of musical compositions which is their primary source of income Charter is one of the largest internet service providers with 22 million subscribers nationwide defendant provides high-speed Internet access for a subscription fee with a tiered pricing structure prescribers can purchase higher download speeds for higher monthly fees in recent years plaintiffs have become aware of persons infringing their copyrighted works through online peer-to-peer file-sharing programs such as BitTorrent BitTorrent is a file sharing protocol that allows users to transfer music and other files directly to one another over the Internet what makes BitTorrent unique from other file sharing programs is that it facilitates much faster downloading by breaking each file into pieces allowing users to download different pieces from different peers simultaneously at the same time the system allows users to begin disseminating the copyrighted content or whatever downloaded content it doesn't have to be copyrighted content there are legitimate uses for doubt for for downloading there are legitimate uses for BitTorrent for disseminating the copyrighted content before that the complete file has even been downloaded this means that at any given time each user connected to the Internet can be both downloading and uploading different pieces of a file from and to multiple they're users once a user has downloaded all the pieces the file is automatically reassembled into its complete form this is just a explanation of how BitTorrent works the efficiencies gained from this type of file sharing have led to significant online piracy a January 2011 report estimated that eleven point four percent of all Internet traffic at the time involved the unauthorized distribution of copyrighted works through BitTorrent alone at least according to the judge in this report in a report from 2013 net names estimated that 99.97% of non-and files distributed via BitTorrent infringe on copyrights I don't understand why the by the other ones wouldn't either I mean we know what I do for a living right further in a well-publicized incident in 2015 millions of individual BitTorrent users downloaded an episode of Game of Thrones within just 24 hours of its airing this is absolutely true we know that Game of Thrones is the most popular pirated content in the history of pirated content or at least it was I don't know what what might have overtaken it if anything did yet let me know too because I want to know what shows are good plaintiffs own copyrighted works have been distributed millions of times through BitTorrent depriving plaintiff of untold millions of dollars in legitimate music sales defendant seeks to draw subscribers to its high-speed Internet service including subscribers who may wish to illegally distribute and download music through programs such as BitTorrent by touting blazing fast speeds that allow you to download just about anything instantly including up to 8 songs in three seconds subscribers in turn have utilized these speeds to private plaintiffs works for example between 2012 and 2015 plaintiffs and their representatives identified hundreds of thousands of specific instances in which defendants subscribers utilized peer-to-peer systems to distribute and copy plaintiffs songs illegally tens of thousands of these subscribers were serial infringers with some pirating hundreds of plaintiffs songs over the course of several months defendant ignored the hundreds of thousands of a statutory infringement notices that's one zero zero zero zero zero hundreds of thousands of infringement notices were ignored by defendant allegedly and according to the court here taking all facts you know in light phones favorable to the non-moving party defendant ignored hundreds of thousands of infringement notices that plaintiffs and others submitted to it under penalty of perjury each of which detailed specific acts of infringement committed by specific subscribers identified by their unique IP addresses they go into the Terms of Service about how the defendants Terms of Service expressly prohibit users from engaging in copyright infringement and defendant has failed to address repeated infringement that occurs on its network defendant does not want to lose the revenue generated from these infringing subscribers by terminating their accounts nor risk the possibility that account terminations would make its service less attractive to other existing or prospective users defendant does not want to devote the resources necessary to track repeat infringers and respond to infringement notices do you guys remember the Cox case that we reported on about a year and a half two years ago where Cox Communications what was that in in Texas I think I forget where it was but they weren't they didn't implement a repeat infringer policy so they lost their safe harbor safe harbor from what from the copyright infringement of their users they were not they were not liable for facilitating the copyright infringement of their users because of a very clear law about them being in a safe harbor well they didn't implement the law of the safe harbor so they lost the safe harbor and and literally they got sued for what was in billions of dollars and they ended up having to settle for many millions if not like a billion or some dollars I refer for their what the final amount was in there anybody remember so defendants refusal to terminate infringing users accounts acts as a further draw to its service as subscribers come to understand that they can download music and other files illegally over defendants Network without fear of being terminated the specific infringing subscribers identified in plaintiffs notices knew that defendant would not terminate their accounts despite defendants receipt of multiple notices identifying them as infringers and they remained defendant subscribers to continue illegally downloading copyrighted works defendants conduct encourages its customers to purchase even more bandwidth from the company and to continue using and paying subscription fees for defendants services when defendants subscribers use its network to obtain infringing copies of plaintiffs works illegally that activity undercuts the legitimate music market depriving plaintiffs and those recording artists and songwriters whose works plaintiffs sell and license of the compensation to which they are entitled without such compensation plaintiffs and the recording artists and songwriters have fewer resources available to invest in the further creation and distribution of high-quality music so they go into the twelve B six motion to dismiss standard a complaint must contain sufficient factual matter accepted as true to state a claim to relief that is plausible on its face and that is the Ashcroft V Iqbal Bell Atlantic V Twombly standard those 2009 and 2007 cases for the from the Supreme Court and those are very important jurisdictional cases and that's why we always repeat that a plausibility means that the plaintiff plead facts which allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged this is not a finding that they are liable this is a finding that the cases is ripe enough to proceed ripe is a bad word because that's another term of art that means something else but it is it is correct here in the sense that the case is ripe at that point but that's not right this isn't the standard for a motion to dismiss you could actually just you could actually file a motion to dismiss if something was moot or not ripe how about that Twombly is a two prong analysis a court must identify the allegations in the complaint which are not entitled to the assumption of truth that is those allegations which are legal conclusions they are assertions merely conclusion so though don't get a assumption of truth and second the court must consider the factual allegations to determine if they plausibly suggest an entitlement to relief if there is a plausible claim for relief properly stated the claim survives the motion to dismiss I'm gonna skip ahead a little bit here the present motion seeks an order dismissing plaintiffs count two for vicarious copyright infringement the Tenth Circuit has determined that a defendant can be secondarily liable for another's copyright infringement under principles of a vicarious and contributory liability vicarious liability attaches when the defendant has the right and ability to supervise the infringing activity and has a direct financial interest in such activities one infringes vicariously by profiting from direct infringement while declining to exercise a right to stop or limit it let me highlight that I'm gonna use that the next time that posing counsel tells me that my ISP defendants are liable defendant may be vicariously liable even when he or she is not aware of the infringing activity vicarious liability Theory allows imposition of liability even if the defendant initially lacks knowledge of the infringement but there must be a showing that someone directly infringed a copyright for vicarious liability to attach both contributory and if I carious infringement require someone to have directly infringe so you can't just sue for vicarious liability and not have to prove the underlying copyright infringement here defendants contend that plaintiffs fail to allege a causal connection between the alleged infringement and its profits and thus fail to show a direct financial interest and to that defendant maintained the right and ability to control infringement by its subscribers the court will address both direct financial interest comes first citing cases from the ninth circuit defendant argues that plaintiffs allegations failed to demonstrate plaintiff derived direct financial benefits from any infringement specifically defendant asserts that the alleged subscription fees defendant charges the infringing users constitute an indirect benefit the infringing activity must be more than an added benefit to a subscription it must be the attracting factor the draw for its subscribers defendant contends that it the only benefit it receives is a flat fee for the provision of Internet services which is insufficient to state a claim according to defendant at most plaintiffs assert that subscribers are able to utilize their internet connection for illegal activity as an added benefit to the subscribers not the draw I would also add in there that they probably don't advertise you can infringe on copyrights by coming to our service or you can use BitTorrent to download the recording industry's music I don't think that's how they advertise it so I mean I'm I get what they're saying let's continue plaintiffs counter that defendant misstates the financial benefit standard plaintiffs contend that the standard is permissive and imposes liability even for remote and unquantifiable benefits plaintiffs also argue that defendant misinterprets the Ellison case in that flat periodic fees can undo constitute direct financial benefits when the value of a defendant's service lies in providing access to infringing material again though they don't provide the access to infringing material they provide access to the Internet the infringing material is then further through on the Internet I I imagine this is going to be part of their arguments further on down the line since they've lost here played disc conclude their allegations that charter drew infringers to its service by touting specific features of his service that are attractive to copyright infringers and by adopting a policy of not enforcement and that these features motivated a subset of users to sign up for and remain with the company together with allegations that Charter has a financial incentive not to terminate the accounts of infringing users an allegation but risk by the fact that Charter has declined to terminate users accounts despite receiving repeated notices of specific users infringement are sufficiently plausible to state the direct financial interest element of a vicarious liability claim longest run sentence ever of lawful masses I think Michael Haggerty just wanted there that was what was one sentence I think this whole thing somebody somebody to come with me here go with min now this is one whole sentence right that whole thing is one sentence good job judge Haggerty the Court finds plaintiffs allegation taken as true at this early stage of litigation plausibly states that defendant has a direct financial interest in the alleged infringing activity defendant is correct the Tenth Circuit has cited opinions from the ninth when addressing vicarious infringement claims however no case in the Tenth Circuit has cited perfect 10 v giga news on which defendant primarily relies the court nevertheless in perfect 10 confirmed that a financial benefit exists where the availability of infringing material acts as a draw for customers and the size of the draw relative to a defendant's overall business is immaterial the court concluded that the essential aspect of the direct financial benefit inquiry is whether there is a causal relationship between the infringing activity and any financial benefit a defendant reaps regardless of how substantial the benefit is in proportion to a defendant's overall profits so it almost sounds like my argument from a minute ago that they are promoting infringing activity doesn't matter doesn't matter doesn't matter okay the perfect 10 court also noted in its analysis of Ellison which has been cited by the Tenth Circuit emphasizing the difference between a defendant's receipt of financial benefits from infringement of the plaintiffs copyrighted works and the defendants receipt of benefits from infringement in general in Ellis and the Ninth Circuit concluded quote the record lacks evidence that AOL in that case attracted or retained subscriptions because of the infringement or lost subscriptions because of aol's eventual obstruction of the infringement in other words aol's action upon its receipt of plaintiffs complaint of blocking access to the infringing material led the court to find that plaintiff failed to demonstrate the defendant received a direct financial benefit from the infringement alleged in that case likewise in perfect 10 the court concluded that perfect-10 was required to provide evidence that customers were drawn to Gig anew services because of the infringing perfect-10 material at issue and there was no evidence indicating that anyone subscribed to giga news because of infringing perfect-10 material while the Tenth Circuit has cited Ellison and fauna visa in setting forth the elements for a secondary copyright infringement the court has not yet engaged in an analysis of the direct financial benefit prong of such a claim however citing the supreme court's opinion in Grokster well we're really good and we're getting into the copyright history here for all all of these infringement and like file-sharing cases crocks there was a file-sharing case for example perfect ten listen that wasn't one of those the thumbnail case there was up the perfect envy google i forget there's a couple perfect ten cases anyway citing the supreme court's opinion in Grokster and the Ninth Circuit's opinion in Ellison and fauna visa the district of Kansas determined that the financial benefit may be established by showing that users are attracted to a defendant's product because it enables infringement and that use of the product for infringement financially benefits the defendants so very simple it exists where the availability of infringing material acts as a draw for customers so how how do you think that attorney or law firm felt the the one copyright attorney in Kansas I'm exaggerating got the case I mean that's isn't that remarkable if there was a copyright case in Kansas I'm exaggerating I'm sure this copyright cases in Kansas all the time in the tomah Larry court the court addressed a motion for summary judgment and found that plaintiff failed to provide evidence that the alleged infringement was a draw for zazzle.com users this court michael haggerty's court and here in Warner Brothers V Charter this Court finds Tama Larry consistent with perfect-10 Ellison in Fona Visa and concludes that plaintiffs have plausibly alleged which just means that they alleged it doesn't mean they win it yet plausibly alleged the infringement of their musical compositions in sound recordings is a draw to defendants subscribers taking the allegations as true plaintiffs allege that defendants drivers are motivated by company advertisements promoting defendants high-speed service that enables subscribers to download eight songs in three seconds defendant subscribers have used such a service to pirate plaintiffs works as evidence by plaintiffs identification between 2012 and 2015 of hundreds of thousands of instances in which plaintiffs subscribers used its service to distribute plaintiffs songs illegally despite notification of subscribers infringement defendants did nothing to stop it once defendants subscribers realized that the feminine did not intend to stop or control the infringement they would purchase more bandwidth and continue using defendant service to infringe plaintiffs copyrighted works and the greater the bandwidth used for pirating content the more money that defendant made these allegations are sufficient to demonstrate a causal relationship between the infringing activity alleged in this case and any financial benefit the defendant reaps in this case defendant contends that the opinion in um G Recordings V grand communications network from February 28th 2018 in the Western District of Texas demonstrates plaintiffs allegations are insufficient to state a plausible direct financial benefit this court disagrees in Grande the court found the allegation that the availability of plaintiff's music acted as a powerful draw for users of defendants service was not sufficient and noted that there are no allegations of defendants actions in failing to adequately police their infringing subscribers is a draw to subscribers to purchase its services so that they can use those services to infringe here the plaintiffs do in fact allege that defendants failure to stop or take other action in response to notices of infringement is a draw to current and prospective subscribers the Court finds the UMG recordings opinion consistent with its conclusion that plaintiffs allegations taken as true are sufficient accordingly the court respectfully recommends that Judge Jackson the judge in this case deny defendants motion to dismiss plaintiffs vicarious liability claim based on a failure to state the direct financial benefit element of the claim okay so the court moves on to the right and ability to supervise and this is where I think charter is probably in big trouble if this is true if this is actually true and those plaintiffs can prove all of this which it I mean they wouldn't really have done this if they didn't think they could then I think charters in real trouble here let's check defendant also seeks dismissal of plaintiffs vicarious infringement claim asserting plaintiffs fail to plausibly allege defendant exercises any practical ability to control the online activity of the allegedly infringing subscribers here again the Supreme Court has determined that a claim for vicarious infringement allows imposition of liability when the defendant profits directly from the infringement and has a right or ability to supervise the direct infringer even if the defendant initially lacks knowledge of the infringement that right and ability to supervise may be found even when a defendant is not aware of the infringing activity the parties site perfect envy Amazon for the proposition that a defendant exercises control over a direct infringer when he has both a legal right to stop or limit the directly infringing conduct as well as the practical ability to do so back to granda communications which is cited by both parties that case also cites Amazon for the same proposition like the plaintiffs here UMG recordings and the other plaintiffs in that case are a collection of record companies that produce and distribute commercial sound recordings in the US and like defendant here Grande Communications is an internet service provider that provides internet access to subscribers in portions of Texas the court addressed grounded communications motion to dismiss the vicarious infringement claims and a set forth above found that plaintiffs failed to allege plausible facts supporting the direct financial benefit element of the claims however before coming to that conclusion the UMG recordings court addressed the same arguments defendant proffers here based on the right and ability to supervise element quote grande asserts that because it cannot block access to the peer-to-peer software used to infringe on the copyrights it cannot stop or limit the infringing conduct taking place by its subscribers additionally grande argues that even if it terminates subscribers such action will only indirectly affect the infringing conduct as internet access is oba quickest and the subscribers simply obtained the service from another ISP the court disagrees grande can stop or limit the infringing conduct by terminating the subscribers internet access this is clearly sufficient to state a claim on the first element of vicarious liability end quote in fact in BMG rights management the court found that defendant another internet service provider had the contractual right to condition the availability of its access to users who do not use the service to violate copyrights if users listen when Cox exercises that power infringement stops if users do not and Cox terminates them that also stops or limits the infringement the court also determined that the defendant had the practical ability to stop or limit infringement there cannot be any serious dispute that internet service is an essential component of the infringing activity alleged file-sharing programs etc it is therefore a reasonable inference that the result of an ISP exercising its ability to suspend or terminate an account stops or limits the infringement once again Michael Haggerty says that he will find those cases instructive as applied to this case and concludes that plaintiff plausibly alleges that defendant has both the legal right to stop or limit the directly infringing conduct as well as the practical ability to do so there are Terms of Service they could use to cite that and there are hundreds of thousands of notices of infringement as we've seen above so he denies the vicarious liability dismissal why in the world why one might I think that they're in hot water even if they had won that dismissal that was just the vicarious liability count and there's also a contributory liability count that doesn't seem to be dismissed so they're in pretty hot water this is likely going to go the same way as the Cox case and charters likely going to get hit with I'm guessing and guessing a multi-billion dollar judgment or settlement I mean because the judgment could be even higher it could be one of those absurd cases I don't I don't know if I can remember off top of my head but there was a case where literally the absurdity of the number was cited by the judge as a reason why the plaintiff cannot sustain a request for damages at that level it's not just a multiplier of the number of alleged infringement times the maximum statutory damages there is a number where it can reach too high I think it was in the trillions of dollars it was more than the gross domestic product or gross world product of the entire world basically so what do you think of that let us know your thoughts in the comments below I think charter is going to suffer a multi-billion dollar settlement I think is I think I think that's what we just read I think that's what's going to happen I'm glad that I'm reading it and I'm not the one suffering the multi-billion dollar settlement so terminate your you're infringing subscribers when you receive notices ISPs that's actually important three strikes and you're out I think is the way it works talk to your attorneys don't talk to me unless you want me to be your attorney that you can talk to me yeah not 12 Cox what happens in cases when the ISP is is like the only ISP in the area and is you know has to deal with the city where they're basically not a lot of terminate service for the video had the option actually terminate I mean if I was a defense attorney and in one of these cases I would definitely cite that as well Your Honor I I can't terminate this person there were the only ISP in the area and we are under orders yadda yadda yadda and then I would totally throw that other entity under the bus like no they're the ones who are responsible they told us to do it sue the city I've not necessarily or it does such a thing exist where you're not allowed to terminate people even for misbehavior I you know I don't know if it would count for misbehavior I would imagine at some point they have to be allowed to me service but there's some pretty harsh restrictions in cases where it goes to apartment buildings so that's like only provider available like there's really no I guess you could get dial-up but there's no other yeah well I don't I I mean I'm assuming that they mean to terminate the one subscriber that's infringing in the apartment building and not the whole apartment building however it's not like I've never had a client who was representing himself as an apartment building owner and he basically bought like one internet connection under his name like personally and then he feeds that to all of his apartment bill tenants I'm sure that that's not quite legal either but that's a contract dispute not hey not a crime they're getting serious about those terminating infringer things so you might find yourself terminated if you decide to infringe and don't heed the first warning or however that works for your ISP so be careful because even charter is having to do this now I wouldn't know I don't commit copyright infringement I don't want that to be a headline let your favorite copyright attorneys sued for copyright is so it's something I so seriously don't want to ever receive that I literally do not pirate anything I literally I'm not not like I would admit it to you but I'm going to school on the record and say no I actually don't affirmatively I affirmative Lee do not pirate anything because I I don't want to be that guy I don't want to be that headline and I'll say the same thing since I started watching your videos not even since I started being involved but I just don't pirate things anymore I buy everything now good and and here's the thing though not to get into politics but I do believe that a healthy society should be giving all of its its workers a living wage like requiring anyone who works to be working for what society establishes as a living wage so that you can have the money to go buy your material instead of having to pirate it like as as society descends further and further into poverty I betcha piracy goes up let's put it that way I thought it might be funny to read all of these names or just just bear with me for like the one minute or 60 seconds it gonna take me to read through these the plaintiffs in this case are Warner Brothers Records Atlantic recording Bad Boy Records Elektra Entertainment fueled by ramen LLC Nonesuch Records Roadrunner Records weeow international warner/chappell music Warner Tamerlane publishing Warner WB Music WBM music I don't even know what that is unit Chappell music writes song music cotillion music inter song music Sony Music Entertainment Arista music Arista Records like the Arista Records LaFace records Provident Label Group Sony Music Entertainment volcano entertainment the third the Samba Recordings sony/atv music publishing and then about a dozen emi z mi l gallico music emi algae music emi April EMI Blackwood music Col jum's EMI Music EMI consortium music publishing EMI Oh doing business as EMI full keel EMI consortium songs doing business as EMI longitude EMI entertainment doing business as EMI for a mi demux all EMI Feist EMI Miller EMI mills EMI Yoon art or an art EMI you catalog Jo beat music not EMI stone agate music Screen Gems EMI Stone that'd be sick UMG recordings Capitol Records Universal Music Corp Universal Music MGB North America Universal Music Publishing Inc Universal publishing a B Universal Music Publishing Limited Universal Music Publishing MGB Limited Universal Music Izzy Tunes LLC and then Island Music Polygram publishing and songs of Universal versus Charter Communications so I thought that was just everyone so what do you think of charter getting hit with that let us know in the comments below and maybe you'll end up on next week's comment review thanks for watching I am Leonard French your favorite copyright attorney that is our show thank you to our sponsors in the month of October remember this is a show that was produced at the end of October October 31st so that there will be a slight rollover supporters who supported November will get charged on November 1st and will also roll over into the very first heard Stacy one or two days of December so thank you to our October sponsor channel sponsor Joshua Davis from tan toupee thank you very much for all of your support thank you to our October $50 plus supporters Joe Tyson aspirin re John Oh Gavin Bernard Evy Kyle mudra Michael Pierce spirit bear yonder gray Daniel Perez snoring was Otsuki black leaf and Benjamin height off and thank you to the $5 plus supporters who are scrolling on this screen in front of me and all of you are on the LED panel behind me I'm Leonard F ench your favorite copyright attorney I look forward to seeing you in the videos that drop I will see you on Sunday for the 10:00 a.m. show at the u.s. time I love you all bye [Applause] you 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