Case 5:12-cv-02088-MMB Document 63 Filed 12/05/12 Page 1 of 13

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA MALIBU MEDIA, LLC, a California limited liability company, CASE NUMBER: 5:12-cv-02088-MMB Plaintiff, v. JOHN DOES 1, 13 and 14, Defendants. PLAINTIFFS MEMORANDUM IN OPPOSITION TO DEFENDANT, JOHN DOE NO. 1S, MOTION TO DISMISS PLAINTIFFS AMENDED COMPLAINT PURSUANT TO F.R.C.P. 12(b)(6) [CM/ECF 57] Honorable Michael M. Baylson

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TABLE OF CONTENTS I. INTRODUCTION ...............................................................................................................4 A. Online Peer-to-Peer Copying and Distribution Is Copyright Infringement .....................5 B. Plaintiff Pled a Claim of Direct Infringement ................................................................7 1. 2. Defendants ISP Need Not Correlate Him to Each Infringement For Plaintiffs Claims to be Plausible ..........................................................................................8 Plaintiff Did Not Need to Serve The Entire Swarm ..............................................9

II. ARGUMENT ......................................................................................................................5

C. BitTorrent Peers Are Not Necessary Parties Under Rule 19(a) ......................................9 D. Defendants Argument That Plaintiff Lacks Capacity to Sue is Wrong ....................... 11 E. Local Rule 40.1(b)(3) Has No Bearing on a Motion to Dismiss................................... 12 III. CONCLUSION ................................................................................................................. 13

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TABLE OF AUTHORITIES A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001) ....................................6 Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003).........................................................6 Arista Records, LLC. v. Doe 3, 604 F.3d 110 (2d Cir. 2010)........................................................6 Charter Communications, Inc. Subpoena Enforcement Matter, 393 F.3d 771, 774 (8th Cir. 2005) ................................................................................................................................................6 Culinary Service of Delaware Valley, Inc. v. Borough of Yardley, PA, 385 Fed. Appx. 135, 145 (3d Cir. 2010) ..........................................................................................................................9 Dague v. Huddler, CIV.A. 07-5539, 2008 WL 4444266 (E.D. Pa. Oct. 2, 2008) ....................... 11 Dun & Bradstreet Software Services, Inc. v. Grace Consulting, Inc., 307 F. 3d 197, 206 (3d Cir. 2002) .......................................................................................................................................7 Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009) ....................................................8 Interscope Records v. Duty, 2006 WL 988086, (D. AZ 2006)................................................... 10 Liebeskind v. Alliance Title Co., C-07-3962 MMC, 2008 WL 160954 (N.D. Cal. Jan. 11, 2008) .............................................................................................................................................. 12 Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. 545 U.S. 913, 125 S.Ct. 2764 (2005).........5 Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93 (3d Cir. 2004).......................................................9 Multimedia Games, Inc. v. WLGC Acquisition Corp., 214 F.Supp.2d 1131, 1142 (N.D.Okla.2001) .................................................................................................................... 11 RIAA v. Verizon Internet Services, Inc., 351 F.3d 1229, 1238 (D.C. Cir. 2003) ............................6 Sony v. Tennenbaum, 2011 WL 4133920 at (1st Cir. 2011) .........................................................7 Sony v. Tennenbaum, 660 F.3d 487 (1st Cir. 2011)......................................................................6 Temple v. Synthes Corp., Ltd., 498 U.S. 5, 6, 7-8, 111 S.Ct. 315, 316, 112 L.Ed.2d 263 (1990) . 10 TES Franchising, LLC v. Dombach, CIV.A. 10-0017, 2010 WL 5071472 (E.D. Pa. Nov. 24, 2010) ................................................................................................................................. 8, 13 TIG Ins. v. Nobel Learning Communities, Inc., 2002 WL 1340332 (E.D. Pa. 2002) .....................9 Twentieth Century Fox Film Corp. v. iCraveTV, 2000 WL 255989, (W.D. Pa. 2000) .................9 Typh, Inc. v. Typhoon Fence of Pa., Inc., 461 F.Supp. 994, 996-997 (D.C.Pa.1978) .................. 11 UMG Recording, Inc. v. Alburger, 2009 WL 3152153, (E.D. PA. 2009). ....................................6

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I.

INTRODUCTION Each of John Doe 1s arguments runs afoul of well-established law and should be

rejected. First, despite having filed a motion to sever [CM/ECF # 14], wherein John Doe 1 disingenuously argued that he should be sued individually, John Doe 1 who got exactly what he asked for now claims that [b]y failing to identify and serve the entire swarm, Plaintiff has also failed to state a claim under Fed.R.Civ.P. 12(b)(6).1 Memorandum in Support of Motion to Dismiss, CM/ECF # 57, p. 3. Defendants argument should be rejected because the other peer infringers in a swarm are neither necessary nor indispensable parties within the meaning of Rule 19. Indeed, Plaintiff sued John Doe 1 solely for direct infringement and Plaintiff can obtain complete relief against Defendant. And, while Plaintiff could have sued other peers in

Defendants swarm, Supreme Court precedent makes clear that a plaintiff need not sue cotortfeasors who are jointly or severally liable. Therefore, Defendants erroneously designated Rule 12(b)(6) motion (it should have been a 12(b)(7) motion) should be denied. Defendant also incorrectly argues that Plaintiffs additional claims of infringement (i.e., those of Plaintiffs claims which were not asserted in the original complaint) should be dismissed because Defendants Internet Service Provider (ISP) has yet to state that Defendant was assigned the same Internet Protocol (IP) Address on the dates and times of the additional infringements. This argument should be rejected because it is not only plausible it is highly probable that since John Doe 1 stole one of Plaintiffs movies on December 22, 2011, using IP Address 174.60.32.79, that it was John Doe 1 who also stole three (3) more of Plaintiffs movies between December 16, 2011 and December 22, 2011, by using the exact same IP Address 174.60.32.79.
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Presumably, Defendant meant to argue that Plaintiffs claims should be dismissed under Rule 12(b)(7) for failing to join an indispensable party.
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Defendant also erroneously argues that Plaintiff lacks capacity to sue because it is a foreign corporation that does not have a certificate of authority to transact business in the Commonwealth. First, Malibu Media mooted this section of Defendants motion by obtaining a Certificate of Authority to Transact Business. See Exhibit A. Second, Plaintiff has never transacted business in Pennsylvania within the meaning of 15 Pa.C.S.A. 4141(a). Therefore, Plaintiff did not need to obtain a Certificate of Authority. Finally, Defendant complains that Plaintiff failed to file a notice of related cases. Failure to file a notice of related cases is not a basis for dismissing a case. For these reasons, as more fully explained below, the Court should deny John Doe 1s motion to dismiss. II. ARGUMENT A. Online Peer-to-Peer Copying and Distribution Is Copyright Infringement

During her testimony before the U.S. Senate, the Register of Copyrights stated Mr. Chairman, make no mistake. The law is unambiguous. Using peer-to-peer networks to copy or distribute copyrighted works without permission is infringement and copyright owners have every right to invoke the power of the courts to combat such activity. Every court that has addressed the issue has agreed that this activity is infringement.2 (Emphasis added.) Vice President Biden stated: [i]t's smash and grab, no different than a guy walking down Fifth Avenue and smashing the window at Tiffany's and reaching in and grabbing what's in the window.3 The Supreme Court in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. 545 U.S. 913, 125 S.Ct. 2764 (2005), found that Grokster was liable for contributory infringement because it materially aided and induced its users to commit direct infringement via its peer-to-peer file
Pornography, Technology, and Process: Problems and Solutions on Peer-to-Peer Networks Statement of Marybeth Peters The Register of Copyrights before the Committee on the Judiciary, 108th Cong. (2003) available at http://www.copyright.gov/docs/regstat090903.html 3 See http://www.reuters.com/article/2010/06/22/us-usa-trade-web-idUSTRE65L3YN20100622
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sharing service. Similarly, the First, Second, Seventh, Eighth, Ninth and D.C. Circuits have all held that peer-to-peer infringement is actionable. See Sony v. Tennenbaum, 660 F.3d 487 (1st Cir. 2011) (holding in a twenty-six (26) page opinion that Tennenbaum was liable for infringement committed through a peer-to-peer network, that peer-to-peer infringement is not fair use nor would any other defense shield Tennenbaums tortious conduct, and that the statutory damages clause set forth in the Copyright Act is constitutional); Arista Records, LLC. v. Doe 3, 604 F.3d 110 (2d Cir. 2010) (denying an individual John Doe Defendants motion to quash a subpoena issued to an internet service provider in response to an allegation that the John Doe Defendant infringed Aristas copyrights through a peer-to-peer file sharing network); In re Aimster Copyright Litigation, 334 F.3d 643 (7th Cir. 2003) (upholding a preliminary injunction because Aimster was contributorily liable for its users direct infringements); In re Charter Communications, Inc. Subpoena Enforcement Matter, 393 F.3d 771, 774 (8th Cir. 2005) (opining that copyright owners can use a Rule 45 subpoena to identify peer-to-peer file sharers because those file sharers are infringing the owners copyrights); A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001) ([w]e agree that the plaintiffs have shown that Napster users infringe at least two of the copyright holders exclusive rights: the rights of reproduction, 106(1); and distribution, 106(3)); and RIAA v. Verizon Internet Services, Inc., 351 F.3d 1229, 1238 (D.C. Cir. 2003) (repetitively acknowledging that file sharing is infringement). Significantly, District courts in the Third Circuit (and elsewhere) agree . . . that downloading music from the internet, without paying for it or acquiring any rights to it, is a direct violation of the Copyright Act. UMG Recording, Inc. v. Alburger, 2009 WL 3152153, *3 (E.D. Pa. 2009). In 1999 Congress intentionally amended the Copyright Act to deter individuals from infringing copyrights on the internet by increasing the statutory remedies:

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Congress did contemplate that suits like this [against individuals] were within the Act. Congress last amended the Copyright Act in 1999 to increase the minimum and maximum awards available under 504(c). See Digital Theft Deterrence and Copyright Damages Improvement Act of 1999, Pub. L. No. 106-160, 113 Stat. 1774. At the time, Congress specifically acknowledged that consumer-based, noncommercial use of copyrighted materials constituted actionable copyright infringement. Congress found that "copyright piracy of intellectual property flourishes, assisted in large part by today's world of advanced technologies," and cautioned that the potential for this problem to worsen is great. Sony v. Tennenbaum, 2011 WL 4133920 at *11 (1st Cir. 2011) (emphasis added). By

specifically amending the Copyright Act to deter on-line infringement Congress evinced a clear and unmistakable intent that people who download works on-line commit infringement. B. Plaintiff Pled a Claim of Direct Infringement

To establish a claim of copyright infringement, a plaintiff must establish: (1) ownership of a valid copyright; and (2) unauthorized copying of original elements of the plaintiffs work. Dun & Bradstreet Software Services, Inc. v. Grace Consulting, Inc., 307 F. 3d 197, 206 (3d Cir. 2002). Plaintiff pled a prima facie case of infringement. Plaintiff is the owner of those United States Copyright Registrations attached hereto as Composite Exhibit A. Each registration covers a copyrighted work which was infringed by Defendant. Complaint at 10. Each Defendant installed a BitTorrent Client onto his computer. Id. at 13. Each Defendant went to a torrent site to upload and download those of Plaintiffs Works identified in the Count directed to each Defendant. Id. at 25. Plaintiff retained IPP, Limited (IPP) to identify the IP addresses that are being used by those people that are using the BitTorrent Protocol and the internet to reproduce, distribute, display or perform Plaintiffs copyrighted works. Id. at 32. IPP used forensic software . . . and related technology enabling the scanning of peer-to-peer networks for the presence of infringing transactions. Id. at 33. IPP extracted the resulting data . . . reviewed the evidence logs, and isolated the transactions and the IP addresses associated
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therewith . . . Id. at 34. The IP addresses, Unique Hash Number and hit dates . . . accurately reflect . . . and show each Defendant had copied a piece of Plaintiffs copyrighted Work(s). Id. at 35. By using the BitTorrent protocol and a BitTorrent Client and the processes described above, Defendant copied the constituent elements of the registered Works on Exhibit C that are original. Id. at 43. Plaintiff did not authorize, permit or consent to Defendants copying of its Works. Id. at 44. As a result of the foregoing, Defendant violated Plaintiffs exclusive [copy]right[s]. Id. at 45. 1. Defendants ISP Need Not Correlate Him to Each Infringement For Plaintiffs Claims to be Plausible

Defendant attempts to attack the plausibility of Plaintiffs claims by claiming that Defendants ISP has yet to state that Defendant was assigned the same IP address on the dates and times of the additional infringements. When analyzing a Rule 12(b)(6) motion to dismiss the court must accept all of the complaint's well-pleaded facts as true . . . [and] . . . determine whether the facts alleged in the complaint demonstrate that the plaintiff has a plausible claim for relief. TES Franchising, LLC v. Dombach, CIV.A. 10-0017, 2010 WL 5071472 (E.D. Pa. 2010) (citing Fowler v. UPMC Shadyside, 578 F.3d 203, 210 (3d Cir.2009)). Plaintiff suffers approximately 100,000 infringements a month. Currently, there are approximately 350,000,000 people in the United States. If one were to conservatively estimate that a quarter of the people in the U.S. have internet access, that would mean that there are 87,500,000 people with internet. Mathematically, this means that there is approximately a 0.1% chance that another person was assigned Defendants IP address and also downloaded one of Plaintiffs works. It is 1 in 1,000. Significantly, despite some IP addresses being dynamic, they are often assigned for months or years at a time. Defendants infringements were alleged to have occurred between December 16, 2011 and December 22, 2011, two films on the 16th and two films on the 22nd.
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Indeed, Defendants ISP, Comcast, states on its website, [a]s an XFINITY Internet subscriber, youre given an Internet protocol (IP) address assigned by a Dynamic Host Configuration Protocol (DHCP) server. While not permanent, your IP address doesnt change often. See http://customer.comcast.com/help-and-support/internet/releasing-and-renewing-ip-address/ (emphasis added). Defendants 1 in 1,000 chance does not defeat the plausibility of Plaintiffs claims. 2. Plaintiff Did Not Need to Serve The Entire Swarm

Defendant erroneously argues [b]y failing to identify and serve the entire swarm, Plaintiff has also failed to state a claim under Fed.R.Civ.P. 12(b)(6).4 Memorandum in Support of Motion to Dismiss, CM/ECF # 57, p. 3. A Rule 19 analysis is a two-step process. The court must first determine whether the absent parties are necessary under Rule 19(a). If the parties are necessary, and joinder is not feasible, then the court must determine whether the parties are indispensable under Rule 19(b). Culinary Service of Delaware Valley, Inc. v. Borough of Yardley, PA, 385 Fed. Appx. 135, 145 (3d Cir. 2010) (reversing District Courts finding that a party was indispensable), internal citations omitted. C. BitTorrent Peers Are Not Necessary Parties Under Rule 19(a) To explain, copyright

BitTorrent Peers are not necessary parties under Rule 19.

[infringement] is a strict liability tort. 5 Patry on Copyright 17:167. See also, Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93 (3d Cir. 2004) (Copyright infringement is a . . . tort); TIG Ins. v. Nobel Learning Communities, Inc., 2002 WL 1340332 (E.D. Pa. 2002) (tort of copyright infringement.); Twentieth Century Fox Film Corp. v. iCraveTV, 2000 WL 255989, * 6 (W.D. Pa. 2000) (copyright infringement is a strict liability tort.) Here, Plaintiff alleged Defendant
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Presumably, Defendant meant to argue that Plaintiffs claims should be dismissed under Rule 12(b)(7) for failing to join an indispensable party.
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directly infringed Plaintiffs copyright by: (a) downloading a complete copy of Plaintiffs works from other peers via BitTorrent; and (b) distributing pieces of Plaintiffs works to other peers (as evidenced by its distribution of a piece to IPP, Ltd.) If Plaintiff proves its case, Defendant is individually liable for this direct infringement. Plaintiff could have pled that John Doe 1 was contributorily liable for the direct infringement of the other members of the BitTorrent swarm. Plaintiff did not do so because omitting that count makes the case simpler, and this Court stayed Plaintiffs claims against all but three Defendants. Further, by the time the Bellwether trial is over, hundreds of thousands of more people will have infringed Plaintiffs copyrights and Plaintiff will move on to new defendants. Even if Plaintiff had pled Defendants were contributorily liable for the infringement of the other peer members, and are therefore jointly liable for the other peers infringement, it is black letter tort law that joint tortfeasors are not necessary parties. See Temple v. Synthes Corp., Ltd. 498 U.S. 5, 6 (1990) (It has long been the rule that it is not necessary for all joint tortfeasors to be named as defendants in a single lawsuit. . . . The Advisory Committee Notes to Rule 19(a) explicitly state that a tortfeasor with the usual joint-and-several liability is merely a permissive party to an action against another with like liability. 28 U.S.C.App., p. 595.) This rule has been applied in copyright cases. See, e.g., Interscope Records v. Duty, 2006 WL 988086, *2 (D. Ariz. 2006) (Duty also argues that the alleged infringement would not have been possible without the use of Kazaa [a peer to peer file sharing service], and therefore the owner of Kazaa, Sharman Networks, Ltd. (Sharman), is a necessary and indispensable party to this suit. We disagree. . . ., citing, Temple v. Synthes Corp., Ltd., 498 U.S. 5, 7-8, 111 S.Ct. 315, 316, 112 L.Ed.2d 263 (1990)); Multimedia Games, Inc. v. WLGC Acquisition Corp., 214 F.Supp.2d 1131,

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1142 (N.D.Okla.2001) (Because a co-tortfeasor is simply allowable but not necessary for a copyright violation, they are by nature also not indispensable parties.) D. Defendants Argument That Plaintiff Lacks Capacity to Sue is Wrong

Defendant cites to 15 Pa. Cons. Stat. Ann. 4141 for the proposition that [a] nonqualified foreign business corporation doing business in this Commonwealth . . . shall not be permitted to maintain any action or proceeding in any court of this Commonwealth until the corporation has obtained a certificate of authority. Defendant also points to 15 Pa. Cons. Stat. Ann. 8587 for the similar position that [a] nonqualified foreign limited partnership doing business in this Commonwealth may not maintain any action or proceeding in any court of this Commonwealth until it has registered under this subchapter. These statutes do not preclude Plaintiff from bringing these suits for three reasons. First, Plaintiff is registered with the Pennsylvania Department of State as of November 26, 2012. See Exhibit A. Although the registration occurred after initiation of the suit, this Court has held that registration after initiation of a suit is permissible. See Dague v. Huddler, 2008 WL 4444266 (E.D. Pa. 2008) (citing Typh, Inc. v. Typhoon Fence of Pa., Inc., 461 F.Supp. 994, 996-997 (D.C.Pa.1978) (it is not necessary that plaintiff comply with 2014 [the predecessor statute to 15 Pa. C.S.A. 4141(a)] before filing suit; compliance during the pendency of the litigation is sufficient.)) Because Plaintiff is registered, Defendants argument fails. Second, even if Plaintiff had not registered, since it is a California limited liability company only transacting business in interstate commerce, Plaintiff falls squarely within the exceptions of 15 Pa. Cons. Stat. Ann. 4122. 4122 provides that a foreign business

corporation shall not be considered to be doing business in this Commonwealth . . . by reason of

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carrying on in this Commonwealth any one or more of the following acts: (1) maintaining or defending any action or . . . effecting the settlement thereof or the settlement of claims or disputes . . . (9) Transacting any business in interstate or foreign commerce. Id. The

Committee Comment to this statute provides that foreign companies conducting business in interstate commerce are not subject to the registration requirement so as not to run afoul of the Commerce Clause. A corporation is not doing business within the meaning of subsection (a) if it is transacting business in interstate commerce (subsection (a)(9)) or soliciting or obtaining orders that must be accepted outside Pennsylvania before they become contracts (subsection (a)(6)). These limitations reflect the provisions of the United States Constitution that grant to the United States Congress exclusive power over interstate commerce, and preclude states from imposing restrictions or conditions upon this commerce. It is intended that these subsections will be construed in a manner consistent with judicial decisions under the United States Constitution. Committee Comment (1988). Here, Plaintiff does not have offices, an agent or any other

connection to Pennsylvania except to the extent that it has filed law suits here and has subscribers here. These are exempt activities under 4122. Third, Fed. R. Civ. P. 17(b)(2) states that the capacity of a corporation to sue or be sued in federal court is determined by the law under which it was organized. Id. Plaintiff was organized under the laws of the State of California. In California, an entity only loses its capacity to sue when it dissolves or is suspended by the State for non-payment of taxes. Liebeskind v. Alliance Title Co, 2008 WL 160954 (N.D. Cal. 2008). Neither reason applies to Plaintiff; accordingly, Plaintiff retains its ability to sue or be sued. E. Local Rule 40.1(b)(3) Has No Bearing on a Motion to Dismiss

Defendants assertion that Plaintiff was required to file a notice of related cases under Local Rule 40.1(b)(3) has no bearing on a motion to dismiss, which is designed to test the legal

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sufficiency of the complaint. TES Franchising, LLC v. Dombach, 2010 WL 5071472 (E.D. Pa. 2010) (citing Conley v. Gibson, 355 U.S. 41, 4546, (1957)). III. CONCLUSION For the foregoing reasons, Defendants motion to dismiss should be denied. DATED this 5th day of December, 2012

Respectfully submitted, FIORE & BARBER, LLC By: /s/ Christopher P. Fiore Christopher P. Fiore, Esquire Aman M. Barber, III, Esquire Attorneys for Plaintiff 425 Main Street, Suite 200 Harleysville, PA 19438 Tel: (215) 256-0205 Fax: (215) 256-9205 Email: cfiore@fiorebarber.com

CERTIFICATE OF SERVICE I hereby certify that on December 5, 2012, I electronically filed the foregoing document with the Clerk of the Court using CM/ECF and that service was perfected on all counsel of record and interested parties through this system. By: /s/ Christopher P. Fiore

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