Can an Old Dog Like Copyright Law Learn New Tricks?

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Beverly Hills Bar Association May 10, 2018 Intellectual Property, Internet Lunch Program & New Media Section

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Since the major overhaul of copyright law in 1976, and the passage of the Digital Millennium Copyright Act in 1996, there has not been much change in Title 17 of United States Code. There have been attempts to pass legislation (such as the Section 115 Reform Act of 2006 ["SIRA" or "S1RA"], the controversial Stop Online Piracy Act ["SOPA"] and Protect Intellectual Property Act ["PIPA"]). New proposals continue to be raised (such as the so-called "Music Modernization Act"), but these have not yet gathered much traction. The most significant change in copyright law, the Sonny Bono Copyright Term Extension Act, passed in 1998, did nothing to address new technological developments.

Copyright law nevertheless continues to evolve through case law, even without any new statutes enacted in more than 20 years to rapidly changing systems of distributing content. Recent cases, however, often apply well- established doctrines to address problems raised by new technologies, some of which purport to exploit loopholes in existing copyright statutes. These attempts to push the boundaries of copyright protection meet with varying degrees of success, and raise additional questions.

A panel of three distinguished copyright practitioners discuss individual decisions and trends in copyright

decisional law applied to newer technologies.

Speakers: S. Martin Keleti, Keleti Law, Moderator Caroline H. Mankey, Akerman LLP Devin A. McRae, Early Sullivan Wright Gizer & McRae LLP

Aaron J. Moss, Greenberg Glusker Fields Claman & Machtinger LLP

Thursday, May 10, 2018 Registration/Lunch: 12:00 p.m. | Program: 12:30 p.m. – 2:00 p.m.

Beverly Hills Bar Association 9420 Wilshire Blvd., 2nd Floor, Beverly Hills, CA 90212 (Parking at 241 No. Canon Drive)

S. Martin Keleti, Esq. – Section & Program Chair | Vera Golosker, Esq. – Vice Chair

MCLE CREDIT This activity has been approved for Minimum Continuing Legal Education credit by the State Bar of California in the amount of 1.5 HOURS of Participatory Credit and the Beverly Hills Bar Association certifies that this activity conforms to the standards for approved education activities prescribed by the rules and regulations of the State Bar of California governing minimum continuing legal education.

Beverly Hills Bar Association | 9420 Wilshire Blvd., 2nd Floor, Beverly Hills, CA 90212 | P: 310.601.2422 | F: 310.601.2423 | www.bhba.org 1 Contents Page

⦁ Bios...... Page 2

⦁ Goldman v. Breitbart News Network, LLC...... Page 4

⦁ Redbox-Codes-Lawsuit...... page 29

⦁ Disney-Redbox Order Denying Preliminary Injunction...... Page 48

⦁ Disney Second Motion for PI against Redbox...... Page 74

⦁ Tickbox-Complaint...... Page 96

⦁ Tickbox Opp to Motion for Preliminary Injunction...... Page 117

⦁ Minutes re motion for preliminary injunction - TickBox...... Page 135

⦁ Tickbox Preliminary Injunction...... Page 170

⦁ Amazon Content Services v. Set Broadcast Complaint...... Page 174

⦁ U.S. v. Lundgren (11th Cir.)...... Page 199

1 Panelists

S. Martin Keleti (Moderator) is chair of the Beverly Hills Bar Association Intellectual Property, Internet and New Media section. A member of both the California and District of Columbia bars, Mr. Keleti has practiced civil litigation in federal and state courts, in trial courts, intermediate appellate courts, and courts of last resort, as well as before administrative agencies. His practice has an emphasis on intellectual property and entertainment matters, including cases involving copyrights, trademarks, the right of publicity, and design patents. His practice extends to general business litigation, decedents’ estates, civil rights, personal injury, real estate, and family law. Mr. Keleti divides his time between trial court and appellate cases. He also represents clients in transactional matters. In intellectual property and entertainment matters, Mr. Keleti has represented clients in such diverse industries as music publishing and recording, photography, book publishing, and fashion. In addition to his own firm, Keleti Law, he collaborates and consults with several firms, often providing a local presence to out-of- state law firms. Mr. Keleti has also served as an expert witness. In addition of moderating panels for the BHBA, he has spoken publicly on legal topics, been a guest lecturer, and served as an adjunct professor of law. Mr.Keleti has been counsel in several cases with published opinions, including Cosmetic Ideas v. IAC/InterActiveCorp, 606 F.3d 612 (9th Cir. 2010), cert. denied, 131 S. Ct. 686; J.C. v. Beverly Hills Unified School Dist., 711 F. Supp. 2d 109 (C.D. Cal. 2010); Peterson v. Highland Music, Inc., 140 F.3d 1313 (9th Cir. 1998) (at trial only); Stratta v. George Duke Enters., 43 U.S.P.Q.2d 1628 (S.D.N.Y. 1997); Russell v. Foglio, 160 Cal. App. 4th 653 (2008).

Caroline H. Mankey (Speaker) is a partner at Akerman LLP, an Am Law 100 law firm. She is a seasoned trial lawyer whose commercial litigation practice is focused on intellectual property and entertainment. Caroline has represented high-profile, well- known clients in the entertainment, media, arts, fashion, design, and technology industries in disputes involving copyrights, trademarks, trade secrets, defamation, licensing and other contract rights, rights of publicity, business interference, and partnership disputes. Caroline also handles high stakes, high profile, and sensitive employment issues, including sexual harassment and discrimination, as well as personal disputes arising out of domestic relationships.

Devin McRae (Speaker) is a co-founding partner of the litigation boutique Early Sullivan Wright Gizer & McRae LLP. Mr. McRae is a business litigator with a particular emphasis in entertainment, intellectual property and employment disputes, including those concerning breach of contract, copyright and trademark infringement, idea submission, royalties and participations, distribution agreements, trade secrets, discrimination, harassment and wrongful termination. Notable copyright cases handled by Mr. McRae have involved popular television series such as The Walking Dead, Ninja Warrior, MXC, Wipeout, Big Brother, and Timeless. Mr. McRae is a member of the Academy of

2 Television Arts & Sciences. He is routinely called upon by the media to provide commentary on high profile issues of entertainment law and litigation. He has been selected for inclusion in Southern California Super Lawyers Editions 2016-2018, Southern California Super Lawyers–Rising Stars Editions 2009, 2011-2015, and was named in The Best Lawyers in America 2016-2018 for Intellectual Property Litigation. In 2016, the Daily Journal selected Devin as one of California’s “Top 40 Under 40” lawyers. Mr. McRae is AV Preeminent Peer Review Rated by Martindale-Hubbell.

Aaron Moss (Speaker) is the chair of litigation department of Fields Claman & Machtinger LLP, and is also a member of its intellectual property department. He specializes in representing owners and users of creative content, and he has been recognized by virtually every major legal and entertainment business publication as one of the preeminent intellectual property litigators in his field. Mr. Moss has been named to The Hollywood Reporter’s “Top 100 Power Lawyers” list, Variety’s “Legal Impact Report,” the Daily Journal’s “Top IP Litigators in California,” and was named among the city’s top IP attorneys in the Los Angeles Business Journal’s list of “40 Angelenos to Know in Intellectual Property Law.”Mr. Moss litigates high-profile copyright and trademark actions for both plaintiffs and defendants, including studios, independent distributors, production companies, video game publishers, toy companies, apparel manufacturers, technology firms and individuals. He has particularly extensive experience handling matters involving the ownership, licensing and termination of rights in fictional characters, including such globally-recognized properties as Godzilla, Spider- Man, Lassie, Frosty the Snowman, and Casper the Friendly Ghost. Mr. Moss also provides advice and counsel in connection with intellectual property acquisitions and transfers, conducts complex chain of title analyses, and engages in pre- publication clearance reviews for authors, publishers, filmmakers, and video game companies – often enabling them to avoid costly lawsuits. In addition to his copyright and trademark practices, Mr. Moss has litigated high-stakes profit participation cases, prosecuted and defended idea submission claims, and has represented award-winning actors and performers in right of publicity actions involving the unauthorized use of their names, voices and likenesses. He also handles defamation, invasion of privacy and other media-related disputes, as well as cybersquatting, false advertising, unfair competition and breach of contract actions across a wide range of industries.

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USDC SDNY UNITED STATES DISTRICT COURT DOCUMENT SOUTHERN DISTRICT OF NEW YORK ELECTRONICALLY FILED ------X DOC #: ______JUSTIN GOLDMAN, : DATE FILED: February 15, 2018 : Plaintiff, : : -v- : : 17-cv-3144 (KBF) BREITBART NEWS NETWORK, LLC, : HEAVY, INC., TIME, INC., YAHOO, INC., : OPINION & ORDER VOX MEDIA, INC., GANNETT COMPANY, : INC., HERALD MEDIA, INC., BOSTON : GLOBE MEDIA PARTNERS, INC., and NEW : ENGLAND SPORTS NETWORK, INC., : : Defendants. : ------X

KATHERINE B. FORREST, District Judge:

When the Copyright Act was amended in 1976, the words “tweet,” “viral,” and

“embed” invoked thoughts of a bird, a disease, and a reporter. Decades later, these same terms have taken on new meanings as the centerpieces of an interconnected world wide web in which images are shared with dizzying speed over the course of any given news day. That technology and terminology change means that, from time to time, questions of copyright law will not be altogether clear. In answering questions with previously uncontemplated technologies, however, the Court must not be distracted by new terms or new forms of content, but turn instead to familiar guiding principles of copyright. In this copyright infringement case, concerning a candid photograph of a famous sports figure, the Court must construe how images shown on one website but stored on another website’s server implicate an owner’s exclusive display right.

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Today, many websites embed Twitter posts into their own content; for those familiar with digital news or other content, this is common knowledge. Here, plaintiff Justin Goldman’s copyrighted photo of Tom Brady went “viral”—rapidly moving from Snapchat to Reddit to Twitter—and finally, made its way onto the websites of the defendants, who embedded the Tweet alongside articles they wrote about Tom Brady actively helping the Boston Celtics recruit basketball player

Kevin Durant.

Plaintiff, claiming he never publicly released or licensed his photograph, filed suit against the defendant websites, claiming a violation of his exclusive right to display his photo, under § 106(5) of the Copyright Act.

With the consent of the parties, this Court divided the litigation into two phases—the first to determine whether defendants’ actions violate the exclusive right to display a work (here an embedded Tweet), and the second to deal with all remaining issues, such as the liability (or non-liability) for other defendants and any defenses that have been raised.

Defendants filed a motion for partial Summary Judgment on October 5, 2017.

(ECF No. 119.) The Court heard oral argument on January 16, 2018.

Having carefully considered the embedding issue, this Court concludes, for

the reasons discussed below, that when defendants caused the embedded Tweets to

appear on their websites, their actions violated plaintiff’s exclusive display right;

the fact that the image was hosted on a server owned and operated by an unrelated

third party (Twitter) does not shield them from this result.

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Accordingly, defendants’ motion for partial Summary Judgment is DENIED.

Partial Summary Judgment is GRANTED to the plaintiff.

I. FACTUAL BACKGROUND

The parties agree that the principle issue briefed on this motion is a legal one

and amenable to summary judgment. The following facts are materially undisputed

and all inferences are drawn in favor of the plaintiff. Anderson v. Liberty Lobby,

Inc., 477 U.S. 242, 255 (1986).

A. The Tom Brady Photo

On July 2, 2016, plaintiff Justin Goldman snapped a photograph of Tom

Brady (the “Photo”), Danny Ainge, and others on the street in East Hampton. (ECF

No. 149, Goldman Declaration (“Goldman Decl.”) ¶ 2.) Shortly thereafter, he

uploaded the photograph to his Snapchat Story.1 (Id. ¶ 5.) The Photo then went

“viral,” traveling through several levels of social media platforms—and finally onto

Twitter, where it was uploaded by several users, including Cassidy Hubbarth

(@cassidyhubbarth), Bobby Manning (@RealBobManning), Rob H (@rch111), and

Travis Singleton (@SneakerReporter). (Id. ¶ 6–10; ECF No. 120, Defendants’

Statement of Undisputed Facts Pursuant to Local Rule 56.1 (“Defs.’ 56.1

Statement”) ¶ 28.) These uploads onto Twitter are referred to as “Tweets.”

Defendants in this case are online news outlets and blogs who published articles featuring the Photo. Each of defendants’ websites prominently featured the

Photo by “embedding” the Tweet into articles they wrote over the course of the next

1 Snapchat is a social media platform where users share photographs and messages; a Snapchat story is a series of photos a user posts—each photo is available for twenty-four hours only.

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forty-eight hours; the articles were all focused on the issue of whether the Boston

Celtics would successfully recruit basketball player Kevin Durant, and if Tom

Brady would help to seal the deal.

It is undisputed that plaintiff holds the copyright to the Photo.

B. Embedding

None of the defendant websites copied and saved the Photo onto their own

servers. Rather, they made the Photo visible in their articles through a technical

process known as “embedding.” Some background is helpful to an understanding of

the embedding process.

A webpage is made up of a series of instructions usually written by coders in

Hypertext Markup Language (“HTML”). These instructions are saved to a server (a

computer connected to the internet), and when a user wishes to view a webpage, his

or her computer’s browser connects with the server, at which point the HTML code

previously written by the coder instructs the browser on how to arrange the

webpage on the user’s computer. The HTML code can allow for the arrangement of

text and/or images on a page and can also include photographs. When including a

photograph on a web page, the HTML code instructs the browser how and where to

place the photograph. Importantly for this case, the HTML code could instruct the

browser either to retrieve the photograph from the webpage’s own server or to

retrieve it from a third-party server.

“Embedding” an image on a webpage is the act of a coder intentionally adding

a specific “embed” code to the HTML instructions that incorporates an image,

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hosted on a third-party server, onto a webpage. To embed an image, the coder or

web designer would add an “embed code” to the HTML instructions; this code

directs the browser to the third-party server to retrieve the image. An embedded

image will then hyperlink (that is, create a link from one place in a hypertext

document to another in a different document) to the third-party website. The

result: a seamlessly integrated webpage, a mix of text and images, although the

underlying images may be hosted in varying locations. Most social media sites—

Facebook, Twitter, and YouTube, for example—provide code that coders and web

designers can easily copy in order to enable embedding on their own webpages.

Here, it is undisputed that none of the defendant websites actually

downloaded the Photo from Twitter, copied it, and stored it on their own servers.

Rather, each defendant website merely embedded the Photo, by including the

necessary embed code in their HTML instructions. As a result, all of defendants’ websites included articles about the meeting between Tom Brady and the Celtics, with the full-size Photo visible without the user having to click on a hyperlink, or a thumbnail, in order to view the Photo.

II. LEGAL PRINCIPLES

A. Summary Judgment Standard

This Court applies the well-known summary judgment standard set forth in

Rule 56 of the Federal Rules of Civil Procedure. Summary Judgment may not be

granted unless a movant shows, based on admissible evidence in the record, “that

there is no genuine dispute as to any material fact and the movant is entitled to

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judgment as a matter of law.” Fed. R. Civ. P. 56(a). The moving party bears the initial burden of demonstrating “the absence of a genuine issue of material fact.”

Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). When the moving party does not bear the ultimate burden on a particular claim or issue, it need only make a showing that the non-moving party lacks evidence from which a reasonable jury could find in the non-moving party’s favor at trial. Id. at 322–23.

In making a determination on summary judgment, the court must “construe all evidence in the light most favorable to the non-moving party, drawing all inferences and resolving all ambiguities in its favor.” Dickerson v. Napolitano, 604

F.3d 732, 740 (2d Cir. 2010) (citing LaSalle Bank Nat’l Ass’n v. Nomura Asset

Capital Corp., 424 F.3d 195, 205 (2d Cir. 2005)). Once the moving party has discharged its burden, the opposing party must set out specific facts showing a genuine issue of material fact for trial. Wright v. Goord, 554 F.3d 255, 266 (2d Cir.

2009). “A party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment,” as “mere conclusory allegations or denials cannot by themselves create a genuine issue of material fact where none would otherwise exist.” Hicks v. Baines, 593 F.3d 159,

166 (2d Cir. 2010) (internal quotation marks, citations, and alterations omitted).

“In considering a motion for summary judgment, if our analysis reveals that there are no genuine issues of material fact, but that the law is on the side of the non-moving party, we may grant summary judgment in favor of the non-moving party even though it has made no formal cross-motion.” Orix Credit Alliance, Inc. v.

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Horten, 965 F. Supp. 481, 484 (S.D.N.Y. 1997) (citing Int’l Union of Bricklayers v.

Gallante, 912 F. Supp. 695, 700 (S.D.N.Y. 1996); see also Coach Leatherware Co. v.

AnnTaylor, Inc., 933 F.2d 162, 167 (2d Cir. 1991) (“[I]t is most desirable that the court cut through mere outworn procedural niceties and make the same decision as would have been made had defendant made a cross-motion for summary judgment.”

(citing Local 33, Int’l Hod Carriers v. Mason Tenders Dist. Council, 291 F.2d 496,

505 (2d Cir. 1961))). “Summary judgment may be granted to the non-moving party in such circumstances so long as the moving party has had an adequate opportunity to come forward with all of its evidence.” Orix Credit Alliance, 965 F. Supp. at 484.

(citing Cavallaro v. Law Office of Shapiro & Kreisman, 933 F. Supp. 1148, 1152

(E.D.N.Y. 1996)).

B. The Copyright Act

“From its beginning, the law of copyright has developed in response to significant changes in technology.” Sony Corp. of America v. Universal City

Studios, Inc., 464 U.S. 417, 430 (1984). Copyright protections “subsists . . . in original works of authorship fixed in any tangible medium of expression.” 17 U.S.C.

§ 102(a). The Copyright Act of 1976, enacted in response to changing technology, gives a copyright owner several “exclusive rights,” including the exclusive right to

“display the copyrighted work publicly.” 17 U.S.C. § 106(5). To display a work, under the Act, is to “show a copy of it, either directly or by means of a film, slide, television image, or any other device or process.” 17 U.S.C. § 101 (emphasis added).

The Act’s Transmit Clause defines that exclusive right as including the right to

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“transmit or otherwise communicate . . . a display of the work . . . to the public, by means of any device or process.” Id. It further defines “device or process” as “one

now known or later developed.” Id.

A review of the legislative history reveals that the drafters of the 1976

Amendments intended copyright protection to broadly encompass new, and not yet

understood, technologies. Indeed, on the first page of the House Report, the

drafters proclaimed that the Amendments were necessary in part because

“technical advances have generated new industries and new methods for the

reproduction and dissemination of copyrighted works;” furthermore, Congress did

“not intend to freeze the scope of copyrightable subject matter at the present stage

of communications technology.” H.R. Rep. 94-1476, 47, 51 (1976).

Specifically, in considering the display right, Congress cast a very wide net,

intending to include “[e]ach and every method by which the images . . . comprising

a . . . display are picked up and conveyed,” assuming that they reach the public. Id.

at 64 (emphasis added). It further noted that “‘display’ would include the projection of an image on a screen or other surface by any method, the transmission of an

image by electronic or other means, and the showing of an image on a cathode ray

tube, or similar viewing apparatus connected with any sort of information storage

and retrieval system.” Id. (emphasis added). Indeed, an infringement of the

display right could occur “if the image were transmitted by any method (by closed or

open circuit television, for example, or by a computer system) from one place to

members of the public elsewhere.” Id. at 80 (emphasis added).

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The Register of Copyrights testified during hearings that preceded the passage of the Act: “[T]he definition [of the display right] is intended to cover every transmission, retransmission, or other communication of [the image],” beyond the originating source that might store the image, but including “any other transmitter who picks up his signals and passes them on.” H. Comm. On the Judiciary, 89th

Cong., Copyright Law Revision Part 6: Supplementary Report of the Register of

Copyrights on the General Revision of the U.S. Copyright Law: 1965 Revision Bill, at 25 (Comm. Print. 1965). He highlighted the importance of the display right in light of changing technology, specifically warning that “information storage and retrieval devices . . . when linked together by communication satellites or other means . . . could eventually provide libraries and individuals throughout the world with access to a single copy of a work by transmission of electronic images” and therefore that “a basic right of public exhibition should be expressly recognized in the statute.” Id. at 20 (emphasis added).

C. American Broadcasting Cos., Inc. v. Aereo, Inc.

The Supreme Court most recently considered the intersection of novel technologies and the Copyright Act in the Aereo decision, rendered in 2014.

American Broadcasting Cos., Inc. v. Aereo, Inc., 134 S. Ct. 2498 (2014). The issue in

Aereo was the performance right; the Court was deciding whether Aereo “infringed this exclusive right by selling its subscribers a technologically complex service that allows them to watch television programs over the Internet at about the same time as the programs are broadcast over the air.” Id. at 2503. Aereo charged a monthly

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fee to allow subscribers to watch broadcast television programming over the internet; it maintained a vast number of servers and antennas in a central warehouse. When a user wanted to watch a program, he would visit Aereo’s website and select a show; in turn, Aereo’s servers would select an antenna, tune it to the on-air broadcast, and transmit it via the internet to the subscriber. Aereo

argued that since the user chose the programs and Aereo’s technology merely

responded to the user’s choice, it was the user and not Aereo who was in fact

“transmitting” the performance.

The Court rejected this analysis, comparing Aereo to the cable companies

that parts of the 1976 Amendments were intended to reach. When comparing cable

technology (where the signals “lurked behind the screen”) to Aereo’s technology

(controlled by a click on a website), the Court stated: “[T]his difference means

nothing to the subscriber. It means nothing to the broadcaster. We do not see how

this single difference, invisible to subscriber and broadcaster alike, could transform

a system that is for all practical purposes a traditional cable system into ‘a copy

shop that provides its patrons with a library card.’” Id. at 2507.

Even the dissent, which would have found no liability based on the lack of

Aereo’s volition in choosing which programming to make available, stated that

where the alleged infringer plays no role in selecting the content, it cannot be held

directly liable when a customer makes an infringing copy: “Aereo does not ‘perform’

for the sole and simple reason that it does not make the choice of content.” Id. at

2514 (Scalia, J., dissenting).

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D. The “Server Test”

Defendants urge this Court to define the scope of the display right in terms of

what they refer to as the “Server Test.” According to defendants, it is “well settled” law and the facts of this case call for its application. As set forth below, the Court does not view the Server Test as the correct application of the law with regard to the facts here. Nevertheless, it is useful to briefly chronicle the body of law that has developed in that area and explain why it is inapplicable.

In Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007)

(“Perfect 10 II”), the Ninth Circuit considered a claim of direct infringement of the

display right against Google based upon Google Image Search. The district court

addressed two different questions: 1) did the thumbnail images that automatically

pop up when a user types in a search term constitute direct infringements of the

display right; and 2) did the full size images that appeared on the screen after a

user clicked on a thumbnail constitute direct infringements of the same display

right. In answer, the court made a sharp distinction between the two based upon

where the images were hosted. Perfect 10 v. Google, Inc., 416 F. Supp. 2d 828, 839

(C.D. Cal. 2006) (“Perfect 10 I”). First, it found the thumbnails to be infringing,

based on the fact that they were stored on Google’s server. Id. at 844. Conversely,

it held that the full size images, which were stored on third-party servers and

accessed by “in-line linking”—which works, like embedding, based upon the HTML

code instructions—were not infringements. Id. In so doing, the court rejected the

plaintiff’s proposed Incorporation Test, which would define display as the “act of

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incorporating content into a webpage that is then pulled up by the browser.” Id. at

839. It adopted instead the Server Test, where whether a website publisher is

directly liable for infringement turns entirely on whether the image is hosted on the

publisher’s own server, or is embedded or linked from a third-party server.

On appeal, the Ninth Circuit affirmed.2 In the Ninth Circuit, therefore, at

least as regards a search engine, the “Server Test” is settled law.

Defendants here argue that Perfect 10 is part of an “unbroken line of

authority” on which this Court should rely in determining broadly whether a

however, the Server Test has not been widely adopted. Even a quick survey reveals

that the case law in this area is somewhat scattered. Of the other Circuits, only the

Seventh Circuit has weighed in thus far—in Flava Works, Inc. v. Gunter, 689 F.3d

754 (7th Cir. 2012), the question before the court was whether the defendant was a

contributory infringer. Defendant in that case, a “social bookmarker,” whose service

involved enabling individuals who share interests to point each other towards

online materials (in this case, videos) that cater towards that taste, through embedding the code for the video onto its website. The videos remained hosted on the original servers. As with Perfect 10, upon arriving on defendant’s website,

thumbnails would appear; after clicking on one, the user would retrieve content

from plaintiff’s website. The Flava Court found that defendants were not

contributory infringers; the question of direct infringement was never reached. The

2It found, however, that “Google is likely to succeed in proving its fair use defense” as to the thumbnail images.

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lower court, however, had opined that “[t]o the extent that Perfect 10 can be read to

stand for the proposition that inline linking can never cause a display of images or

videos that would give rise to a claim of direct copyright infringement, we

respectfully disagree. In our view, a website’s servers need not actually store a copy

of the work in order to ‘display’ it.” Flava Works, Inc. v. Gunter, 2011 WL 3876910,

at *4 (N.D. Ill. Sept. 1, 2011), rev’d on other grounds, 689 F.3d 754 (7th Cir. 2012)

(emphasis added).

Four courts in this District have discussed the Server Test and Perfect 10’s

holding; none adopted the Server Test for the display right. First, in Live Face on

Web, LLC v. Biblio Holdings LLC, 2016 WL 4766344 (S.D.N.Y. Sept. 12, 2016), the

issue before the court was the distribution right, not the display right. Defendant argued that a distribution had not occurred, since the alleged infringing content was hosted on a third-party server, and not its own. The court noted that defendant

cited no legal authority for this proposition, but stated that “such authority may

exist,” citing Perfect 10. Id. at *4. The court did not adopt the Server Test; rather,

it held that additional discovery was necessary as the issue had “hardly” been

briefed. Id. at *5. Second, in MyPlayCity, Inc., v. Conduit Ltd., 2012 WL 1107648

(S.D.N.Y. Mar. 30, 2012), the distribution right was again at issue. In that case,

when the user clicked a “play now” button on the defendant’s customized tool bar, it

would be able to play games hosted on the plaintiff’s servers. The court cited

Perfect 10 and then found that, due to the fact that plaintiff’s servers “‘actually

disseminated’ the copies of [plaintiff’s] copyrighted games, [defendant] cannot be

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held liable for infringing on [plaintiff’s] distribution rights.” Id. at *14. Third, in

Pearson Education, Inc. v. Ishayev, 963 F. Supp. 2d 239 (S.D.N.Y. 2013), the court

held that standard text hyperlinks (not including images) that users click in order

to view and visit other sites were not a use of infringing content, relying in part on

Perfect 10; the exclusive right at issue here, too, was the distribution right.

Only the fourth case in this District, Capitol Records, LLC v. ReDigi Inc., 934

F. Supp. 2d 640 (S.D.N.Y. 2013) squarely dealt with the § 106(5) display right.

There, however, the court did no more than offer a simple factual statement, “The

Ninth Circuit has held that the display of a photographic image on a computer may

implicate the display right, though infringement hinges, in part, on where the

image was hosted.” Id. at 652 (emphasis added). It then proceeded to deny

summary judgment based on material disputes as to the content of the allegedly

infringing issues. Id.

Additionally, in a trademark decision rendered in this District prior to

Perfect 10, when considering whether defendant Tunes was liable for trademark

infringement to the Hard Rock Café for “framing” the Hard Rock logo on their

website, the court held that it was. Hard Rock Café Int’l v. Morton, 1999 WL

717995 (S.D.N.Y. Sept. 9, 1999). After considering both the fact that “it [was] not clear to the computer user that she or he has left the [plaintiff’s] web site” and the fact that there was a “seamless presentation” on the website, the court found that

“the only possible conclusion is that the Hard Rock Hotel Mark is used or exploited to advertise and sell CDS.” Id. at *25.

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Only a handful of other district courts have considered the issue.3 In Grady

v. Iacullo, 2016 WL 1559134 (D. Colo. Apr. 18, 2016), the court considered the

exclusive reproduction and distribution rights, and, relying on Perfect 10, reopened

discovery in order to allow plaintiff an opportunity to show that defendant stored

the allegedly infringing images on his own computer.4 In another recent district

court case, plaintiff survived the motion to dismiss stage in a distribution case,

based on the theory that each time a user used defendant’s website, it “cause[d] a

copy of [plaintiff’s] software to be distributed to the website visitor’s computer in

cache, memory, or hard drive” and that the “[defendant’s] website distributed copies

of the code to each of the website’s visitors.” Live Face on Web, LLC v. Smart Move

Search, Inc., 2017 WL 1064664 (D.N.J. Mar. 21, 2017), at *2.

Finally, in The Leader’s Institute, LLC v. Jackson, 2017 WL 5629514 (N.D.

Tex. Nov. 22, 2017), at issue on summary judgment was, inter alia, whether

plaintiffs infringed defendant’s exclusive display rights by “framing” defendant’s

websites. The court rejected Perfect 10, holding that by “framing the defendant’s

copyrighted works, the plaintiffs impermissibly displayed the works to the public.”

Id. at *10. It distinguished Perfect 10 on its facts, noting that, “[U]nlike Google,

[plaintiffs’ website] did not merely provide a link by which users could access

[defendant’s] content but instead displayed [defendant’s] content as if it were its

own.” Id. at *11. It further stated: “[T]o the extent Perfect 10 makes actual

3 The Court does not here review district court cases from the Ninth Circuit, as they are appropriately controlled by Perfect 10’s analysis. 4 It subsequently granted summary judgment to the plaintiff upon a showing that the defendant had, in fact, downloaded the images onto his computer.

18 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 16 of 25

possession of a copy a necessary condition to violating a copyright owner’s exclusive

right to display the copyrighted works, the Court respectfully disagrees with the

Ninth Circuit. . . . The text of the Copyright Act does not make actual possession of

a work a prerequisite for infringement.” Id.

In sum, this Court is aware of only three decisions outside of the Ninth

Circuit considering the display right in light of Perfect 10; one from the Seventh

Circuit which adopted the Server Test for contributory liability, one from the

Southern District which stated as a factual matter only that Perfect 10 existed, and

one from the Northern District of Texas rejecting Perfect 10.

III. DISCUSSION

Defendants’ argument is simple—they have framed the issue as one in which

the physical location and/or possession of an allegedly infringing image determines

liability under the § 106(5) exclusive display right. Defendants argue that—despite

the seamless presentation of the Brady Photo on their webpages—they simply provided “instructions” for the user to navigate to a third-party server on which the photo resided. According to defendants, merely providing instructions does not constitute a “display” by the defendants as a matter of law. They maintain that

Perfect 10’s Server Test is settled law that should determine the outcome of this

case.

Plaintiff maintains both 1) that to apply the Server Test leads to results

incongruous with the purposes and text of the Copyright Act; and 2) even if the

Server Test is rightfully applied in a case such as Perfect 10, or another case in

19 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 17 of 25

which the user takes a volitional action of his own to display an image, it is inappropriate in cases such as those here, where the user takes no action to

“display” the image. He and his amici5 caution that to adopt the Server Test

broadly would have a “devastating” economic impact on photography and visual

artwork licensing industries, noting that it would “eliminate” the incentives for

websites to pay licensing fees, and thus “deprive content creators of the resources

necessary to invest in further creation.” (ECF No. 145-1 at 4.)

The Court agrees with plaintiff. The plain language of the Copyright Act, the

legislative history undergirding its enactment, and subsequent Supreme Court

jurisprudence provide no basis for a rule that allows the physical location or

possession of an image to determine who may or may not have “displayed” a work

within the meaning of the Copyright Act. Moreover, the Court agrees that there are

critical factual distinctions between Perfect 10 and this case such that, even if the

Second Circuit were to find the Server Test consistent with the Copyright Act, it

would be inapplicable here.

A. The Copyright Act

Nowhere does the Copyright Act suggest that possession of an image is

necessary in order to display it. Indeed, the purpose and language of the Act

support the opposite view. The definitions in § 101 are illuminating. First, to

display a work publicly means to “to transmit . . . a . . . display of the work . . . by

5 Getty Images, the American Society of Media Photographers, Digital Media Licensing Association, National Press Photographers Association, and North American Nature Photography Association submitted an amicus brief supporting plaintiff. (ECF No. 145-1.)

20 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 18 of 25

means of any device or process.” 17 USC § 101. To transmit a display is to

“communicate it by any device or process whereby images or sounds are received beyond the place from which they are sent.” Id. (emphasis added). Devices and processes are further defined to mean ones “now known or later developed.” Id.

This is plainly drafted with the intent to sweep broadly.

Here, defendants’ websites actively took steps to “display” the image. A review of just a few of the declarations proffered by defendants illustrates the point.

For defendant Heavy.com:

[I]n order to embed the SneakerReporter Tweet, Heavy.com navigated to Twitter and copied the SneakerReporter Tweet’s URL. Heavy.com then used out of the box content management functionality provided by WordPress to embed the SneakerReporter Tweet within the Heavy.com Article.

(ECF No. 130, Nobel Decl. ¶ 5.).

Defendant Boston Herald “pasted a code line into its blog/article that contains Twitter HTML instructions.” (ECF No. 137, Emond Decl. ¶ 16.)

Defendant The Big Lead submitted a declaration in which the managing editor stated, “My entering the URL for the RealBobManningTweet into the field for embedded content in the CMS [content management system] caused this URL to be inserted into embedding code that became part of the HTML code for the Big Lead

Article.” (ECF No. 127, Lisk Decl. ¶ 7.)

Defendant Gannett submitted a declaration in which the Vice President stated that:

[I]f I wanted that web page to display a photo that a third party user had posted to a site like Twitter, I could do so without me ever having

21 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 19 of 25

to make a copy of the photo. I would simply include in my HTML code some additional coding containing a link to the URL of the Twitter page where the photo appeared.

(ECF No. 126, Hiland Decl. ¶ 6) (emphasis added).

It is clear, therefore, that each and every defendant itself took active steps to put a process in place that resulted in a transmission of the photos so that they could be visibly shown. Most directly this was accomplished by the act of including the code in the overall design of their webpage; that is, embedding. Properly understood, the steps necessary to embed a Tweet are accomplished by the defendant website; these steps constitute a process. The plain language of the

Indeed, and as discussed above, the Copyright Act’s authors intended to

include “each and every method by which images . . . comprising a . . . display are

picked up and conveyed;” moreover they went as far as to note that an infringement

of the display right could occur “if the image were transmitted by any method (. . .

for example, by a computer system) from one place to members of the public

elsewhere.” H.R. Rep. 94-1476, 64, 70 (1976). Persuasive as well is the warning of

the Register of Copyrights that a “basic right of public exhibition” was necessary to

the 1976 Amendments precisely because “information storage and retrieval devices .

. . when linked together by communication satellites or other means . . . could

eventually provide libraries and individuals throughout the world with access to a

single copy or a work by transmission of electronic images.” H. Comm. On the

Judiciary, 89th Cong., Copyright Law Revision Part 6: Supplementary Report of the

22 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 20 of 25

Revision Bill, at 25 (Comm. Print. 1965).

In sum, this Court sees nothing in either the text or purpose of the Copyright

Act suggesting that physical possession of an image is a necessary element to its

display for purposes of the Act.

B. Aereo’s Impact

Moreover, though the Supreme Court has only weighed in obliquely on the

issue, its language in Aereo is instructive. At heart, the Court’s holding eschewed

the notion that Aereo should be absolved of liability based upon purely technical

distinctions—in the end, Aereo was held to have transmitted the performances,

despite its argument that it was the user clicking a button, and not any volitional

act of Aereo itself, that did the performing. The language the Court used there to

describe invisible technological details applies equally well here: “This difference

means nothing to the subscriber. It means nothing to the broadcaster. We do not

see how this single difference, invisible to subscriber and broadcaster alike, could

transform a system that is for all practical purposes a traditional cable system into

a ‘copy shop that provides patrons with a library card.’” Aereo, 134 S. Ct. at 2507.

Of course, in Aereo there was no argument about the physical location of the

antennae, which were without dispute located in Aereo’s warehouses; similarly

there was no dispute that Aereo’s servers saved data from the on-air broadcasts onto its own hard drives. On the other hand, Aereo was arguably a more passive participant in transmitting the performance right than is a user in the case here—

23 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 21 of 25

who has no choice in what is displayed to him when he navigates to one of defendant’s webpages. Furthermore, the principles that undergird the Aereo decision—chief among them that mere technical distinctions invisible to the user should not be the lynchpin on which copyright liability lies—apply with equal vigor here.

As noted above, even the dissent implies that were Aereo to engage in any sort of curatorial process as to content, that liability might lie: “In sum, Aereo does not perform for the sole and simple reason that it does not make the choice of content.” Id. at 2514 (Scalia, J., dissenting). This adds credence to the notion that where, as here, defendants are choosing the content which will be displayed, that they would indeed be displaying.

In sum, this Court reads Aereo, while not directly on point, as strongly supporting plaintiff’s argument that liability should not hinge on invisible, technical processes imperceptible to the viewer.

C. Perfect 10

The Court declines defendants’ invitation to apply Perfect 10’s Server Test for two reasons. First, this Court is skeptical that Perfect 10 correctly interprets the display right of the Copyright Act. As stated above, this Court finds no indication in the text or legislative history of the Act that possessing a copy of an infringing image is a prerequisite to displaying it. The Ninth Circuit’s analysis hinged, however, on making a “copy” of the image to be displayed—which copy would be stored on the server. It stated that its holding did not “erroneously collapse the

24 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 22 of 25

display right in section 106(5) into the reproduction right in 106(1).” Perfect 10 II,

508 F.3d at 1161. But indeed, that appears to be exactly what was done.

The Copyright Act, however, provides several clues that this is not what was

intended. In several distinct parts of the Act, it contemplates infringers who would

not be in possession of copies—for example in Section 110(5)(A) which exempts

“small commercial establishments whose proprietors merely bring onto their premises standard radio or television equipment and turn it on for their customer’s enjoyment” from liability. H.R. Rep. No. 94-1476 at 87 (1976). That these establishments require an exemption, despite the fact that to turn on the radio or television is not to make or store a copy, is strong evidence that a copy need not be

made in order to display an image.

Second, even if it correctly interprets the Act, to the degree that defendants

interpret Perfect 10 as standing for a broadly-construed Server Test, focusing on the

physical location of allegedly infringing images, this Court disagrees. Rather,

Perfect 10 was heavily informed by two factors—the fact that the defendant

operated a search engine, and the fact that the user made an active choice to click

on an image before it was displayed—that suggest that such a broad reading is

neither appropriate nor desirable.

In Perfect 10, the district court’s Opinion, while not strictly cabining its

adoption of the Server Test to a search engine like Google, nevertheless relied

heavily on that fact in its analysis. It stated, for example, that adopting the Server

Test “will merely preclude search engines from being held directly liable for in-line

25 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 23 of 25

linking and or framing infringing contents stored on third-party websites.” Perfect

10 I, 416 F. Supp. 2d at 844 (emphasis added). It went on: “Merely to index the web so that users can more readily find the information they seek should not constitute direct infringement . . . .” Id. (emphasis added). On appeal, the Ninth Circuit began its statement of the case by saying, “we consider a copyright owner’s efforts to stop an Internet search engine from facilitating access to infringing images.”

Perfect 10 II, 508 F.3d at 1154.

In addition, the role of the user was paramount in the Perfect 10 case—the district court found that users who view the full-size images “after clicking on one of the thumbnails” are “engaged in a direct connection with third-party websites, which are themselves responsible for transferring content.” Perfect 10 I, 416 F.

Supp. 2d at 843.

In this Court’s view, these distinctions are critical. In Perfect 10, Google’s search engine provided a service whereby the user navigated from webpage to webpage, with Google’s assistance. This is manifestly not the same as opening up a favorite blog or website to find a full color image awaiting the user, whether he or she asked for it, looked for it, clicked on it, or not. Both the nature of Google Search

Engine, as compared to the defendant websites, and the volitional act taken by users of the services, provide a sharp contrast to the facts at hand.

In sum, the Court here does not apply the Server Test. It is neither appropriate to the specific facts of this case, nor, this Court believes, adequately

26 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 24 of 25

grounded in the text of the Copyright Act. It therefore does not and should not control the outcome here.

D. Defenses

Defendants warn that to find for plaintiff here would “cause a tremendous

chilling effect on the core functionality of the web.” (ECF No. 121, Defs.’ Mem. of

Law in Supp. at 35) (quoting Perfect 10 I, 426 F. Supp. 2d at 840). Their amici6

warn that not adopting the Server Test here would “radically change linking

practices, and thereby transform the Internet as we know it.”

The Court does not view the results of its decision as having such dire

consequences. Certainly, given a number as of yet unresolved strong defenses to

liability separate from this issue, numerous viable claims should not follow.

In this case, there are genuine questions about whether plaintiff effectively released his image into the public domain when he posted it to his Snapchat account. Indeed, in many cases there are likely to be factual questions as to licensing and authorization. There is also a very serious and strong fair use defense, a defense under the Digital Millennium Copyright Act, and limitations on

damages from innocent infringement.

6 The Electronic Frontier Foundation, a non-profit foundation dedicated to free expression, and Public Knowledge, a not-for-profit public interest advocacy and research organization, submitted an amicus brief at ECF No. 143-1. (Amicus Brief of the Electronic Frontier Foundation and Public Knowledge in Support of Defendants’ Motion for Partial Summary Judgment.)

27 Case 1:17-cv-03144-KBF Document 169 Filed 02/15/18 Page 25 of 25

In sum, for all the reasons discussed above, the Court DENIES defendants’ motion for partial summary judgment and GRANTS partial summary judgment to

the plaintiff.

IV. CONCLUSION

For the reasons stated above, defendants’ motion for partial Summary

Judgment is DENIED. The Court GRANTS partial Summary Judgment to the

plaintiff. The Clerk of Court is directed to terminate the motion at ECF No. 119.

SO ORDERED.

Dated: New York, New York February 15, 2018

______KATHERINE B. FORREST United States District Judge

28 Case 2:17-cv-08655 Document 1 Filed 11/30/17 Page 1 of 19 Page ID #:1

1 GLENN D. POMERANTZ (State Bar No. 112503) [email protected] 2 ROSE LEDA EHLER (State Bar No. 296523) [email protected] 3 MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, 50th Floor 4 Los Angeles, California 90071-3426 Telephone: (213) 683-9100 5 Facsimile: (213) 687-3702 6 KELLY M. KLAUS (State Bar No. 161091) [email protected] 7 CAROLYN HOECKER LUEDTKE (State Bar No. 207976) [email protected] 8 STEPHANIE GOLDFARB HERRERA (State Bar No. 313887) [email protected] 9 MUNGER, TOLLES & OLSON LLP 560 Mission Street, 27th Floor 10 San Francisco, California 94105-2907 Telephone: (415) 512-4000 11 Facsimile: (415) 512-4077 12 Attorneys for Plaintiffs 13 14 UNITED STATES DISTRICT COURT 15 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION 16 17 DISNEY ENTERPRISES, INC., Case No. ______BUENA VISTA HOME 18 ENTERTAINMENT, INC., COMPLAINT FOR COPYRIGHT LUCASFILM LTD. LLC, and MVL INFRINGEMENT, BREACH OF 19 FILM FINANCE LLC, CONTRACT, TORTIOUS INTERFERENCE WITH 20 Plaintiffs, CONTRACT, FALSE ADVERTISING, AND UNFAIR 21 vs. COMPETITION 22 REDBOX AUTOMATED RETAIL, DEMAND FOR JURY TRIAL LLC, 23 Defendant. 24 25 26 27 28

COMPLAINT CASE NO. ____29 Case 2:17-cv-08655 Document 1 Filed 11/30/17 Page 2 of 19 Page ID #:2

1 Plaintiffs Disney Enterprises, Inc., Buena Vista Home Entertainment, Inc., 2 Lucasfilm Ltd. LLC, and MVL Film Finance LLC (collectively, “Plaintiffs”) bring 3 this Complaint against Redbox Automated Retail, LLC (“Redbox”) for infringing 4 Plaintiffs’ exclusive rights under the Copyright Act (17 U.S.C. § 101 et seq.), breach 5 of contract, tortious interference with contract, false advertising (Cal. Bus. & Prof. 6 Code § 17500 et seq.), and unfair competition (id. § 17200 et seq.). This Court has 7 subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1338(a), and 1367(a), and 8 17 U.S.C. § 501(b). Plaintiffs allege on personal knowledge as to themselves, and 9 information and belief as to others, as follows: 10 INTRODUCTION 11 1. Redbox operates a movie and video-game rental business. Redbox 12 rents physical DVDs and Blu-ray discs through self-service kiosks located at 13 grocery stores and other retail establishments. 14 2. Redbox recently began illegally selling Plaintiffs’ digital movie codes 15 (“Codes”) to Redbox customers in blatant disregard of clear prohibitions against 16 doing so and in violation of Plaintiffs’ copyrights. 17 3. Plaintiffs sell Codes as part of combination packages (“Combo 18 Packs”) that include a Blu-ray disc, a DVD, and a Code. The outside packaging is 19 clearly marked: “Codes are not for sale or transfer.” 20 21 22 23 24 25 26 27 28 -1- COMPLAINT CASE NO. ____30

Case 2:17-cv-08655 Document 1 Filed 11/30/17 Page 3 of 19 Page ID #:3

31 Case 2:17-cv-08655 Document 1 Filed 11/30/17 Page 4 of 19 Page ID #:4

1 8. Plaintiff Lucasfilm Ltd. LLC (“Lucasfilm”) is a limited liability 2 company formed under the laws of the State of California with its principal place of 3 business in San Francisco, California. 4 9. Plaintiff MVL Film Finance LLC (“Marvel”) is a limited liability 5 company formed under the laws of the State of Delaware with its principal place of 6 business in Burbank, California. 7 10. Plaintiffs Disney, Lucasfilm, and Marvel own the copyrights in the 8 motion pictures and television programs that they or their affiliates produce and 9 distribute (the “Copyrighted Works”). The Copyright Office has issued Certificates 10 of Copyright Registration for the Copyrighted Works. Exhibit A includes a 11 representative list of Copyrighted Works, along with their corresponding Certificate 12 of Copyright Registration numbers, that are the subject of Plaintiffs’ claims. 13 11. Defendant Redbox is a limited liability company formed under the 14 laws of the State of Delaware with its principal place of business at One Tower 15 Lane, Suite 900, Oakbrook Terrace, Illinois 60181. Redbox has established and 16 maintains kiosk locations throughout this District and the State of California from 17 which it sells the Codes. Redbox also makes Codes available for sale online to 18 consumers located in California. 19 JURISDICTION AND VENUE 20 12. This Court has subject matter jurisdiction over Plaintiffs’ copyright 21 infringement claims pursuant to 28 U.S.C. §§ 1331, 1338(a) and 17 U.S.C. 22 § 501(b). 23 13. This Court has supplemental jurisdiction over Plaintiffs’ state law 24 claims pursuant to 28 U.S.C. § 1367(a). 25 14. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(b)(2) 26 and 1400(a). 27 28 -3- COMPLAINT CASE NO. ____32

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1 BACKGROUND FACTS 2 Plaintiffs and Their Copyrighted Works 3 15. Plaintiffs or their affiliates own, produce, and distribute some of the 4 most popular and critically acclaimed motion pictures in the world. 5 a. Well-known feature-length motion pictures in which Disney 6 holds the copyrights include: Pirates of the Caribbean: Dead Men Tell No Tales 7 (2017), Beauty and the Beast (2017), Finding Dory (2016), The Jungle Book (2016), 8 Moana (2016), Inside Out (2015), and Frozen (2013). 9 b. Well-known feature-length motion pictures in which Lucasfilm 10 holds the copyrights include: Rogue One: A Star Wars Story (2016) and Star Wars: 11 Episode VII – The Force Awakens (2015). 12 c. Well-known feature-length motion pictures in which Marvel 13 holds the copyrights include: Doctor Strange (2017), Guardians of the Galaxy Vol. 14 2 (2017), and Iron Man 3 (2013). 15 16. Redbox currently engages in the unauthorized sale of Codes for all of 16 the foregoing titles, and other Copyrighted Works, both online and at its physical 17 kiosks. 18 17. Plaintiffs or their affiliates own or have the exclusive U.S. rights 19 (among others) to reproduce and distribute the Copyrighted Works. 20 18. Plaintiffs or their affiliates distribute the Copyrighted Works in various 21 formats and through multiple distribution channels, including: for exhibition in 22 theaters; through cable and direct-to-home satellite services (including basic, 23 premium, “pay-per-view,” and video-on-demand services); through licensed digital 24 services; and through physical copies on Blu-ray discs and DVDs. 25 19. Consumers can access Plaintiffs’ digital content through the 26 ReedeemDigitalMovie.com website, the Movies Anywhere service, or other 27 websites hosted by Plaintiffs or their affiliates. These sites provide online portals 28 -4- COMPLAINT CASE NO. ____33

Case 2:17-cv-08655 Document 1 Filed 11/30/17 Page 6 of 19 Page ID #:6

1 through which consumers with authorization to do so are permitted to redeem 2 Codes for access to the underlying motion picture. 3 Plaintiffs’ Combo Packs and Digital Movie Codes 4 20. Plaintiffs’ Combo Packs are single retail units that contain three 5 separate consumer offerings bundled together: a Blu-ray disc containing a copy of 6 the work; a DVD containing a copy of the work; and a Code, which the purchaser 7 of the Combo Pack can redeem through authorized online services. 8 21. Combo Packs are sold at a discount from the price that a consumer 9 would pay separately to purchase the individual discs and obtain an authorized 10 digital copy. Plaintiffs offer Codes as part of the Combo Packs as a way of 11 providing consumers who typically utilize physical playback media with access to 12 the online entertainment ecosystem. The discounted aggregate price is also an 13 incentive for consumers to upgrade to the purchase of Combo Packs instead of a 14 single disc package or digital download. 15 22. Combo Packs are sold subject to terms and conditions that govern both 16 the purchase and use of the included offerings. One such term, stated twice on the 17 outside of the Combo Pack packaging, states: “Codes are not for sale or transfer.” 18 23. The Code is printed on an insert included with the Combo Pack. The 19 insert provides instructions for redeeming the Code to download or access a digital 20 stream of the motion picture. A consumer can redeem a Code through 21 RedeemDigitalMovie.com, the Movies Anywhere service, or, in some cases, 22 through other authorized services. The bottom of the insert states again that “Codes 23 are not for sale or transfer.” 24 25 26 27 28 -5- COMPLAINT CASE NO. ____34

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35 Case 2:17-cv-08655 Document 1 Filed 11/30/17 Page 8 of 19 Page ID #:8

1 Vista Home Entertainment, Inc. reserves the right to invalidate any digital movie codes it suspects have been sold, distributed, purchased 2 or transferred in a manner inconsistent with these terms and conditions. 3 In addition, Buena Vista Home Entertainment, Inc. will have the right to take appropriate legal action, in its sole discretion. 4 5 6 7 8 9 10 11 12 13 Figure 4: Terms and Conditions for RedeemDigitalMovie.com 14 Consumers must agree to these terms and conditions when entering Codes and 15 before streaming or downloading the content. 16 26. The Movies Anywhere service is likewise subject to terms of use, 17 which provide the following regarding redemption of Codes: 18 Digital Copy Code Redemption. You can enter authorized, unexpired, 19 valid, and unused Digital Copy codes from a Digital Copy enabled and 20 Movies Anywhere-eligible physical product that is owned by you in the “Redeem” section of the Movies Anywhere Service. . . . You will not 21 transfer, sell or rent (or offer to transfer, sell or rent) any Digital Copy 22 codes. . . . The sale, distribution, purchase or transfer of Digital Copy codes outside of the methods set forth in such terms and conditions is 23 strictly prohibited. 24 Consumers cannot access or use Movies Anywhere without creating an account, 25 which requires them to click a box acknowledging that they have read and agree to 26 the terms of use. 27 28 -7- COMPLAINT CASE NO. ____36

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1 Redbox’s Unlawful Resale of Codes 2 27. Redbox purchases and disassembles Combo Packs, separating the 3 Codes from the physical discs. Redbox rents or sells the discs through its kiosks. 4 Redbox separately re-packages the Code insert—that states “Codes are not for sale 5 or transfer”—into a Redbox case for resale. 6 7 8 9 10 11 12 13 14 Figure 5: Redbox Re-packaging of Digital Movie Codes 15 28. Redbox sells these Codes through its retail kiosks as well as online (to 16 be picked up at a nearby Redbox kiosk). Redbox markets its offering of the Codes 17 as “cheap,” a “Smart buy,” and a low-price alternative to authorized digital 18 services. Redbox does so to attract customers who would otherwise purchase a 19 Combo Pack or licensed digital offering through an authorized distributor. 20 21 22 23 24 25 26 27 28 -8- COMPLAINT CASE NO. ____37

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1 2 3 4 5 6 7 8 9

10 Figure 6: Redbox Website 11 http://redbox.com/ 12 29. Redbox knows the terms and conditions that govern use of the Codes, 13 including the express prohibition that appears twice on the outside of the packaging 14 (and again on the inside packaging containing the Code): “Codes are not for sale or 15 transfer.” 16 30. Redbox does not tell its customers that the Codes were sold as part of 17 a Combo Pack; that the Codes may not be resold or transferred; that a customer 18 who purchases a Code separate from the rest of the Combo Pack does not have 19 authorization to redeem the Code, or to download or otherwise access a copy of the 20 Copyrighted Work; or that BVHE has the right to invalidate any Code it suspects 21 has been sold, distributed, purchased, or transferred in a manner inconsistent with 22 the governing terms and conditions. 23 31. Redbox knows that Plaintiffs’ digital content licenses are subject to 24 terms of use. This is a practice that Redbox itself follows. When Redbox offers 25 online programs and services, its customers must create an account and agree to 26 Redbox’s terms of use. Redbox knows that the online redemption of Codes and the 27 use of services like RedeemDigitalMovie.com and Movies Anywhere also are 28 subject to terms of use. And, Redbox knows from the language on the outside -9- COMPLAINT CASE NO. ____38

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1 packaging of Combo Packs that terms and conditions apply to the redemption of 2 Codes. Redbox has knowledge of the RedeemDigitalMovie.com and Movies 3 Anywhere terms of use either because Redbox read those terms of use before 4 starting to sell the Codes or because Redbox willfully blinded itself to those terms 5 of use. 6 Redbox’s Conduct Causes Immediate and Irreparable Harm 7 32. If not enjoined, Redbox’s continued unlawful conduct will harm 8 Plaintiffs’ relationships with its authorized distributors and retailers. Because 9 Redbox resells Codes without authorization and in violation of the terms of the 10 contract, Redbox significantly undercuts the prices offered by licensed services for 11 accessing the Copyrighted Works online. Redbox’s conduct interferes with, among 12 other things, Plaintiffs’ goodwill with those licensees and ability to negotiate with 13 licensees. 14 33. Redbox’s illegal conduct will continue to undermine Plaintiffs’ 15 relationships with its customers. Redbox markets its sale of the Codes to its 16 customers as a legitimate and lawful alternative to purchasing digital access 17 through authorized online services. Redbox misleads customers into believing that 18 they are entering into authorized transactions when they redeem Codes and induces 19 those customers to download digital copies of titles when Redbox knows those 20 customers have no legal authorization or right to do so. Redbox’s illegal conduct 21 threatens to confuse and frustrate customers regarding the authorized use of Codes. 22 FIRST CAUSE OF ACTION 23 (Disney, Lucasfilm, and Marvel: 24 Contributory Copyright Infringement, 17 U.S.C. §106) 25 34. Plaintiffs incorporate herein by reference each and every averment 26 contained in paragraphs 1 through 33 inclusive. 27 28 -10- COMPLAINT CASE NO. ____39

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1 35. When Redbox’s customers download Copyrighted Works using a 2 Code purchased from Redbox, they do so without authorization and in violation of 3 Plaintiffs’ exclusive rights under copyright, including the right of reproduction. 4 36. Redbox is contributorily liable for copyright infringement because it 5 (a) has knowledge that its customers will be reproducing the Copyrighted Works 6 without authorization when they use the Codes to download copies of those works, 7 and (b) induces, encourages, or materially contributes to the violation of Plaintiffs’ 8 rights through its unlawful resale of the Codes. 9 37. Redbox’s acts of infringement are willful, in disregard of, and done 10 with indifference to Plaintiffs’ rights. 11 38. As a direct and proximate result of the infringements for which 12 Redbox is responsible, Plaintiffs are entitled to damages and Redbox’s profits in 13 amounts to be proven at trial. 14 39. Alternatively, at their election, Plaintiffs are entitled to statutory 15 damages, up to the maximum amount of $150,000 per statutory award, by virtue of 16 Redbox’s willful infringement, or for such other amounts as may be proper under 17 17 U.S.C. § 504. 18 40. Plaintiffs are further entitled to recover their attorneys’ fees and full 19 costs pursuant to 17 U.S.C. § 505. 20 41. As a direct and proximate result of the foregoing acts and conduct, 21 Plaintiffs are threatened with continuing substantial, immediate, and irreparable 22 injury for which there is no adequate remedy at law. Unless enjoined and 23 restrained by this Court, Redbox will continue to infringe Plaintiffs’ rights in their 24 Copyrighted Works. Plaintiffs are entitled to injunctive relief under 17 U.S.C. 25 § 502. 26 27 28 -11- COMPLAINT CASE NO. ____40

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1 SECOND CAUSE OF ACTION 2 (BVHE: 3 Breach of Contract) 4 42. Plaintiffs incorporate herein by reference each and every averment 5 contained in paragraphs 1 through 41 inclusive. 6 43. Redbox enters into a contract with BVHE when it purchases Combo 7 Packs. That contract prohibits “sale or transfer” of the Codes. 8 44. BVHE has performed its obligations under the contract. 9 45. Redbox has breached the contract by reselling the Codes to its 10 customers. 11 46. Redbox’s breach causes Plaintiffs to suffer damages and threatens 12 them with continuing substantial, immediate, and irreparable injury. 13 47. Plaintiffs are entitled to specific performance and an injunction 14 restraining Redbox from continuing to violate the terms of the contract because 15 there is no adequate legal remedy, Cal. Civ. Code § 3366 et seq. 16 THIRD CAUSE OF ACTION 17 (BVHE: 18 Tortious Interference with Plaintiffs’ Contracts with Customers) 19 48. Plaintiffs incorporate herein by reference each and every averment 20 contained in paragraphs 1 through 47 inclusive. 21 49. BVHE has valid contracts with customers through the 22 RedeemDigitalMovie.com terms of service. These contracts prohibit the 23 redemption of Codes by customers who do not own the accompanying physical 24 product sold as part of the Combo Pack. 25 50. Redbox at all relevant times has known of these contracts. 26 51. Redbox intentionally induced and is continuing to induce breach and 27 disruption of these contractual relationships between BVHE and customers by 28 selling Codes disassembled from the Combo Packs that cannot be redeemed -12- COMPLAINT CASE NO. ____41

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1 without violating the terms and conditions of the RedeemDigitalMovie.com terms 2 of service. 3 52. Plaintiffs are damaged by Redbox’s interference with their 4 relationships with their customers as well as lost sales; and are threatened with 5 continuing substantial, immediate, and irreparable injury for which there is no 6 adequate remedy at law, thereby entitling Plaintiffs to injunctive relief. 7 53. Redbox’s actions were done with malice, oppression, and fraud and in 8 wanton disregard for Plaintiffs’ rights. Plaintiffs are therefore entitled to punitive 9 damages, under California Civil Code § 3294, to punish Redbox for its conduct and 10 to deter it from engaging in similar conduct in the future. 11 FOURTH CAUSE OF ACTION 12 (All Plaintiffs: 13 Violation of the False Advertising Law, Cal. Bus. & Prof. Code § 17500) 14 54. Plaintiffs incorporate herein by reference each and every averment 15 contained in paragraphs 1 through 53 inclusive. 16 55. California Business and Professions Code § 17500 et seq., prohibits 17 false advertising, i.e., untrue or misleading statements with the intent to induce 18 members of the public to enter into a transaction. 19 56. Redbox knowingly disseminates false and misleading information by 20 not disclosing to consumers that the Codes may only be redeemed by the owner of 21 the physical product sold as part of the Combo Pack. Redbox deceives customers 22 into believing that the Codes that Redbox sells grant those customers authorized 23 access to a digital copy of the motion picture, when they do not. 24 57. Plaintiffs are entitled to injunctive relief and restitution pursuant to 25 California Business and Professions Code § 17535. 26 27 28 -13- COMPLAINT CASE NO. ____42

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1 FIFTH CAUSE OF ACTION 2 (All Plaintiffs: 3 Violation of the Unfair Competition Law, Cal. Bus. & Prof. Code § 17200) 4 58. Plaintiffs incorporate herein by reference each and every averment 5 contained in paragraphs 1 through 57 inclusive. 6 59. California Business and Professions Code § 17200 et seq. (“UCL”), 7 prohibits unfair competition in the form of any unlawful, unfair, or fraudulent 8 business acts or practices. 9 60. Redbox engages in conduct that violates the UCL by, as further 10 explained in paragraphs 1 through 57 inclusive, competing in the marketplace on 11 unfair terms by engaging in unlawful conduct and misleading its customers into 12 believing that their purchase of the illegally re-packaged and resold Codes grants 13 those customers authorized access to a digital copy of the motion picture. 14 61. This conduct is “unlawful” because it constitutes tortious interference 15 with contracts and false advertising under Cal. Bus. & Prof. Code § 17500. 16 62. This conduct is “unfair” because (a) it is contrary to legislatively 17 declared policies, including the policies expressed and embodied in Cal. Bus. & 18 Prof. Code § 17500; and (b) the impact of the conduct on Plaintiffs, when weighed 19 against Redbox’s reasons, motivations, and justifications for such conduct, 20 establish that the conduct is unfair. 21 63. This conduct is “fraudulent” in that it is likely to deceive customers 22 into believing they have purchased a Code that grants them authorized access to a 23 digital copy of a Copyrighted Work, when in fact customers are only authorized to 24 use a Code if they have purchased the accompanying physical product as part of the 25 Combo Pack. 26 64. Plaintiffs have lost and will continue to lose sales as a direct result of 27 Redbox’s unlawful, unfair, and fraudulent conduct. 28 -14- COMPLAINT CASE NO. ____43

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1 65. Plaintiffs are entitled to injunctive relief and restitution pursuant to 2 California Business and Professions Code § 17203. 3 PRAYER FOR RELIEF 4 WHEREFORE, Plaintiffs pray for judgment against Redbox for the following 5 relief: 6 1. For preliminary and permanent injunctions enjoining Redbox and all 7 persons acting in concert or participation with it, from reselling Codes; from 8 infringing in any manner, directly or indirectly, any copyrighted work owned or 9 controlled by Plaintiffs or their affiliates (including without limitation any 10 Copyrighted Work); from breaching the terms of Redbox’s contracts with any 11 Plaintiff; from interfering with any Plaintiff’s contracts with customers; from 12 disseminating false and misleading information regarding Codes; and from 13 unlawfully, unfairly, or fraudulently competing by reselling Codes. 14 2. For Plaintiffs’ damages and Redbox’s profits in such amount as may 15 be found; alternatively, at Plaintiffs’ election, for maximum statutory damages; or 16 for such other amounts as may be proper pursuant to 17 U.S.C. § 504(c). 17 3. For Plaintiffs’ damages and restitution to the fullest extent allowed 18 pursuant to the common law and Cal. Bus. & Prof. Code § 17203. 19 4. For an award of punitive damages pursuant to Cal. Civ. Code § 3294. 20 5. For prejudgment interest pursuant to Cal. Civ. Code § 3287. 21 6. For Plaintiffs’ attorneys’ fees and full costs incurred in this action 22 pursuant to 17 U.S.C. § 505 and Cal. Civ. Code §1021.5. 23 7. For all such further and additional relief, in law or in equity, to which 24 Plaintiffs may be entitled or which the Court deems just and proper. 25 26 27 28 -15- COMPLAINT CASE NO. ____44

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1 DEMAND FOR JURY TRIAL 2 Plaintiffs demand a trial by jury on all issues triable by jury. 3

4 DATED: November 30, 2017 MUNGER, TOLLES & OLSON LLP 5

6 7 By: /s/ Kelly M. Klaus 8 KELLY M. KLAUS 9 Attorneys for Plaintiffs 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -16- COMPLAINT CASE NO. ____45

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EXHIBIT A

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Complaint Exhibit A

Plaintiff Title U.S. Copyright Reg. Number Disney Enterprises, Inc. Alice Through the Looking Glass PA 1-991-651 Disney Enterprises, Inc. Beauty and the Beast (2017) PA 2-031-209 Disney Enterprises, Inc. Cars 3 PA 2-048-714 Disney Enterprises, Inc. Finding Dory PA 1-994-819 Disney Enterprises, Inc. Frozen PA 1-871-077 Disney Enterprises, Inc. Inside Out PA 1-949-250 Disney Enterprises, Inc. Jungle Book, The (2016) PA 1-988-129 Disney Enterprises, Inc. Lone Ranger, The PA 1-848-181 Disney Enterprises, Inc. Maleficent PA 1-899-203 Disney Enterprises, Inc. Moana PA 2-012-015 Disney Enterprises, Inc. Muppets Most Wanted PA 1-887-658 Disney Enterprises, Inc. Oz the Great and Powerful PA 1-830-872 Disney Enterprises, Inc. Pirates of the Caribbean: Dead PA 2-045-629 Men Tell No Tales Disney Enterprises, Inc. Planes PA 1-856-767 Disney Enterprises, Inc. Planes: Fire & Rescue PA 1-907-149 Lucasfilm Ltd. LLC Star Wars: Episode VII – The PA 1-975-592 Force Awakens Lucasfilm Ltd. LLC Rogue One: A Star Wars Story PA 2-016-306 MVL Film Finance, LLC Doctor Strange PA 2-008-618 MVL Film Finance, LLC Guardians of the Galaxy Vol. 2 PA 2-033-904 MVL Film Finance, LLC Iron Man 3 PA 1-836-301

COMPLAINT, EX. A CASE NO. ____ 47 Case 2:17-cv-08655-DDP-AGR Document 74 Filed 02/20/18 Page 1 of 26 Page ID #:1670

1 2 3 O 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA 10 11 DISNEY ENTERPRISES, INC.; ) Case No. CV 17-08655 DDP (AGRx) BUENA VISTA HOME ) 12 ENTERTAINMENT, INC.; ) LUCASFILM LTD., LLC, MVL ) 13 FILM FINANCE LLC, ) ORDER DENYING PLAINTIFFS’ MOTION ) FOR PRELIMINARY INJUNCTION 14 Plaintiff, ) ) 15 v. ) ) 16 REDBOX AUTOMATED RETAIL, ) [Dkt. 13] LLC, ) 17 ) Defendants. ) 18 ) ______) 19 20 Presently before the court is Plaintiffs Disney Enterprises, 21 Inc., Buena Vista Home Entertainment, Inc., Lucasfilm Ltd., LLC, 22 and MVL Film Finance LLC (collectively, “Disney”)’s Motion for 23 Preliminary Injunction. Having considered the submissions of the 24 parties, the court denies the motion and adopts the following 25 Order. 26 I. Background 27 Disney owns the copyrights to several well-known movies, 28 including Beauty and the Beast, Frozen, Star Wars: Episode VII -

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1 The Force Awakens, Rogue One: A Star Wars Story, and Guardians of 2 the Galaxy Vol. 2. (Declaration of Rosa Leda Ehler ¶¶ 3, 6, 17-18, 3 20; Exs. B, E, P, Q, S.) Disney distributes its films in multiple 4 formats through a variety of channels, including DVD and Blu-ray 5 disc sales, on-demand streaming services such as iTunes and Google 6 Play, and subscription streaming services such as Netflix and 7 Hulu.1 (Declaration of Janice Marinelli ¶ 7.) Among Disney’s 8 offerings are “Combo Packs.” (Marinelli Decl., ¶ 8, Ex. A.) Combo 9 Pack boxes feature large-type text reading, “Blu-Ray + DVD + 10 Digital HD,” and include a Blu-ray disc, a digital versatile disc 11 (“DVD”), and a piece of paper containing an alphanumeric code. 12 (Marinelli Decl., Ex. A.) The alphanumeric code can be inputted or 13 redeemed at RedeemDigitalMovies.com or DisneyMoviesAnywhere.com to 14 allow a user to “instantly stream and download with digital HD.” 15 (Id.) The exteriors of the Combo Pack boxes state, in somewhat 16 smaller print near the bottom third of the box, that “Codes are not 17 for sale or transfer.” (Id.) Very fine print at the bottom of the 18 boxes indicates, with respect to “Digital HD,” that “Terms and 19 Conditions apply.”2 (Id.) 20 1 Disney does not sell standalone digital downloads directly 21 to consumers, but does make standalone downloads available through Disney licensees. (Marinelli Decl., ¶ 10.) 22 2 Although Disney describes its Beauty and the Beast (2017) 23 packaging as a representative sample of the twenty Combo Packs identified in the Complaint, that does not appear to be the case. 24 (Marinelli Decl., Ex. 10.) For example, the “Codes are not for sale or transfer” language appears only on Combo Packs released 25 after June 2017. (Supplemental Declaration of Kelly Klaus ¶ 3.) Similarly, the “Blu-Ray + DVD + Digital HD” language only appears 26 on a small number of Combo Packs, while the packaging of other works named in the Complaint contain different descriptions, such 27 as “Digital Copy.” (Supplemental Klaus Decl., Ex. KK.) Nevertheless, for purposes of determining whether any injunction 28 (continued...)

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1 The download code insert within the Combo Pack box instructs 2 consumers to (1) visit RedeemDigitalMovie.com or Disney Movies 3 Anywhere, (2) enter the alphanumeric code printed on the insert, 4 and (3) “enjoy your movie.” (Marinelli Decl., Ex. B.) The insert, 5 like the exterior of the Combo Pack packaging, also states, “Codes 6 are not for sale or transfer.” (Id.) 7 The RedeemDigitalMovies and Disney Movies Anywhere web pages 8 each set forth additional terms and conditions of use. The former 9 states that Plaintiff Buena Vista Home Entertainment, Inc. retains 10 ownership of the codes and authorizes only their conditional use.3 11 The page also states that by redeeming a code, the user “represents 12 that [he] is the owner of the physical product that accompanied the 13 digital code at the time of purchase. The redemption of a digital 14 code sold or transferred separate from the original physical 15 product is prohibited.” (Declaration of Kelly Klaus, Ex. A.) The 16 more substantial Movies Anywhere click-wrap terms of use provide 17 that only members with registered Movies Anywhere accounts, who 18 have by definition agreed to Movies Anywhere’s terms of use, can 19 take advantage of the Movies Anywhere service. (Klaus Decl., Ex. B 20 at 11.) Among the terms of use are terms concerning digital copy 21 code redemption, which provide that a consumer “can enter 22 authorized . . . Digital Copy codes from a Digital Copy enabled . . 23

24 2(...continued) should issue, this court will analyze the “best case scenario”-type 25 language included on the Beauty and the Beast packaging. 26 3 The pop-up “terms and conditions” dialog window refers to “these terms and conditions” in several places, but does not appear 27 to include all terms and conditions. Instead, “all applicable terms and conditions” are accessible via a separate link outside 28 the dialog box. (Declaration of Kelly Klaus, Ex. A.)

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1 . physical product that is owned by [that consumer].” (Id. at 15.) 2 The terms further state that the “sale, distribution, purchase, or 3 transfer of Digital Copy codes . . . is strictly prohibited.” 4 (Id.) The Movies Anywhere terms of use also state that Movies 5 Anywhere grants the registered member “a limited, personal use, 6 non-transferable, non-assignable, revocable non-exclusive and non- 7 sublicensable right” to stream or download movies and to use the 8 service. (Id. at 12.) The terms of service expressly restrict 9 users’ right to copy the copyrighted works, except in accordance 10 with the Movies Anywhere terms of service. (Id.) 11 Defendant Redbox Automated Retail, LLC (“Redbox”) rents and 12 sells movies to consumers via tens of thousands of automated kiosks 13 that dispense DVD and Blu-ray discs. (Declaration of Galen Smith 14 ¶¶ 4,6; Declaration of Richard Chamberlain ¶¶ 2,4.) Redbox also 15 offers a “Redbox on Demand” service that allows consumers to stream 16 or download movies owned by studios other than Disney. (Smith 17 Decl. ¶ 4.) More recently, Redbox has begun to offer digital 18 downloads of Disney movies in the form of download codes. 19 (Chamberlain Decl. ¶ 7, Smith Decl. ¶ 17.) Because Redbox does not 20 have a vendor agreement with Disney, Redbox acquires Disney films 21 by purchasing copies at retail outlets such as electronics stores, 22 grocery stores, and the like. (Chamblerlain Decl. ¶¶ 3, 5.) 23 Redbox purchases standalone Blu-rays and DVDs as well as Disney’s 24 Combo Packs. (Id. at ¶ 4.) Redbox obtains digital download codes 25 for Disney movies by purchasing Combo Packs and removing the piece 26 of paper bearing the download code from Disney’s packaging. (Id. 27 at ¶ 7.) Redbox then places the piece of paper bearing the code 28

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1 into its own Redbox packaging and offers the code for sale at a 2 Redbox kiosk. (Id.) 3 Disney’s Complaint alleges that Redbox’s resale of Combo Pack 4 digital download codes (1) constitutes contributory copyright 5 infringement, insofar as it encourages end users to make 6 unauthorized reproductions of Disney’s copyrighted works, (2) is a 7 breach of the contract Redbox enters into with Buena Vista when 8 Redbox purchases Combo Packs, (3) interferes with Disney’s 9 contracts with RedeemDigitalMovie.com users, and (4) violates 10 California false advertising and unfair competition laws. Disney 11 now moves for a preliminary injunction enjoining Redbox from, among 12 other things, selling or transferring Disney digital download 13 codes. 14 II. Legal Standard 15 A private party seeking a preliminary injunction must show 16 that: (i) it is likely to succeed on the merits; (ii) it will 17 suffer irreparable harm in the absence of preliminary relief; (iii) 18 the balancing of the equities between the parties that would result 19 from the issuance or denial of the injunction tips in its favor; 20 and (iv) an injunction will be in the public interest. Winter v. 21 Natural Resources Def. Council, 555 U.S. 7, 20 (2008). Preliminary 22 relief may be warranted where a party: (i) shows a combination of 23 probable success on the merits and the possibility of irreparable 24 harm; or (ii) raises serious questions on such matters and shows 25 that the balance of hardships tips in favor of an injunction. See 26 Arcamuzi v. Continental Air Lines, Inc., 819 F.2d 935, 937 (9th 27 Cir. 1987). “These two formulations represent two points on a 28 sliding scale in which the required degree of irreparable harm

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1 increases as the probability of success decreases.” Id. Under 2 both formulations, the party must demonstrate a “fair chance of 3 success on the merits” and a “significant threat of irreparable 4 injury” absent the issuance of the requested injunctive relief.4 5 Id. 6 III. Discussion 7 A. Breach of Contract 8 Disney contends that Redbox entered into a contract with 9 Disney when Redbox purchased and opened Disney Combo Packs that 10 included, on the outside of the packaging, the phrase “Codes are 11 not for sale or transfer.” (Motion at 9.) The elements of a 12 breach of contract claim are (1) the existence of a contract, (2) 13 performance or excuse for nonperformance, (3) defendant’s breach, 14 and (4) damages. Oasis West Realty, LLC v. Goldman, 51 Cal. 4th 15 811, 821 (2011). A valid contract requires capable, consenting 16 parties, a lawful object, and sufficient cause or consideration. 17 Cal. Civ. Code § 1550; Janda v. Madera Community Hosp., 16 F. 18 Supp. 2d 1181, 1186 (E.D. Cal. 1998). In California, “[a] contract 19 for sale of goods may be made in any manner sufficient to show 20 agreement, including conduct by both parties which recognizes the 21 existence of such a contract.” Cal. Com. Code § 2204(1). In 22 general, “silence or inaction does not constitute acceptance of an 23 offer.” Norcia v. Samsung Telecomm. Am., LLC, 845 F.3d 1279, 1284 24 (9th Cir. 2017) (quoting Golden Eagle Ins. Co. v. Foremost Ins. 25

26 4 Even under the “serious interests” sliding scale test, a plaintiff must satisfy the four Winter factors and demonstrate 27 “that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Alliance for the Wild 28 Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011).

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1 Co., 20 Cal. App. 4th 1372, 1385 (1993). Nevertheless, a party’s 2 voluntary acceptance of the benefit of an offer may constitute 3 consent to a contract. Id. At the same time, however, even a 4 party that has accepted an offered benefit cannot be deemed to have 5 accepted a contract if the offeree did not have reasonable notice 6 that an offer had been made. Id. (citing Windsor Mills, Inc. v. 7 Collins & Aikman Corp., 25 Cal. App. 3d 987, 993 (1972)). 8 In Norcia, the defendant sought to enforce the terms of an 9 arbitration agreement set forth within a brochure that was located 10 inside a product box, and which therefore could not be accessed or 11 viewed by the consumer without opening the product packaging after 12 purchase. Norcia, 845 F.3d at 1286. The defendant contended that 13 the plaintiff had consented to the arbitration terms because, 14 notwithstanding the absence of any terms on the outside of the 15 packaging, the brochure was analogous to a “shrink-wrap license,” 16 which states on the outside of a product package that the user 17 agrees to further, as-yet undisclosed license terms by opening up 18 the packaging.5 Id. Accepting the analogy for the sake of 19 5 Plaintiff asserts that the instant case is distinguishable 20 because “Norcia deals with ‘shrink wrap’ licenses, the terms of which are found inside the box or when software is booted up.” 21 (Reply at 8:19-20.) The Norcia court defined a shrink-wrap license as “a form on the packing or on the outside of [a] CD-ROM 22 containing [] software which states that by opening the packaging or CD-ROM wrapper, the user agrees to the terms of the license.” 23 Norcia, 845 F.3d at 1286 (quoting Wall Data Inc. v. Los Angeles County Sheriff’s Dep’t, 447 F.3d 769, 782 n.4 (9th Cir. 2006); see 24 also Arizona Cartridge Remanufacturers Ass’n v. Lexmark Int'l, Inc., 421 F.3d 981, 987 n.6 (9th Cir. 2005) (defining shrink-wrap 25 license as one that “impose[s] restrictions that a consumer may discover only after opening and installing the software.” (emphasis 26 original); Tompkins v. 23andMe,Inc., No. 5:13-CV-05682-LHK, 2014 WL 2903752 at *5 (N.D. Cal. June 25, 2014) (“A shrinkwrap agreement 27 generally refers to a situation where a customer buys and receives a product, the written agreement is presented with the product 28 (continued...)

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1 argument, the court nevertheless rejected the defendant’s position. 2 Id. Although acknowledging that a shrink wrap license might be 3 enforceable under California law, the court held that the 4 plaintiff’s silence could not be deemed acceptance where there was 5 no indication on the outside of the packaging that opening the box 6 would constitute acceptance of further terms set forth inside the 7 box. Id. at 1287 (“Even if a license to copy software could be 8 analogized to a brochure that contains contractual terms, the 9 outside of the Galaxy S4 box did not notify the consumer that 10 opening the box would be considered acceptance to the terms set 11 forth in the brochure.” (emphasis added)); see also Marshall & 12 Swift/Boeckh, LLC v. URS Corp., No. CV-0804375-GAF, 2009 WL 13 10668449, at *17 (C.D. Cal. Aug. 26, 2009) (explaining that a 14 shrink-wrap license, even though it is a contract of adhesion, is 15 “fully enforceable unless certain other factors are present which, 16 under established legal rules – legislative or judicial – operate 17 to render it otherwise.” (quoting DVD Copy Control Ass’n v. 18 19

20 5(...continued) after purchase, and the customer implicitly accepts by opening and 21 keeping the product.”). Here, Norcia is distinguishable only to the extent that Disney contends that a single phrase on the 22 exterior of its Combo Pack packaging itself constitutes a “box-top” license agreement, to which Redbox consented when it opened the 23 Combo Pack, as opposed to shrink wrap notice of further license restrictions stated elsewhere, such as within the box or on the 24 redemption service portals. The court notes that although the box tops also contain “Terms and Conditions Apply” fine print, Disney’s 25 breach of contract arguments do not rely upon that shrink wrap license-type language and, as noted above, Disney disclaims the 26 existence of any shrink wrap license. In any event, the issue in Norcia, as here, was whether external packaging put the offeree on 27 notice that he was accepting a contract by opening the box. See Norcia, 845 F.3d at 1287). 28

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1 Kaleidescape, Inc., 176 Cal. App. 4th 697, 716 (2009)) (internal 2 quotation marks omitted). 3 Disney argues that the circumstances here are more similar to 4 those before the court in Arizona Cartridge Remanufacturers 5 Association, Inc. v. Lexmark International, Inc., 421 F.3d 981 (9th 6 Cir. 2005). There, the plaintiff brought false advertising and 7 unfair competition claims based upon an allegation that the 8 defendant was misleading customers into thinking that contractual 9 terms printed upon the outside of a printer cartridge box were 10 enforceable. Lexmark, 421 F.3d at 983. Because the case involved 11 license terms ostensibly printed in their entirety on the outside 12 of the product packaging, the court distinguished shrink wrap 13 license disputes and other cases involving lack of notice at the 14 time of purchase that additional terms applied. Id. at 987 n.6. 15 With that understanding, the court analyzed the following “box-top 16 license” language: 17 Please read before opening. Opening of this package or using the patented cartridge inside confirms your 18 acceptance of the following license agreement. The patented cartridge is sold at a special price subject to a 19 restriction that it may be used only once. Following this initial use, you agree to return the empty cartridge only 20 to Lexmark for remanufacturing and recycling. If you don't accept these terms, return the unopened package to your 21 point of purchase. A regular price cartridge without these terms is available. 22 Id. at 983-984. 23 The court rejected the plaintiff’s argument, holding that the 24 box-top language was sufficient to constitute an enforceable 25 contract that consumers accepted by opening the box. Id. at 987. 26 The court explained that the contract was enforceable because, by 27 its own terms, it gave notice of the existence of a license, set 28

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1 forth the conditions of sale of that license, afforded the consumer 2 the opportunity to read the terms of the contract before deciding 3 whether to accept them, and provided consideration in the form of a 4 reduced price, thus supporting the conclusion that a consumer who 5 opened the box accepted the terms printed upon it. Id. at 987-88. 6 The question before this Court, then, is whether language on 7 the Combo Packs stating that “Codes are not for sale or transfer” 8 is, like the box-top license in Lexmark, an enforceable license, 9 and whether Redbox’s decision to open the Combo Pack packaging 10 notwithstanding that language constitutes acceptance of that 11 license. At this stage, whether considering the Combo Pack 12 language as a shrink wrap or as a box-top license, Disney has not 13 demonstrated a likelihood of success on the merits of that 14 question. 15 The phrase “Codes are not for sale or transfer” cannot 16 constitute a shrink wrap contract because, like the box at issue in 17 Norcia, Disney’s Combo Pack box makes no suggestion that opening 18 the box constitutes acceptance of any further license restrictions. 19 Norcia, 845 F.3d at 1287; see also SoftMan Prod. Co. v. Adobe Sys., 20 Inc., 171 F. Supp. 2d 1075, 1087 (C.D. Cal. 2001) (finding a 21 consumer’s decision to open a software box bearing language 22 stating, “NOTICE TO USERS: This product is offered subject to the 23 license agreement included with the media” insufficient to 24 constitute assent to a license). Although Disney seeks to 25 analogize its Combo Pack packaging and language to the packaging 26 and terms in Lexmark, the comparison is inapt. The thorough box- 27 top license language in Lexmark not only provided consumers with 28 specific notice of the existence of a license and explicitly stated

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1 that opening the package would constitute acceptance, but also set 2 forth the full terms of the agreement, including the nature of the 3 consideration provided, and described a post-purchase mechanism for 4 rejecting the license. Here, in contrast, Disney relies solely 5 upon the phrase “Codes are not for sale or transfer” to carry all 6 of that weight.6 Unlike the box-top language in Lexmark, Disney’s 7 phrase does not identify the existence of a license offer in the 8 first instance, let alone identify the nature of any consideration, 9 specify any means of acceptance, or indicate that the consumer’s 10 decision to open the box will constitute assent. In the absence of 11 any such indications that an offer was being made, Redbox’s silence 12 cannot reasonably be interpreted as assent to a restrictive 13 license.7 14 6 Disney also suggests that Redbox accepted license terms 15 because it purchased and opened many Combo Packs. This argument is not persuasive. See, e.g., In re CFLC, Inc., 209 B.R. 508, 514 16 (B.A.P. 9th Cir. 1997) (“[T]he repetitive use of a standard form by one party, without a meeting of the minds or express agreement, is 17 insufficient to establish a course of dealing.”) (citing Step-Saver Data Sys., Inc. v. Wyse Tech., 939 F.2d 91, 104 (3d Cir. 1991)). 18 Disney’s argument that Redbox understands that “Not for Sale or Transfer” indicates the existence of a license because Redbox also 19 uses those terms is also unpersuasive. (Mot. at 10:14-20.) Disney ignores the fact that Redbox’s statements do not appear in 20 isolation, and are accompanied by language far closer to that in Lexmark. (Klaus Decl., Exs. I, J.) Furthermore, particularly in 21 the absence of any evidence that particular terms have a particular meaning in the relevant industries, this Court cannot ascribe to 22 any party knowledge of some special or coded definition of “Not for Sale or Transfer,” or any other phrase. 23 7 Suppose, for example, that a bulk package of pencils stated, 24 “Individual pencils not for re-sale,” but that a bulk package pencil purchaser nevertheless re-sold a single pencil. It is 25 doubtful that the manufacturer would be able to state a colorable claim for breach of contract or credibly argue that the consumer 26 assented to a license. Although the distinction between physical goods like pencils and arguably intangible products like a digital 27 download code may be relevant in other contexts, no party has suggested that the nature of the product has any effect on notice 28 (continued...)

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1 Indeed, the presence of other, similarly assertive but 2 unquestionably non-binding language on the Combo Pack boxes casts 3 further doubt upon the argument that the phrase “Not For Sale or 4 Transfer” communicates the terms or existence of a valid offer. 5 The packaging also states, for example, that “This product . . . 6 cannot be resold or rented individually.” (Marinelli Decl., Ex. 7 A.) This prescription is demonstrably false, at least insofar as 8 it pertains to the Blu-ray disc and DVD portions of the Combo 9 Pack.8 The Copyright Act explicitly provides that the owner of a 10 particular copy “is entitled, without the authority of the 11 copyright owner, to sell or otherwise dispose of the possession of 12 that copy.” 17 U.S.C. § 109(a); UMG Recordings, Inc. v. Augusto, 13 628 F.3d 1175, 1180 (9th Cir. 2011) (discussing first sale 14 doctrine). Thus, the clearly unenforceable “cannot be resold 15 individually” language conveys nothing so much as Disney’s 16 preference about consumers’ future behavior, rather than the 17 existence of a binding agreement. At this stage, it appears that 18 the accompanying “Not For Sale or Transfer” language plays a 19 similar role.9 20 7(...continued) 21 requirements or other traditional elements of contract formation. 22

23 8 Any suggestion that “this product” refers to the Combo Pack as a whole, and not to the physical discs, is belied by the 24 inclusion of the word “individually.” 9 Although Disney concedes that any attempt to curtail the 25 secondary distribution of Blu-rays and DVDs would not be successful, Disney maintains that any transfer of a Combo Pack in 26 its entirety would necessarily violate the supposed contract because the download code portion of the Combo Pack is non- 27 transferable. Thus, under Disney’s interpretation of the contract, a consumer who purchases a Combo Pack for his child or relative and 28 (continued...)

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1 Accordingly, Disney has failed to meet its burden to 2 demonstrate a likelihood of success on the merits of its breach of 3 contract claim. 4 B. Contributory Copyright Infringement 5 Disney’s First Cause of Action alleges that Redbox 6 contributorily infringes upon Disney’s copyrights by enabling and 7 encouraging individual consumers to violate the RedeemDigitalMovies 8 and Disney Movies Anywhere use licenses, and in the process create 9 unauthorized reproductions of Disney’s copyrighted works. 10 A copyright owner has the exclusive right to reproduce the 11 copyrighted work. 17 U.S.C. § 106. “To establish copyright 12 infringement, a plaintiff must prove two elements: ‘(1) ownership 13 of a valid copyright, and (2) copying of constituent elements of 14 the work that are original.’” L.A. Printex Indus., Inc.v. 15 Aeropostale, Inc., 676 F.3d 841, 846 (9th Cir. 2012) (citing Feist 16 Publ’ns, Inc. v. Rural Tel. Serv. Co., 499 U.S. 340, 361, (1991)). 17 A defendant is contributorily liable for copyright infringement if 18 he has “intentionally induced or encouraged direct infringement.” 19 MDY Indus., LLC v. Blizzard Entm’t, Inc., 629 F.3d 928, 937 (9th 20 Cir. 2010) (internal alterations and quotation marks omitted). A 21 copyright licensee infringes upon a copyright if he exceeds the 22 scope of his license. S.O.S., Inc. v. Payday, Inc., 886 F.2d 1081, 23 1085 (9th Cir. 1989) (“To prevail on its claim of copyright 24 infringement, [the copyright owner] must prove . . . ‘copying’ of 25

26 9(...continued) proceeds to give that Combo Pack to a family member as a gift has 27 violated the purchase agreement and is subject to suit for breach of contract, notwithstanding Disney’s representation that it is 28 unlikely to ever bring such a claim.

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1 protectable expression by [the accused infringer] beyond the scope 2 of [the] license.”) 3 A restrictive license exists where the copyright owner “(1) 4 specifies that the user is granted a license; (2) significantly 5 restricts the user’s ability to transfer the software; and (3) 6 imposes notable use restrictions.” Vernor v. Autodesk, Inc., 621 7 F.3d 1102, 1111 (9th Cir. 2010). There is little doubt that the 8 RedeemDigitalMovies and Movies Anywhere terms of service meet all 9 of these criteria. The terms of the RedeemDigitalMovies license 10 state that Plaintiff Buena Vista owns all digital movie codes and 11 that users may only use digital codes as authorized. The terms 12 further require that a user “represent[] that [he] is the owner of 13 the physical product that accompanied the digital code at the time 14 of purchase,” and expressly forbid the “redemption of a digital 15 code sold or transferred separate from the original physical 16 product.” The Movies Anywhere terms similarly specify that they 17 comprise “a license agreement and not an agreement for sale . . .” 18 that creates any ownership interest in licensed content, provide 19 that users can only “enter authorized . . . Digital Copy codes from 20 a Digital Copy enabled . . . physical product that is owned by 21 [that user],” and state that “the purchase of Digital Copy codes 22 . . . is strictly prohibited.” By buying a standalone Disney code 23 from Redbox and then redeeming that code on the licensed download 24 service portals, end users necessarily violate the terms of the 25 licenses and, Disney contends, therefore infringe upon Disney’s 26 copyrights. See MDY Indus., LLC, 629 F.3d at 939 (explaining that 27 28

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1 violations of license conditions constitute copyright 2 infringement).10 3 Nevertheless, Redbox argues that Disney cannot demonstrate a 4 likelihood of success on the merits of its contributory copyright 5 claim because Disney has engaged in copyright misuse. Copyright 6 misuse is an affirmative defense that “prevents copyright holders 7 from leveraging their limited monopoly to allow them control of 8 areas outside the monopoly.” A&M Records, Inc. v. Napster, Inc., 9 239 F.3d 1004, 1026 (9th Cir. 2001). Disney responds that it is 10 not guilty of copyright misuse because it is not “trying to extend 11 its copyright over the underlying movies to other, non-copyrighted 12 products.”11 (Reply at 6:24-25.) Disney is correct that the 13 copyright misuse defense often applies to situations in which 14 copyright holders attempt to use their copyright to obtain some 15 power over other, non-copyrighted goods or services. In Practice 16 Management Information Corporation v. American Medical Association, 17 121 F.3d 516 (9th Cir. 1997), for example, the defendant misused 18 its copyright when it obtained an unfair advantage over its 19 competitors by licensing a copyrighted coding system on the 20 10 The court notes that Defendant’s opposition to Plaintiffs’ 21 argument regarding contributory infringement appears to misunderstand the nature of Plaintiffs’ claim. Defendant argues 22 that “there is no license and even Plaintiffs do not claim one was created.” (Opposition at 13:12-13.) Although that statement is 23 arguably true with respect to the relationship between Disney and Redbox, Disney’s contributory copyright infringement claim is 24 predicated not upon that relationship, but rather upon the license agreement between the end user/downloader and one or both of the 25 digital download services. 11 Redbox also argues that Disney is engaged in copyright 26 misuse because it is attempting to “impose an artificial price floor by eliminating competition.” (Opposition at 17:12-13.) 27 Although copyright misuse may be rooted in anticompetitive behavior or public policy considerations, Redbox does not adequately develop 28 its price-fixing theory.

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1 condition that licensees agree not to use the competing systems. 2 Practice Mgmt., 121 F.3d at 521. In Omega S.A. v. Costco Wholesale 3 Corporation, 776 F.3d 692 (9th Cir. 2015), the owner of a 4 copyrighted design sought to use its copyright to restrict sales of 5 otherwise uncopyrightable watches. Omega, S.A., 776 F.3d at 693- 6 94. The watch seller frustrated the plaintiff’s domestic 7 distribution strategy by obtaining genuine watches abroad, then 8 legitimately re-selling them in the United States. Id. In an 9 attempt to foreclose this practice, the copyright holder began 10 engraving a “barely perceptible” version of the copyrighted design 11 onto the bottom of the watches, then sued the watch seller for 12 copyright infringement.12 Id. The district court concluded that 13 the copyright holder misused its copyright “by leveraging its 14 limited monopoly in being able to control the importation of [the 15 copyrighted design] to control the importation of [the] watches.” 16 Id. 17 Here, Disney contends that its actions are distinguishable 18 from those at issue in Practice Management and Omega, S.A. because 19 Disney’s control of and restraints on digital downloads only 20 pertain to the copyrighted work itself, and not to other, non- 21 copyrighted products such as the competitors’ code systems in 22 Practice Management or the watches in Omega, S.A. The copyright 23 misuse defense, however, is not so narrow as Disney would have it. 24 Indeed, copyright misuse need not even be grounded in anti- 25 competitive behavior, and extends to any situation implicating “the 26 public policy embodied in the grant of a copyright.” Omega, S.A., 27

28 12 See 17 U.S.C. § 602.

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1 776 F.3d at 699-700 (Wardlaw, J. concurring). The pertinent 2 inquiry, then, is not whether the digital download services’ 3 restrictive license terms give Disney power over some entirely 4 unrelated product, but whether those terms improperly grant Disney 5 power beyond the scope of its copyright. A&M Records, Inc., 239 6 F.3d at 102. 7 The Copyright Act gives copyright owners the exclusive right 8 to distribute copies of the copyrighted work. 17 U.S.C. § 106(3); 9 Adobe Sys., Inc. v. Christenson, 809 F.3d 1071, 1076 (9th Cir. 10 2015). That right is exhausted, however, once the owner places a 11 copy of a copyrighted item into the stream of commerce by selling 12 it. Id.; 17 U.S.C. § 109(a); Vernor v. Autodesk, 621 F.3d 1102, 13 1107 (9th Cir. 2010). In other words, once a copyright owner 14 transfers title to a particular copy of a work, the transferor is 15 powerless to stop the transferee from redistributing that copy as 16 he chooses. UMG Recordings, 628 F.3d at 1180. 17 There can be no dispute, therefore, that Disney’s copyrights 18 do not give it the power to prevent consumers from selling or 19 otherwise transferring the Blu-ray discs and DVDs contained within 20 Combo Packs. Disney does not contend otherwise.13 Nevertheless, 21 the terms of both digital download services’ license agreements 22 purport to give Disney a power specifically denied to copyright 23 holders by § 109(a). RedeemDigitalMovies requires redeemers to 24 represent that they are currently “the owner of the physical 25 product that accompanied the digital code at the time of purchase,” 26 while the Movies Anywhere terms of use only allow registered 27

28 13 See note 9, supra.

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1 members to “enter authorized . . . Digital Copy codes from a 2 Digital Copy enabled . . . physical product that is owned by [that 3 member].”14 Thus, Combo Pack purchasers cannot access digital 4 movie content, for which they have already paid, without exceeding 5 the scope of the license agreement unless they forego their 6 statutorily-guaranteed right to distribute their physical copies of 7 that same movie as they see fit.15 This improper leveraging of 8 Disney’s copyright in the digital content to restrict secondary 9 transfers of physical copies directly implicates and conflicts with 10 public policy enshrined in the Copyright Act, and constitutes 11 copyright misuse.16 12 Accordingly, Disney has not demonstrated a likelihood of 13 success on the merits of its contributory copyright infringement 14 claim.17 15 14 Redbox also argues that “physical product” includes the 16 pieces of paper upon which the digital download code is printed, and that digital downloaders therefore do not violate any terms of 17 use even when inputting a code purchased from Redbox. That argument has no merit. The paper insert, like the alphanumeric 18 code it bears, has no value separate from the digital content that the code represents. 19 15 At argument, Disney suggested that consumers can contract away their redistribution rights. To the extent Disney suggests 20 that that occurred here, that argument has no merit, for the reasons described in the breach of contract discussion, above. 21 16 Although the court need not and does not address the remaining Winter factors beyond likelihood of success on the 22 merits, the court notes that the policy considerations underlying the copyright misuse defense raise serious questions about Disney’s 23 ability to demonstrate that an injunction essentially ratifying Disney’s misuse would nevertheless be in the public interest. 24 17 As alluded to in the context of the box-top and shrink wrap license discussion, above, significant questions remain 25 regarding the representations made to consumers on the Combo Pack packaging. Disney characterizes the purchase of “Digital HD” as 26 effectively the purchase of a coupon that will allow consumers to download digital content only if they agree to the terms of a 27 license in the future. Although beyond the scope of briefing here, the question whether the representations made on the box actually 28 (continued...)

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1 C. First Sale Doctrine 2 Much of the parties’ briefing and argument focuses on Redbox’s 3 contention that Disney’s attempts to prohibit transfer of digital 4 download codes are barred by the first sale doctrine. For the 5 reasons stated above, the issues presently before the court can be 6 resolved irrespective of the first sale doctrine question. Indeed, 7 at this stage of proceedings, it appears to the court that the 8 first sale doctrine is not applicable to this case. 9 The first sale doctrine, recognized first by the Supreme Court 10 and later codified, allows the “owner of a particular copy or 11 phonorecord lawfully made under [the Copyright Act] . . . to sell 12 or otherwise dispose of the possession of that copy or 13 phonorecord,” without the permission of the copyright holder. UMG 14 v. Augusto, 628 F.3d 1175, 1180 (9th Cir. 2011) (quoting 17 U.S.C. 15 § 109(a)); Bobbs-Merrill Co. v. Strauss, 210 U.S. 339, 341 (1908). 16 Thus, as explained above, a copyright owner’s exclusive right to 17 distribute a particular copy of a copyrighted work is exhausted 18 once the owner transfers title to that copy. Christenson, 809 F.3d 19 1071 at 1076 (9th Cir. 2015); Vernor, 621 F.3d at 1107; 17 U.S.C. § 20 106(3). 21 Not all transfers of a copy of a copyrighted work constitute a 22 transfer of title sufficient to trigger exhaustion of the copyright 23 holder’s distribution rights. Vernor, 621 F.3d at 1111. Under 24 certain conditions, a transferee may be a licensee rather than an 25

26 17(...continued) support Disney’s characterization or give rise to other legal or 27 equitable defenses to allegations of infringement and other potential claims casts further doubt upon Disney’s likelihood of 28 success.

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1 owner, and will not enjoy the protections of the first sale 2 doctrine. Id. Redbox spends much of its opposition arguing that 3 Disney’s transfer of a digital code in a Combo Pack does not bear 4 the indicia of a license, and therefore should be considered a 5 transfer of title to a particular copy. This argument misses the 6 thrust of Disney’s position regarding the first sale doctrine. 7 Disney does not argue that it transferred a restrictive license 8 rather than title to a digital copy, but rather that the first sale 9 doctrine does not apply here for the fundamental reason that the 10 digital download codes are not “copies” in the first instance, let 11 alone “particular copies.” For copyright purposes, “‘[c]opies’ are 12 material objects, other than phonorecords, in which a work is fixed 13 by any method now known or later developed, and from which the work 14 can be perceived, reproduced, or otherwise communicated, either 15 directly or with the aid of a machine or device.” 17 U.S.C. § 101. 16 By Disney’s reading, no “copy” exists until a copyrighted work is 17 fixed onto a downloader’s hard drive, and Redbox’s purchase of a 18 download code therefore cannot possibly involve a “particular copy” 19 to which a first sale defense could apply. Thus, Disney contends, 20 this case is solely about the exclusive right to reproduce a 21 copyrighted work, and has nothing to do with the right of 22 distribution or, by extension, the first sale doctrine’s limitation 23 on that exclusive right. 24 One court that addressed a similar issue applied logic similar 25 to that Disney puts forth here. In Capitol Records, LLC v. ReDigi 26 Inc., 934 F. Supp. 2d 640 (S.D.N.Y. 2013), the defendant attempted 27 to create a marketplace for used digital music downloads by 28 devising a technology that “migrated” a seller’s digital music file

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1 from the seller’s computer, data packet by data packet, onto the 2 defendant’s server, from whence it could then again be migrated to 3 a secondary purchaser’s computer without any bit of data ever 4 existing in any two places at the same time. ReDigi Inc., 934 F. 5 Supp. 2d at 645. On summary judgment, the court rejected the 6 defendant’s first sale doctrine defense.18 Id. at 655. Regardless 7 of the defendant’s claim that no datum existed in two places at the 8 same time, the court observed, the digital files at issue could not 9 be re-sold without a “new” version first being created on the 10 defendant’s physical server. Id. Thus, the court concluded, the 11 new version was not the same “particular copy,” but rather an 12 unauthorized reproduction of a copyrighted work.19 Id. “Put 13 another way, the first sale defense is limited to material items, 14 like records, that the copyright owner put into the stream of 15 commerce.” Id. 16 Policy considerations also supported the ReDigi court’s 17 conclusion. In 2001, the United States Copyright Office, at 18

19 18 With respect to the right of reproduction, the ReDigi court rejected the first sale defense out of hand as inapplicable. 20 ReDigi, 934 F.Supp.2d at 655. 19 The ReDigi court’s discussion of the first sale defense 21 concerned the plaintiff’s exclusive distribution right, which applies only to “copies or phonorecords.” 17 U.S.C. § 106; ReDigi, 22 934 F.Supp.2d at 655. “Phonorecords,” like “copies,” are defined as “material objects.” 17 U.S.C. § 101. Nevertheless, no party 23 disputed that an electronic transfer of a copyrighted work constitutes a distribution for copyright purposes. ReDigi, 934 24 F.Supp.2d at 651. One court, in determining that electronic files qualify as phonorecords, has stated that “Electronic Files Are 25 Material Objects.” London-Sire Records, Inc. v. Doe 1, 542 F. Supp. 2d 153, 170 (D. Mass. 2008). As the London-Sire court 26 elaborated, however, “more accurately, the appropriate segment of the hard disk[] is . . . a ‘phonorecord’ within the meaning of the 27 statute.” Id. at 171 (emphasis added). 28

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1 Congress’ command, prepared a report on, among other things, the 2 effect of emerging technologies on copyright law. USCO, Library of 3 Cong., DMCA Section 104 Report (2001) (“USCO Report”); Digital 4 Millennium Copyright Act of 1998, § 104, Pub. L. No. 105-304, 112 5 Stat. 2860, 2876. The Copyright Office engaged in a lengthy 6 discussion of the first sale doctrine, including the rationales 7 underpinning the doctrine as it relates to tangible goods in the 8 physical world. USCO Report at 74-101. The Copyright Office 9 specifically addressed the potential implications of expressly 10 expanding the first sale doctrine “to permit the transmission of a 11 digital work by the owner of a lawful copy of that work, so long as 12 that copy is destroyed.” USCO Report at 80-81. Ultimately, the 13 USCO recommended that the first sale doctrine not be explicitly 14 expanded to include digital transmission. As the USCO report 15 explained: 16 Physical copies of works degrade with time and use, making used copies less desirable than new ones. Digital 17 information does not degrade, and can be reproduced perfectly on a recipient’s computer. The “used” copy is 18 just as desirable as (in fact, is indistinguishable from) a new copy of the same work. Time, space, effort and cost 19 no longer act as barriers to the movement of copies, since digital copies can be transmitted nearly instantaneously 20 anywhere in the world with minimal effort and negligible cost. The need to transport physical copies of works, which 21 acts as a natural brake on the effect of resales on the copyright owner’s market, no longer exists in the realm of 22 digital transmissions. The ability of such “used” copies to compete for market share with new copies is thus far 23 greater in the digital world. Even the “lending” of a fairly small number of copies of a work by digital 24 transmission could substitute for a large number of purchases. For example, one could devise an aggregation 25 site on the Internet that stores (or, in a peer-to-peer model, points to) multiple copies of an electronic book. A 26 user can “borrow” a copy of the book for as long as he is actually reading it. Once the book is “closed,” it is 27 “returned” into circulation. Unlike a typical lending library, where the book, once lent to a patron, is out of 28 circulation for days or weeks at a time, the electronic

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1 book in this scenario is available to other readers at any moment that it is not actually being read. Since, at any 2 given time, only a limited number of readers will actually be reading the book, a small number of copies can supply 3 the demand of a much larger audience. The effect of this activity on the copyright owner’s market for the work is 4 far greater than the effect of the analogous activity in the non-digital world. 5 *** [T]hese differences between circulation of tangible and 6 intangible copies is directly relevant to the balance between copyright owners and users in section 109. In 7 weighing the detrimental effect of a digital first sale doctrine on copyright owners’ markets against the 8 furtherance of the policies behind the first sale doctrine it must be acknowledged that the detrimental effect 9 increases significantly in the online environment. *** 10 In the final analysis, the concerns about expanding first sale to limit the reproduction right, harm to the market as 11 a result of the ease of distribution, and the lessened deterrent effect of the law that could promote piracy, 12 outweigh the pro-competitive gains that might be realized from the creation of a digital first sale doctrine. 13 14 USCO Report at 82-83, 85, 100. 15 Notwithstanding ReDigi, the plain language of the statutes, 16 and the important policy considerations described by the Copyright 17 Office, Redbox urges this court to conclude that Disney’s sale of 18 a download code is indistinguishable from the sale of a tangible, 19 physical, particular copy of a copyrighted work that has simply 20 not yet been delivered. Even assuming that the transfer is a sale 21 and not a license, and putting aside what Disney’s representations 22 on the box may suggest about whether or not a “copy” is being 23 transferred, this court cannot agree that a “particular material 24 object” can be said to exist, let alone be transferred, prior to 25 the time that a download code is redeemed and the copyrighted work 26 is fixed onto the downloader’s physical hard drive. Instead, 27 Disney appears to have sold something akin to an option to create 28

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1 a physical copy at some point in the future.20 Because no 2 particular, fixed copy of a copyrighted work yet existed at the 3 time Redbox purchased, or sold, a digital download code, the first 4 sale doctrine is inapplicable to this case. 5 D. Additional Claims 6 Disney also alleges that Redbox’s sale of digital download 7 codes constitutes “tortious interference” with the contractual 8 relationship formed between Disney’s and downloaders when the 9 latter agree to the digital download services’ terms of use. A 10 plaintiff alleging intentional interference with an existing 11 contractual relationship must show “(1) a valid contract between 12 plaintiff and a third party; (2) defendant’s knowledge of this 13 contract; (3) defendant’s intentional acts designed to induce a 14 breach or disruption of the contractual relationship; (4) actual 15 breach or disruption of the contractual relationship; and (5) 16 resulting damage.” Quelimane Co. v. Stewart Title Guaranty Co., 17 19 Cal. 4th 26, 55 (1998) (quoting Pac. Gas & Elec. Co. v. Bear 18 Stearns & Co.), 50 Cal. 3d 1118, 1126 (1990). 19 The parties’ discussion of Disney’s intentional interference 20 claims are relatively undeveloped, and largely derivative of other 21 arguments. Furthermore, even assuming that Disney is a 22 beneficiary of the contracts between the online redemption 23 services and their users, Plaintiffs have submitted no evidence of 24 pre-existing contracts between the redemption services and any 25

26 20 Again, whether that fact is adequately communicated to purchasers, whether purchasers are ultimately able to enjoy that 27 benefit, and whether the answers to those questions give rise to potential defenses or affirmative claims are all separate issues. 28 See note 14, supra.

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1 user who subsequently purchased a download code from Redbox. For 2 these reasons, and for the reasons stated above, Disney has not 3 met its burden to show a likelihood of the success on the merits 4 of its intentional interference claim, and particularly the first, 5 second, and third elements of that claim. 6 Nor, at this stage, has Disney demonstrated a likelihood of 7 success on the merits of its state law false advertising and 8 unfair competition claims.21 Although Disney alleges that Redbox 9 misleads customers by omitting details about license restrictions 10 Disney imposes upon digital downloaders, as noted above, 11 significant questions remain about the validity and enforceability 12 of those restrictions. See note 14, supra. Nor has Disney 13 sufficiently demonstrated, at this stage, that it has standing to 14 assert false advertising claims in the absence of its own reliance 15 upon Redbox’s statements. See Youngevity Int’l Corp. v. Smith, 16 224 F.Supp.3d 1022, 1031 (S.D. Cal. 2016); L.A. Taxi Cooperative, 17 Inc. v. Uber Technologies, Inc., 114 F.Supp.3d 852, 866 (S.D. Cal. 18 2015). 19 IV. Conclusion 20 For the reasons stated above, Disney has failed to 21 demonstrate a likelihood of success on the merits of its claims. 22 The court need not, therefore, address the remaining preliminary 23 // 24 // 25 26

27 21 Plaintiffs’ unfair competition claim under California Business & Professions Code § 17200 is predicated upon Plaintiffs’ 28 other claims.

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1 injunction factors. Plaintiffs’ Motion for Preliminary Injunction 2 is DENIED. 3 4 5 IT IS SO ORDERED. 6 7 Dated: February 20, 2018 DEAN D. PREGERSON 8 United States District Judge 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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6 KELLY M. KLAUS (State Bar No. 161091) [email protected] 7 CAROLYN HOECKER LUEDTKE (State Bar No. 207976) [email protected] 8 STEPHANIE GOLDFARB HERRERA (State Bar No. 313887) [email protected] 9 MUNGER, TOLLES & OLSON LLP 560 Mission Street, 27th Floor 10 San Francisco, California 94105-2907 Telephone: (415) 512-4000 11 Facsimile: (415) 512-4077

12 Attorneys for Plaintiffs

13 UNITED STATES DISTRICT COURT 14 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION 15 16 DISNEY ENTERPRISES, INC., Case No. 2:17-cv-08655-DDP (AGRx) LUCASFILM LTD. LLC, and MVL 17 FILM FINANCE LLC, PLAINTIFFS’ NOTICE OF MOTION AND MOTION FOR 18 Plaintiffs, PRELIMINARY INJUNCTION; MEMORANDUM OF POINTS AND 19 vs. AUTHORITIES IN SUPPORT THEREOF 20 REDBOX AUTOMATED RETAIL, LLC, Judge: Hon. Dean D. Pregerson 21 Defendant. Date: June 4, 2018 22 Time: 10:00 a.m. Ctrm: 9C 23 Filed concurrently: 24 (1) Declaration of Janice Marinelli 25 (2) Declaration. of Kelly M. Klaus (3) [Proposed] Order 26 27 Trial Date: None Set

NOTICE AND MOTION FOR PRELIMINARY INJUNCTION CASE NO. 2:17-CV-08655-DDP (AGRX)74

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1 TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: 2 PLEASE TAKE NOTICE that on June 4, 2018, at 10:00 a.m., before the 3 Honorable Dean D. Pregerson, United States District Judge, in Courtroom 9C of the 4 United States District Court for the Central District of California, located at 350 5 West First Street, Los Angeles, California, Plaintiffs Disney Enterprises, Inc., 6 Lucasfilm Ltd. LLC, and MVL Film Finance LLC (collectively, “Disney”1) will and 7 hereby do move for a preliminary injunction restraining Defendant Redbox 8 Automated Retail, LLC (“Redbox”) from selling Disney’s digital movie codes 9 (“Codes”). 10 This Motion is made on the following grounds, as further explained in the 11 accompanying Memorandum of Points and Authorities and supporting papers: 12 1. Disney is likely to succeed on the merits of its claim that Redbox 13 knowingly and materially contributes to the infringement of Disney’s exclusive 14 reproduction rights, 17 U.S.C. § 106(1), by (a) selling Codes with knowledge that its 15 customers will use them to make unauthorized download copies of Disney movies, 16 and (b) materially contributing to that unauthorized copying by selling the Codes 17 and encouraging its customers to use them. 18 2. Absent a preliminary injunction, Disney will continue to suffer 19 immediate and irreparable harms that are not easily quantifiable or remedied by 20 money damages, including interfering with Disney’s right to determine how to 21 distribute its content and harming its relationships, goodwill, and ability to negotiate 22 with authorized licensees, and relationships with its customers. 23 3. The balance of equities tips sharply for Disney. 24 4. The requested injunction is in the public interest. 25 This Motion is based upon this Notice of Motion and Motion; the attached 26 Memorandum of Points and Authorities; the Declarations of Janice Marinelli 27 1 Abbreviations introduced in this Notice of Motion and Motion are used in the 28 accompanying Memorandum of Points and Authorities. -1- NOTICE AND MOTION FOR PRELIMINARY INJUNCTION CASE NO. 2:17-CV-08655-DDP (AGRX)75

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1 (“Marinelli Decl.”), and Kelly M. Klaus (“Klaus Decl.”), and Exhibits thereto; all 2 documents on file in this action; and such further or additional evidence or 3 argument as may be presented before or at the time of the hearing on this Motion. 4 This Motion is exempt from the pre-motion meet-and-confer requirements 5 of Civil Local Rule 7-3. 6 7 DATED: April 9, 2018 MUNGER, TOLLES & OLSON LLP 8

9 10 By: /s/ Kelly M. Klaus 11 KELLY M. KLAUS 12 Attorney for Plaintiffs

13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -2- NOTICE AND MOTION FOR PRELIMINARY INJUNCTION CASE NO. 2:17-CV-08655-DDP (AGRX)76

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1 TABLE OF CONTENTS 2 Page 3 INTRODUCTION ...... 1 4 BACKGROUND ...... 1 5 A. Changes To The RedeemDigitalMovie.Com And Movies Anywhere Licensing Terms ...... 1 6 B. Notwithstanding Changes To The Licensing Terms, Redbox 7 Refuses To Stop Selling Codes ...... 2 8 ARGUMENT ...... 2 9 I. DISNEY IS LIKELY TO SUCCEED ON THE MERITS OF ITS CONTRIBUTORY COPYRIGHT INFRINGEMENT CLAIM...... 3 10 A. Redbox Knowingly And Materially Contributes To Its 11 Customers’ Infringement Of Disney’s Copyrights ...... 3 12 1. Redbox’s Customers Infringe By Redeeming Redbox-Sold Codes To Make Download Copies Of Disney Movies ...... 3 13 a. Disney Owns The Copyrights At Issue ...... 3 14 b. Redbox’s Code Customers Infringe Disney’s 15 Copyrights ...... 3 16 2. Redbox Knows Its Customers Are Infringing ...... 4 17 3. Redbox Provides The Means For And Encourages Its Customers To Infringe ...... 5 18 B. Redbox’s Defenses Have Either Been Rejected Or Mooted ...... 5 19 1. The First-Sale Defense Does Not Apply ...... 6 20 2. A Copy Made By Redeeming A Code Is Subject To A 21 License ...... 6 22 3. Redbox’s Misuse Defense Is Moot ...... 7 23 II. ABSENT AN INJUNCTION, DISNEY WILL CONTINUE TO SUFFER IRREPARABLE HARM ...... 10 24 III. THE BALANCE OF HARDSHIPS TIPS DECISIVELY FOR 25 DISNEY ...... 13 26 IV. A PRELIMINARY INJUNCTION IS IN THE PUBLIC INTEREST ...... 14 27 V. MINIMAL SECURITY SHOULD BE REQUIRED ...... 15 28 CONCLUSION ...... 15 -i- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)77

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1 TABLE OF AUTHORITIES 2 Page(s)

3 FEDERAL CASES 4 A&M Records, Inc. v. Napster, Inc., 5 114 F. Supp. 2d 896 (N.D. Cal. 2000) ...... 13 6 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001) ...... 3, 4, 5, 9 7 8 Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772 (5th Cir. 1999) ...... 9 9 Am. Broad. Cos. v. Aereo, Inc., 10 No. 12-CV-1540, 2014 WL 5393867 (S.D.N.Y. Oct. 23, 2014) ...... 11 11 Apple Inc. v. Psystar Corp., 12 658 F.3d 1150 (9th Cir. 2011) ...... 8, 9 13 Arista Records LLC v. Lime Grp. LLC, 14 784 F. Supp. 2d 398 (S.D.N.Y. 2011) ...... 5

15 Blackberry Ltd. v. Typo Prods. LLC, 16 No. 14-CV-00023-WHO, 2014 WL 1318689 (N.D. Cal. Mar. 28, 2014) ...... 13 17 18 Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640 (S.D.N.Y. 2013) ...... 4 19 Disney Enters., Inc. v. VidAngel, Inc., 20 869 F.3d 848 (9th Cir. 2017) ...... 11, 12, 13, 14 21 DSC Commc’ns Corp. v. DGI Techs., Inc., 22 81 F.3d 597 (5th Cir. 1996) ...... 9

23 Eldred v. Ashcroft, 24 537 U.S. 186 (2003) ...... 14 25 Fonovisa, Inc. v. Cherry Auction, Inc., 26 76 F.3d 259 (9th Cir. 1996) ...... 5 27 Fox Television Stations, Inc. v. BarryDriller Content Sys., PLC, 915 F. Supp. 2d 1138 (C.D. Cal. 2012) ...... 11 28 -ii- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)78

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1 TABLE OF AUTHORITIES (continued) 2 Page(s) 3 Fox Television Stations, Inc. v. FilmOn X LLC, 966 F. Supp. 2d 30 (D.D.C. 2013)...... 11, 12 4 5 Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990) ...... 8, 9 6 Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 7 454 F. Supp. 2d. 966 (C.D. Cal. 2006) ...... 7 8 Microsoft Corp. v. Comput. Support Servs. of Carolina, Inc., 9 123 F. Supp. 2d 945 (W.D.N.C. 2000) ...... 8 10 Microsoft Corp. v. Jesse’s Computs. & Repair, Inc., 11 211 F.R.D. 681 (M.D. Fla. 2002) ...... 8

12 MySpace, Inc. v. Wallace, 13 498 F. Supp. 2d. 1293 (C.D. Cal. 2007) ...... 12 14 In re Napster, Inc. Copyright Litig., 15 191 F. Supp. 2d 1087 (N.D. Cal. 2002) ...... 7 16 Omega S.A. v. Costco Wholesale Corp., 776 F.3d 692 (9th Cir. 2015) ...... 9 17 18 Oracle Am., Inc. v. Google LLC, Nos. 2017-1118, 2017-1202, slip op. (Fed. Cir. Mar. 27, 2018) ...... 10 19 Oracle USA, Inc. v. Rimini St., Inc., 20 879 F.3d 948 (9th Cir. 2018) ...... 3, 4, 7, 8, 9 21 Perfect 10, Inc. v. Amazon.com, Inc., 22 508 F.3d 1146 (9th Cir. 2007) ...... 8

23 Practice Mgmt. Info. Corp. v. Am. Med. Ass’n, 24 121 F.3d 516 (9th Cir. 1997) ...... 9 25 S.O.S., Inc. v. Payday, Inc., 26 886 F.2d 1081 (9th Cir. 1989) ...... 4, 7 27 Sega Enters. Ltd. v. MAPHIA, 948 F. Supp. 923 (N.D. Cal. 1996) ...... 5 28 -iii- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)79

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1 TABLE OF AUTHORITIES (continued) 2 Page(s) 3 Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832 (9th Cir. 2001) ...... 11 4 5 Triad Sys. Corp. v. Se. Express Co., 64 F.3d 1330 (9th Cir. 1995) ...... 13 6 United Fabrics Int’l, Inc. v. C&J Wear, Inc., 7 630 F.3d 1255 (9th Cir. 2011) ...... 3 8 United States v. Moore, 9 604 F.2d 1228 (9th Cir. 1979) ...... 6 10 Vernor v. Autodesk, Inc., 11 621 F.3d 1102 (9th Cir. 2010) ...... 6, 7

12 Warner Bros. Entm’t v. WTV Sys., Inc., 13 824 F. Supp. 2d 1003 (C.D. Cal. 2011) ...... 11, 15 14 Windsurfing Int’l Inc. v. AMF, Inc., 15 782 F.2d 995 (Fed. Cir. 1986) ...... 13 16 Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7 (2008) ...... 3, 12 17 18 WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 286 (2d Cir. 2012) ...... 11 19 FEDERAL STATUTES 20 21 17 U.S.C. § 106 ...... 3, 4, 6 22 17 U.S.C. § 109 ...... 5, 6 23 17 U.S.C. § 117(c) ...... 13

24 17 U.S.C. § 410(c) ...... 3 25 OTHER AUTHORITIES 26 Paul Goldstein, Goldstein on Copyright § 8.1 (3d. ed. 2016) ...... 5 27

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1 MEMORANDUM OF POINTS AND AUTHORITIES 2 INTRODUCTION 3 The Court denied Disney’s original motion for a preliminary injunction on the 4 ground that certain licensing terms on the Code-redemption websites could support 5 Redbox’s affirmative defense of copyright misuse. Dkt. 74 at 15-18 (“Order”). 6 (Disney refers to its original motion, Dkt. 13, as the “first PI Motion.”) Disney has 7 revised the website licensing terms to address the Court’s concerns and moot 8 Redbox’s misuse defense.2 Redbox, however, still refuses to stop selling Codes. 9 The Court’s Order rejects Redbox’s remaining defenses, including most notably its 10 first-sale defense. In the meantime, the harm to Disney’s relationships with 11 licensees and customers and its ability to control the exploitation of its exclusive 12 rights continues. Disney therefore respectfully renews its motion for an injunction 13 halting Redbox’s infringing conduct. 14 BACKGROUND 15 The Court is familiar with the background in this case. Disney therefore 16 limits this discussion to recent factual and procedural developments.3 17 A. Changes To The RedeemDigitalMovie.Com And Movies Anywhere Licensing Terms 18 Following the Order, Disney revised the terms on RedeemDigitalMovie.com 19 and Movies Anywhere. To redeem a Code through either site, a user must represent 20 that he or she, or a member of his or her family, “obtained the [C]ode in an original 21 disc + code package [i.e., a Combo Pack] and the [C]ode was not purchased 22

23 2 Although Disney respectfully disagrees that the prior licensing terms could provide 24 a basis for a copyright misuse defense, as described below, the revised terms condition redeeming a Code and downloading a movie only on Codes being 25 acquired in an original disc + code combination package (“Combo Pack”) and not 26 purchased separately. 3 27 Disney refers to and incorporates its prior background summary and supporting evidence. See first PI Motion at 2-8; Reply ISO Prelim. Inj. (Dkt. 55) at passim, 16- 28 25. -1- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)81

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1 separately.” Klaus Decl. Ex. A (RedeemDigitalMovie.com); id. Ex. C (Movies 2 Anywhere) (same). The representation “is a condition of redemption of the Code 3 and of . . . obtaining a license to access a digital copy of the movie.” Id. Ex. A 4 (RedeemDigitalMovie.com); id. Ex. C (Movies Anywhere). The user must make 5 that representation when entering the Code and clicking “redeem.” Id. Ex. A; id. 6 Ex. C. 7 The terms of use reinforce this express condition of using the services to 8 make download copies. Klaus Decl. Ex. B (RedeemDigitalMovie.com Terms and 9 Conditions); id. Ex. D (Movies Anywhere Terms of Use). Nothing in the licensing 10 terms on these websites conditions a user’s ability to redeem a Code and make a 11 download copy on the user’s possessing the discs that were part of the underlying 12 Combo Pack when redeeming a Code. 13 B. Notwithstanding Changes To The Licensing Terms, Redbox Refuses To Stop Selling Codes 14 After modifying the online licensing terms, Disney prepared an amended 15 complaint and provided it to Redbox’s counsel. Klaus Decl. ¶ 2. Disney inquired 16 whether, in light of the changes, Redbox would stop selling Codes. Id. Redbox 17 agreed to stipulate to the filing of the amended complaint, but refused to stop selling 18 Codes. Id. Within the last month, Redbox started selling Codes for Coco and Thor: 19 Ragnarok. Id ¶¶ 7-8, Exs. E-F. Absent an injunction, Redbox will continue to sell 20 Codes for Disney’s next Combo Pack release (Black Panther) and releases after that 21 ad infinitum. Disney therefore renews its motion for a preliminary injunction. 22 ARGUMENT 23 Disney satisfies all of the requirements for a preliminary injunction. In light 24 of the changes to the website terms and the Court’s disposition of Redbox’s 25 defenses, Disney likely will succeed on the merits; Disney has suffered and will 26 continue to suffer irreparable harm absent an injunction; the balance of the equities 27 28 -2- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)82

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1 tip sharply in Disney’s favor; and an injunction is in the public interest. Winter v. 2 Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008). 3 I. DISNEY IS LIKELY TO SUCCEED ON THE MERITS OF ITS CONTRIBUTORY COPYRIGHT INFRINGEMENT CLAIM 4 A. Redbox Knowingly And Materially Contributes To Its Customers’ 5 Infringement Of Disney’s Copyrights 6 Disney likely will prevail on its contributory copyright infringement claim 7 because (1) Redbox’s customers infringe Disney’s copyrights, and (2) Redbox 8 materially contributes to that infringing conduct, (3) with actual or constructive 9 knowledge of the same. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1019 10 (9th Cir. 2001). 11 1. Redbox’s Customers Infringe By Redeeming Redbox-Sold Codes To Make Download Copies Of Disney Movies 12 Disney states a prima facie claim of infringement by (1) “show[ing] 13 ownership” of the copyrights in issue, and (2) showing that “at least one exclusive 14 right” under 17 U.S.C. § 106 is violated. Id. at 1013. 15 a. Disney Owns The Copyrights At Issue 16 Disney owns the copyrights at issue. Exhibit A to the Amended Complaint 17 (Dkt. 82-1) identifies Disney movies for which Redbox currently sells Codes, as 18 well as forthcoming releases for which Redbox will offer Codes unless enjoined. 19 Certificates of copyright registration for each of these works are included with this 20 filing. Klaus Decl. Exs. G-Y. The certificates create a presumption of copyright 21 validity and ownership. 17 U.S.C. § 410(c); United Fabrics Int’l, Inc. v. C&J Wear, 22 Inc., 630 F.3d 1255, 1257 (9th Cir. 2011). 23 b. Redbox’s Code Customers Infringe Disney’s 24 Copyrights 25 Disney has the exclusive right to make and authorize others to make copies of 26 its movies. 17 U.S.C. § 106(1). Redbox’s customers infringe Disney’s rights by 27 redeeming Codes purchased from Redbox to make unauthorized download copies of 28 Disney movies through RedeemDigitalMovie.com or Movies Anywhere. -3- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)83

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1 The Ninth Circuit has made clear that an individual violates a copyright 2 owner’s exclusive rights under § 106(1) by making an unauthorized download copy 3 of a copyrighted work. Napster, 239 F.3d at 1014. Redbox’s customers have no 4 authorization to make download copies using Codes sold by Redbox. In particular, 5 when Redbox’s customers redeem Redbox-sold Codes to download movies, they are 6 acting outside the scope of the licenses because they cannot satisfy the condition 7 requiring that they “obtain[] the code in an original disc + code package” and not 8 “purchase[] [it] separately.” Klaus Decl. Exs. A, C. Because Redbox’s customers 9 act outside the scope of the license, they are copyright infringers. “[W]hen a 10 licensee exceeds the scope of the license granted by the copyright holder, the 11 licensee is liable for infringement.” Oracle USA, Inc. v. Rimini St., Inc., 879 F.3d 12 948, 954 (9th Cir. 2018) (citation omitted); S.O.S., Inc. v. Payday, Inc., 886 F.2d 13 1081, 1087 (9th Cir. 1989) (“A licensee infringes the owner’s copyright if its use 14 exceeds the scope of its license.”). 15 2. Redbox Knows Its Customers Are Infringing 16 The knowledge requirement is satisfied because Redbox “know[s] or ha[s] 17 reason to know” of its customers’ infringing activity. Napster, 239 F.3d at 1020; 18 Capitol Records, LLC v. ReDigi Inc., 934 F. Supp. 2d 640, 658 (S.D.N.Y. 2013) 19 (knowledge element is “objective” and satisfied “where the defendant knew or had 20 reason to know of the infringing activity”). 21 Redbox knows exactly what its customers are doing with the Codes it sells 22 them. Redbox tells its customers to use the Codes to “download the digital version 23 of your movie to the device of your choice.” Klaus Decl. Ex. AA; see also id. Ex. Z 24 (Redbox instructing customers to redeem Codes through the websites listed on the 25 Code inserts, RedeemDigitalMovie.com and Movies Anywhere). And Redbox 26 directs its customers to follow the on-screen prompts that require agreement to the 27 terms of the redemption sites. See id. Ex. Z (telling customers to visit the 28 redemption sites, “[e]nter the digital movie code,” “[f]ollow the on-screen prompts, -4- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)84

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1 and enjoy the show!”). Redbox knows or should know the conditions those terms 2 require users to satisfy, that its Code customers cannot satisfy those conditions, and 3 that those customers act outside the scope of the license agreements when they make 4 a download copy. 5 3. Redbox Provides The Means For And Encourages Its Customers To Infringe 6 Redbox contributes to its customers’ infringing activity by (a) providing the 7 means for making the unauthorized downloads that infringe Disney’s reproduction 8 rights, i.e., Codes sold separately from Combo Packs; and (b) encouraging its 9 customers to use the Codes to make unauthorized download copies. See Napster, 10 239 F.3d at 1022 (“provid[ing] the ‘site and facilities’ for direct infringement” 11 constitutes material contribution (citation omitted)); Fonovisa, Inc. v. Cherry 12 Auction, Inc., 76 F.3d 259, 264 (9th Cir. 1996) (“[m]erely providing the means for 13 infringement may be sufficient” for contributory infringement (citation omitted)); 14 Arista Records LLC v. Lime Grp. LLC, 784 F. Supp. 2d 398, 432 (S.D.N.Y. 2011) 15 (defendant made material contribution to infringement by “provid[ing] machinery or 16 goods that facilitated infringement” (citations omitted)); Sega Enters. Ltd. v. 17 MAPHIA, 948 F. Supp. 923, 933 (N.D. Cal. 1996) (finding contributory 18 infringement where defendant, among other things, “actively solicited users to 19 upload unauthorized games” and “provided a road map . . . for easy identification of 20 Sega games available for downloading”); Paul Goldstein, Goldstein on Copyright § 21 8.1 (3d. ed. 2016) (“providing materials or equipment necessary for the 22 infringement” constitutes contributory infringement). 23 B. Redbox’s Defenses Have Either Been Rejected Or Mooted 24 The Order considered and rejected Redbox’s arguments against liability based 25 on the first-sale defense, 17 U.S.C. § 109(a), and the contention that Code redeemers 26 are not licensees. Order at 13-15 & n.10, 19-24. Disney’s revisions to the online 27 28 -5- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)85

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1 licensing terms have mooted Redbox’s only remaining defense to copyright liability, 2 the defense of misuse. 3 1. The First-Sale Defense Does Not Apply 4 “Because no particular, fixed copy of a copyrighted work yet existed at the 5 time Redbox purchased, or sold, a digital download code, the first sale doctrine is 6 inapplicable to this case.” Order at 24.4 7 2. A Copy Made By Redeeming A Code Is Subject To A License 8 Redbox previously argued that a copy made by redeeming a Code is not 9 subject to a license. This argument was part of Redbox’s first-sale defense, which is 10 available only to “owners” of “copies” and not to licensees. Vernor v. Autodesk, 11 Inc., 621 F.3d 1102, 1107 (9th Cir. 2010) (“The first sale doctrine does not apply to 12 a person who possesses a copy of the copyrighted work without owning it, such as a 13 licensee.”); accord 17 U.S.C. § 109(d) (first-sale defense does not “extend to any 14 person who has acquired possession of the copy . . . by rental, lease, loan, or 15 otherwise, without acquiring ownership of it”). Redbox accordingly argued that its 16 customers are owners, not licensees, of the download copies they make. 17 The Order did not accept Redbox’s argument. First, the Court reasoned that a 18 copy “can[not] be said to exist, let alone transferred, prior to the time that a 19 download code is redeemed and the copyrighted work is fixed onto the 20 downloader’s physical hard drive.” Order at 23. Second, the Court concluded that 21 the terms of use that govern redemption of a Code through 22 RedeemDigitalMovie.com and Movies Anywhere satisfy all the requirements for a 23 license under Vernor. Id. at 14-15. The website language continues to make clear 24 25

26 4 The first-sale defense also is inapplicable because it limits only the distribution 27 right, 17 U.S.C. § 106(3), which is not in issue here. Id. § 109(a); United States v. Moore, 604 F.2d 1228, 1232 (9th Cir. 1979) (“[T]he owner’s other copyright rights 28 remain intact (e.g., publishing or copying).”). -6- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)86

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1 that users are permitted to redeem Codes to make copies only as authorized 2 licensees and not as owners.5 See Vernor, 621 F.3d at 1111. 3 Redbox’s customers must affirmatively agree to these terms before they can 4 make a download copy by redeeming a Code through RedeemDigitalMovie.com or 5 Movies Anywhere. See Klaus Decl. Ex. A (RedeemDigitalMovie.com); id. Ex C 6 (Movies Anywhere). Those customers are thus licensees and are permitted to make 7 download copies of Disney’s copyrighted work only to the extent authorized by the 8 licenses. See Oracle, 879 F.3d at 954; S.O.S., 886 F.2d at 1087. 9 3. Redbox’s Misuse Defense Is Moot 10 The revised terms do not condition redeeming a Code and downloading a 11 movie on a consumer’s possessing the physical discs included in the Combo Pack. 12 Klaus Decl. Exs. B, D. Where, as here, the conduct claimed to constitute misuse has 13 ceased, the copyright owner is free to enforce its copyrights. See Metro-Goldwyn- 14 Mayer Studios, Inc. v. Grokster, Ltd., 454 F. Supp. 2d. 966, 994 (C.D. Cal. 2006) 15 (“The plaintiff is free to bring suit to enforce its rights against infringers once the 16 misuse ceases.”); In re Napster, Inc. Copyright Litig., 191 F. Supp. 2d 1087, 1108 17 (N.D. Cal. 2002) (“The doctrine does not prevent plaintiffs from ultimately 18 recovering for acts of infringement that occur during the period of misuse. The 19 5 See Klaus Decl. Ex. B (RedeemDigitalMovie.com: “All digital movie codes are 20 owned by Buena Vista Home Entertainment, Inc.”; “Digital codes originally 21 packaged in combination disc + code packages may not be sold separately and may be redeemed only by an individual who obtains the code in the original disc + code 22 package”; and “You may use digital movie codes to obtain licensed access to digital 23 movies only as specifically authorized under these terms and conditions”); id. Ex. D (Movies Anywhere: terms comprise “a license agreement and not an agreement for 24 sale”; the “purchase of a license to stream or download . . . does not create an 25 ownership interest.”; “digital codes are owned by Participating Studios” and may be used only “as specifically authorized under these Movies Anywhere Terms of Use 26 and the terms and conditions of the applicable issuer”; “Digital codes originally 27 packaged in combination disc + code packages may not be sold separately and may be redeemed only by an individual who obtains the code in the original combination 28 disc + code package”). -7- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)87

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1 issue focuses on when plaintiffs can bring or pursue an action for infringement, not 2 for which acts of infringement they can recover.”); accord Lasercomb Am., Inc. v. 3 Reynolds, 911 F.2d 970, 979 n.22 (4th Cir. 1990) (“[The copyright-holder] is free to 4 bring a suit for infringement once it has purged itself of the misuse.”). 5 Should Redbox again assert the defense of misuse to resist the merits of 6 Disney’s infringement claim, it will not meet its burden of showing likelihood of 7 success on the merits of that affirmative defense. Perfect 10, Inc. v. Amazon.com, 8 Inc., 508 F.3d 1146, 1158 (9th Cir. 2007) (party opposing preliminary injunction 9 motion bears burden of showing likely success on affirmative defense to 10 infringement). 11 Copyright misuse is a narrow doctrine that should be applied “sparingly,” 12 Oracle, 879 F.3d at 957-58 (quoting Apple Inc. v. Psystar Corp., 658 F.3d 1150, 13 1157 (9th Cir. 2011)). Because copyright misuse is an equitable doctrine, the 14 defense is properly invoked “only where the [alleged] wrongful acts affect the 15 equitable relations between the parties” and has no application “where plaintiff’s 16 misconduct is not directly related to the merits of the controversy between the 17 parties.” Microsoft Corp. v. Jesse’s Computs. & Repair, Inc., 211 F.R.D. 681, 683 18 (M.D. Fla. 2002) (citation omitted); Microsoft Corp. v. Comput. Support Servs. of 19 Carolina, Inc., 123 F. Supp. 2d 945, 955 (W.D.N.C. 2000) (equitable defense of 20 copyright misuse “requires a defendant to show a nexus between the plaintiff’s 21 purported misconduct and the defendant’s infringing acts”). 22 While the Order stated that Disney read Ninth Circuit misuse precedent 23 narrowly, Disney respectfully submits that the defense applies only where a 24 copyright holder is “seeking to extend a copyright monopoly to other products or 25 works.” Psystar, 658 F.3d at 1157 (emphasis added). The Courts of Appeals have 26 27 28 -8- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)88

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1 found misuse in only four instances—and the Ninth Circuit only once6—and all of 2 these decisions found the copyright owner had attempted to extend its limited 3 monopoly to restrict use of (1) competing products or (2) non-copyrightable 4 products, thereby exceeding the scope of its copyright grant. Alcatel USA, Inc. v. 5 DGI Techs., Inc., 166 F.3d 772 (5th Cir. 1999) (license agreement requiring that 6 software be used only in conjunction with non-copyrightable hardware 7 manufactured by the copyright holder); Practice Mgmt. Info. Corp. v. Am. Med. 8 Ass’n, 121 F.3d 516 (9th Cir. 1997) (license agreement prohibiting use of competing 9 coding system); DSC Commc’ns Corp. v. DGI Techs., Inc., 81 F.3d 597 (5th Cir. 10 1996) (license agreement requiring that software be used only with non- 11 copyrightable hardware manufactured by the copyright holder); Lasercomb Am., 12 Inc. v. Reynolds, 911 F.2d 970 (4th Cir. 1990) (noncompetition provision in 13 software license agreement). 14 Conditions that govern the use of Codes do not restrict the use of competing 15 or non-copyrighted products. The conditions limit the reproduction of Disney’s 16 underlying copyrighted work. The Ninth Circuit has repeatedly held that the 17 doctrine of copyright misuse does not apply to a copyright holder’s use of 18 “conditions to control use of copyrighted material.” Psystar, 658 F.3d at 1159; id. 19 (“[C]ourts have long held that copyright holders may . . . use their limited monopoly 20 to leverage the right to use their work on the acceptance of specific conditions.”); 21 see also Oracle, 879 F.3d at 957 (same); Napster, 239 F.3d at 1027 (copyright 22 holder does not “seek to control areas outside of their grant of monopoly” through 23 efforts to “control reproduction and distribution of their copyrighted works”). 24 6 25 Omega S.A. v. Costco Wholesale Corp., 776 F.3d 692 (9th Cir. 2015), is not a copyright misuse decision. The majority did not resolve the case based on the 26 copyright misuse defense. Judge Wardlaw, concurring in the judgment, would have 27 found misuse based on the copyright holder’s attempt to use its copyright to restrict sales of a non-copyrightable product. See id. at 698-705 (Wardlaw, J., concurring in 28 the judgment). -9- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)89

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1 II. ABSENT AN INJUNCTION, DISNEY WILL CONTINUE TO SUFFER IRREPARABLE HARM 2 Disney’s first PI Motion included extensive evidence documenting the 3 irreparable harms Redbox’s illegal Code sales are causing Disney in its relationships 4 with licensees and customers. See, e.g., Marinelli Decl. ¶¶ 11-25; Klaus Decl. Ex. 5 EE (submitting evidence of complaints from Disney licensees); id. Ex. DD 6 (customer communications reflecting confusion regarding redemption of Codes 7 purchased from Redbox). 8 Among other harms, Disney demonstrated that Redbox’s conduct interferes 9 with Disney’s right to control how it distributes its content. To date, Disney has 10 chosen not to sell Codes as a freestanding commercial product and instead offers 11 them as a benefit to consumers who choose to buy Combo Packs. Marinelli Decl. 12 ¶ 22. Redbox has no right to interfere with that decision and money damages cannot 13 compensate Disney for this interference, id. See Oracle Am., Inc. v. Google LLC, 14 Nos. 2017-1118, 2017-1202, slip op. at 50 (Fed. Cir. Mar. 27, 2018) (“[A] copyright 15 holder has the exclusive right to determine ‘when, “whether and in what form to 16 release’” the copyrighted work into new markets, whether on its own or via a 17 licensing agreement.” (citation omitted)). 18 Redbox’s sale of Codes also continues to threaten immediate and irreparable 19 harm to Disney’s relationships, goodwill, and ability to negotiate with licensees. 20 Marinelli Decl. ¶¶ 11-15; Klaus Decl. Exs. EE, BB, Marinelli Dep. 24:17-27:16, 21 34:6-36:2; 162:5-17, 162:24-163:19, 164:8-19, 172:9-12. By the time Disney filed 22 the first PI Motion, three licensees had already contacted Disney to complain about 23 Redbox’s Code sales, one of whom explicitly asked for better license terms to 24 compete with Redbox. Klaus Decl. Exs. EE, BB, Marinelli Dep. 24:17-27:16, 34:6- 25 36:2. Janice Marinelli, President of Disney/ABC Home Entertainment and 26 Television Distribution, who has more than 32 years of experience at Disney and 20 27 years of experience in her current role, testified that (1) Disney depends on its 28 -10- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)90

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1 goodwill with licensees to promote its content, and (2) Redbox’s conduct will make 2 it “[m]ore difficult” for Disney to negotiate with licensees in the future. Marinelli 3 Decl. ¶ 14; Klaus Decl. Ex. BB, Marinelli Dep. 162:5-17, 172:9-12. 4 Since the Order, Disney has released new titles in Combo Packs—Coco 5 (2017) and Thor: Ragnarok (2017)—for which Redbox is, true to its word, selling 6 Codes. Klaus Decl. ¶¶ 7-8, Exs. E, F. With another blockbuster film set for Combo 7 Pack release in about a month—Black Panther (2018)—the threat of irreparable 8 damage to Disney’s relationships and goodwill with licensees has only become 9 more acute. 10 The Ninth Circuit and other courts have found evidence of irreparable harm 11 like that established here sufficient to grant injunctive relief. See Disney Enters., 12 Inc. v. VidAngel, Inc., 869 F.3d 848, 866 (9th Cir. 2017) (affirming district court’s 13 finding of irreparable harm based on threatened harm to licensee goodwill and loss 14 of negotiating leverage with licensees); WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 286 15 (2d Cir. 2012) (affirming district court’s finding of irreparable harm based on, 16 among others, harms to plaintiffs’ “negotiating position” and “business model”); 17 Stuhlbarg Int’l Sales Co. v. John D. Brush & Co., 240 F.3d 832, 841 (9th Cir. 2001) 18 (affirming district court’s finding of irreparable harm based on threatened harm to 19 relationships and goodwill with customers); Am. Broad. Cos. v. Aereo, Inc., No. 12- 20 CV-1540, 2014 WL 5393867, at *7 (S.D.N.Y. Oct. 23, 2014) (reaffirming 21 irreparable harm findings based on “loss of control over copyrighted content, and 22 damage to relationships with . . . licensees”); Fox Television Stations, Inc. v. FilmOn 23 X LLC, 966 F. Supp. 2d 30, 49-50 (D.D.C. 2013) (holding that operation of 24 unauthorized streaming service threatened irreparable harm to copyright holders’ 25 relationships, goodwill, and ability to negotiate with licensees and to their ability to 26 control distribution of their copyrighted content); Fox Television Stations, Inc. v. 27 BarryDriller Content Sys., PLC, 915 F. Supp. 2d 1138, 1147 (C.D. Cal. 2012) 28 (same); Warner Bros. Entm’t v. WTV Sys., Inc., 824 F. Supp. 2d 1003, 1012 (C.D. -11- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)91

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1 Cal. 2011) (holding that unauthorized DVD “rental” service threatened irreparable 2 harm to copyright holders’ relationships and goodwill with licenses, their “ability to 3 negotiate similar agreements in the future,” and their “overall ability to control the 4 use and transmission of their Copyrighted Works”); MySpace, Inc. v. Wallace, 498 5 F. Supp. 2d. 1293, 1305-06 (C.D. Cal. 2007) (finding irreparable harm to goodwill 6 with consumers based on evidence of consumer confusion). 7 The evidence of irreparable harm to Disney’s relationships with licensees in 8 this case is much stronger than other copyright infringement actions in which courts 9 have granted injunctions. In VidAngel, for example, the Ninth Circuit affirmed an 10 irreparable harm finding based on threatened future harm to relationships with 11 licensees, despite the fact that licensees had not yet even complained about the 12 defendant’s conduct. 869 F.3d at 865-66. By contrast, Disney put forward evidence 13 that licensees have already complained about Redbox’s conduct—two of them 14 within hours of the Deadline Hollywood article that first alerted Disney and its 15 licensees of Redbox’s Code sales—including one who inquired about changes to 16 existing license terms because of Redbox’s conduct. Klaus Ex. EE. This is strong 17 evidence of actual, concrete harms to licensee relationships. Disney need not wait 18 until that harm manifests itself in renegotiated license agreements before seeking 19 relief from the Court. See VidAngel, 869 F.3d at 865-66 (rejecting argument that 20 threatened harms to studio’s negotiating position with licensees were “vague and 21 speculative”); FilmOn X, 966 F. Supp. 2d at 50 (rejecting contention that harm to 22 negotiating leverage with licensees was “pure speculation”). In addition, Disney’s 23 uncontroverted evidence of customer confusion demonstrates that Redbox’s conduct 24 is already and will continue to harm Disney’s goodwill and relationships with 25 customers. Klaus Ex. DD (customer communications reflecting confusion regarding 26 redemption of Codes purchased from Redbox). 27 Disney need only show that “irreparable injury is likely in the absence of an 28 injunction.” VidAngel, 869 F.3d at 865 (quoting Winter, 555 U.S. at 22). Disney’s -12- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)92

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1 evidence easily clears that hurdle. Redbox’s conduct is causing and will continue to 2 cause irreparable harm by interfering with Disney’s control over the distribution of 3 its content and by causing damage to Disney relationships and goodwill with 4 licensees and customers, among other harms, absent intervention by this Court. 5 III. THE BALANCE OF HARDSHIPS TIPS DECISIVELY FOR DISNEY 6 The irreparable harm to Disney absent an injunction far outweighs the impact 7 to Redbox of being enjoined from its illegal activities. 8 Redbox offered two arguments on the balance of hardships in opposing the 9 first PI Motion, neither of which has merit. 10 First, Redbox claimed it would be harmed by an injunction because it had 11 spent $700,000 to launch its Code sale business. First PI Opp. at 25 (Dkt. 30). 12 Redbox cannot complain of “financial hardship from ceasing infringing activities.” 13 VidAngel, 869 F.3d at 867; see also Triad Sys. Corp. v. Se. Express Co., 64 F.3d 14 1330, 1338 (9th Cir. 1995), superseded on other grounds by 17 U.S.C. § 117(c) 15 (defendant “cannot complain of the harm that will befall it when properly forced to 16 desist from its infringing activities”). Even if Redbox’s claimed financial hardship 17 were relevant, a temporary delay in recouping $700,000 does not imperil Redbox’s 18 “billion dollar plus business.” Klaus Ex. CC, Smith Dep. 68:14-15. Courts have 19 granted injunctions when the stakes are much higher, including when an injunction 20 might put the defendant out of business. See Blackberry Ltd. v. Typo Prods. LLC, 21 No. 14-CV-00023-WHO, 2014 WL 1318689, at *12 (N.D. Cal. Mar. 28, 2014) 22 (“[T]he fact that an injunction might put an alleged infringer out of business ‘cannot 23 justify denial of that injunction.’” (quoting Windsurfing Int’l Inc. v. AMF, Inc., 782 24 F.2d 995, 1003 n.12 (Fed. Cir. 1986))); A&M Records, Inc. v. Napster, Inc., 114 F. 25 Supp. 2d 896, 925-26 (N.D. Cal. 2000) (“The court cannot give much weight to 26 defendant’s lament that the requested relief will put it out of business. . . . the 27 business interests of an infringer do not trump a rights holder’s entitlement to 28 -13- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)93

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1 copyright protection.”), aff’d in part and reversed in part on other grounds, 239 2 F.3d 1004 (9th Cir. 2001). 3 Second, Redbox claimed that an injunction in these proceedings would 4 “delay” its alleged “entry into the market for selling digital downloads.” First PI 5 Opp. at 25. There is no factual basis for that argument. A preliminary injunction 6 would not delay Redbox’s “entry into the market for selling digital downloads” 7 because Redbox has already entered that market: It sells digital downloads of other 8 studios’ movies through “Redbox On Demand.” Declaration of Galen Smith ¶ 4 9 (Dkt. 31). Moreover, Redbox is not selling digital downloads of Disney movies; it 10 is selling Codes. Redbox offers no explanation why temporarily ceasing sales of the 11 one product would have any effect on the other, and the record evidence proves it 12 would not. Klaus Decl. Ex. CC, Smith Dep. 90:1-4 (Redbox’s CEO admits selling 13 Codes has no effect on the Redbox On Demand library); id.159:5-9 (Redbox’s CEO 14 says the company will offer Redbox On Demand regardless of what happens in this 15 lawsuit); id. 94:9-11 (Redbox’s CEO believes Redbox On Demand can be 16 successful without Disney content). 17 IV. A PRELIMINARY INJUNCTION IS IN THE PUBLIC INTEREST 18 This Court’s initial question about Disney’s ability to demonstrate that an 19 injunction would be in the public interest was based on the prior online licensing 20 terms. Order at 18 n.16. Disney has addressed that concern by changing the terms. 21 Ninth Circuit precedent makes clear that the public interest here is in 22 upholding copyright protection. Specifically, “‘the public has a compelling interest 23 in protecting copyright owners’ marketable rights to their work and the economic 24 incentive to continue creating television programming’ and motion pictures.” 25 VidAngel, 869 F.3d at 867 (citations omitted); see also Eldred v. Ashcroft, 537 U.S. 26 186, 212 n.18 (2003) (“[T]he economic philosophy behind the [Copyright] [C]lause 27 . . . is the conviction that encouragement of individual effort by personal gain is the 28 -14- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)94

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1 best way to advance public welfare through the talents of authors and inventors.” 2 (citation omitted)). 3 Redbox has argued that the public has an interest in paying less for Codes. 4 First PI Opp. at 25. That logic would defeat an injunction any time a copyright 5 holder seeks to restrain an infringer who is undercutting the prices of licensed 6 offerings. That is not the law and certainly not the right result here. As Ms. 7 Marinelli explained: “If consumers come to expect that they can buy unauthorized 8 digital downloads for below market prices, this could have a permanent and 9 irreparable negative impact on consumers’ expectations and relationships with both 10 Disney and its authorized licensees. Consumers will come to believe that below 11 market pricing for a digital copy of a movie from an unauthorized service is 12 legitimate, adversely affecting consumers’ perception of authorized services.” 13 Marinelli Decl. ¶ 19. 14 Allowing Redbox to continue flouting the law is not in the public interest. 15 V. MINIMAL SECURITY SHOULD BE REQUIRED 16 Security in the amount of $50,000—an amount that Redbox did not contest in 17 proceedings on the first PI Motion—is appropriate. See Zediva, 824 F. Supp. 2d at 18 1015 (setting bond at $50,000). 19 CONCLUSION 20 Redbox is knowingly encouraging its customers to infringe Disney’s 21 reproduction rights. The basis for any misuse defense has been eliminated and the 22 Court has rejected Redbox’s other defenses. Accordingly, the Court should grant 23 Disney’s motion for a preliminary injunction. 24 DATED: April 9, 2018 MUNGER, TOLLES & OLSON LLP 25 26 By: /s/ Kelly M. Klaus 27 KELLY M. KLAUS Attorneys for Plaintiffs 28 -15- MEM. OF POINTS & AUTH. ISO MOT. FOR PRELIM. INJ. CASE NO. 2:17-CV-08655-DDP (AGRX)95

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KELLY M. KLAUS (CA Bar No. 161091) [email protected] ELIZABETH A. KIM (CA Bar No. 295277) [email protected] MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue, Fiftieth Floor Los Angeles, California 90071-3426 Telephone: (213) 683-9100 Facsimile: (213) 687-3702

MICHAEL B. DESANCTIS (pro hac vice pending) [email protected] MUNGER, TOLLES & OLSON LLP 1155 F Street N.W., Seventh Floor Washington, D.C. 20004-1357 Telephone: (202) 220-1100 Facsimile: (202) 220-2300

KAREN R. THORLAND (CA Bar No. 172092) [email protected] MOTION PICTURE ASSOCIATION OF AMERICA, INC. 15301 Ventura Blvd., Building E Sherman Oaks, California 91403 Telephone: (818) 935-5812

Attorneys for Plaintiffs

UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION

Universal City Studios Productions Case No. LLLP; Columbia Pictures Industries, Inc.; Disney Enterprises, Inc.; Twentieth Century Fox Film COMPLAINT Corporation; Paramount Pictures Corporation; Warner Bros. DEMAND FOR JURY TRIAL Entertainment Inc.; Amazon Content Services, LLC; Netflix Studios, LLC,

Plaintiffs,

vs.

TickBox TV LLC,

Defendant.

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Plaintiffs Universal City Studios Productions LLLP (“Universal”), Columbia Pictures Industries, Inc. (“Columbia”), Disney Enterprises, Inc. (“Disney”), Twentieth Century Fox Film Corporation (“Fox”), Paramount Pictures Corporation (“Paramount”), Warner Bros. Entertainment Inc. (“Warner Bros.”), Amazon Content Services, LLC (“Amazon”), and Netflix Studios, LLC (“Netflix”) (collectively, “Plaintiffs”) bring this Complaint against TickBox TV LLC (“TickBox” or “Defendant”) under the Copyright Act (17 U.S.C. § 101 et seq.). This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1338(a), and 17 U.S.C. § 501(b). Plaintiffs allege, on personal knowledge as to themselves and information and belief as to others, as follows: INTRODUCTION 1. TickBox sells “TickBox TV,” a computer hardware device that TickBox urges its customers to use as a tool for the mass infringement of Plaintiffs’ copyrighted motion pictures and television shows (“Plaintiffs’ Copyrighted Works”). TickBox tells customers to “plug the Tickbox TV into your current television and enjoy unlimited access to ALL the hottest TV shows, Hollywood blockbusters and LIVE sporting events in one convenient little device … ABSOLUTELY FREE.” And TickBox promotes the device as the means to “cut the cord” if “you’re sick of paying high monthly fees and expensive bills for your regular cable bill and premium cable channels like HBO and SHOWTIME … [o]r if you’re tired of wasting money with online streaming services like Netflix, Hulu or Amazon Prime.”

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2. What TickBox actually sells is nothing less than illegal access to Plaintiffs’ copyrighted content. It works like this: TickBox distributes and promotes the TickBox TV “box,” the black box in the right-hand side of TickBox’s ad shown above. TickBox TV uses software to link TickBox’s customers to infringing content on the Internet. When those customers use TickBox TV as Defendant intends and instructs, they have nearly instantaneous access to multiple sources that stream Plaintiffs’ Copyrighted Works without authorization. These streams are illegal public performances of Plaintiffs’ Copyrighted Works. 3. For the customers who use TickBox TV, the device provides the hallmarks of subscribing to authorized streaming services, with one notable exception: the customers only pay money to TickBox, not to Plaintiffs and other content creators upon whose works TickBox’s business depends. Plaintiffs bring this action to stop TickBox’s intentional inducement of, and knowing and material contribution to, the widespread infringement of Plaintiffs’ rights.

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THE PARTIES 4. Plaintiff Universal City Studios Productions LLLP is a limited liability limited partnership duly organized under the laws of the State of Delaware with its principal place of business in Universal City, California. Universal owns or controls the copyrights or exclusive rights in the content that it or its affiliates produce or distribute. 5. Plaintiff Columbia Pictures Industries, Inc. is a corporation duly incorporated under the laws of the State of Delaware with its principal place of business in Culver City, California. Columbia owns or controls the copyrights or exclusive rights in the content that it or its affiliates produce or distribute. 6. Plaintiff Disney Enterprises, Inc. is a corporation duly incorporated under the laws of the State of Delaware with its principal place of business in Burbank, California. Disney owns or controls the copyrights or exclusive rights in the content that it or its affiliates produce or distribute. 7. Plaintiff Twentieth Century Fox Film Corporation is a corporation duly incorporated under the laws of the State of Delaware with its principal place of business in Los Angeles, California. Fox owns or controls the copyrights or exclusive rights in the content that it or its affiliates produce or distribute. 8. Plaintiff Paramount Pictures Corporation is a corporation duly incorporated under the laws of the State of Delaware with its principal place of business in Los Angeles, California. Paramount owns or controls the copyrights or exclusive rights in the content that it or its affiliates produce or distribute. 9. Plaintiff Warner Bros. Entertainment Inc. is a corporation duly incorporated under the laws of the State of Delaware with its principal place of business in Burbank, California. Warner Bros. owns or controls the copyrights or exclusive rights in the content that it or its affiliates produce or distribute. 10. Plaintiff Amazon Content Services, LLC is a corporation duly incorporated under the laws of the State of Delaware with its principal place of

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business in Seattle, Washington. Amazon owns or controls the copyrights or exclusive rights in the content that it or its affiliates produce or distribute. 11. Plaintiff Netflix Studios, LLC is a corporation duly incorporated under the laws of the State of Delaware with its principal place of business in Los Gatos, California. Netflix owns or controls the copyrights or exclusive rights in the content that it or its affiliates produce or distribute. 12. Plaintiffs have obtained Certificates of Copyright Registration for their Copyrighted Works. Exhibit A contains a representative list of titles, along with their registration numbers, as to which TickBox has contributed to and induced infringement and continues to contribute to and induce infringement. 13. TickBox TV LLC is a corporation duly incorporated under the laws of the State of Georgia with its principal place of business at 5887 Glenridge Dr., #400, Sandy Springs, GA 30328. JURISDICTION AND VENUE 14. This Court has subject matter jurisdiction over this Complaint pursuant to 28 U.S.C. §§ 1331, 1338(a), and 17 U.S.C. § 501(b). 15. TickBox operates an eponymous interactive website (www.tickboxtv.com), where TickBox conducts online sales, offers “live chat” technical support, and promotes its TickBox TV device. This website is available to and used by California residents. TickBox TV’s widespread and growing popularity is reflected in the roughly half a million unique visitors per month to its website. 16. TickBox sells and ships its devices to California residents. It also provides ongoing technical support to California residents and manages TickBox TV units remotely by facilitating automatic software updates to TickBox TV customers who reside in California. TickBox utilizes the services of companies in California, including Facebook, YouTube, Twitter, and Google+ to advertise and promote TickBox TV to potential customers in California.

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17. TickBox also knowingly and intentionally targets Plaintiffs and the State of California by openly encouraging TickBox TV customers in California and elsewhere to obtain “free” streams of infringing content rather than “wasting money with online streaming services like Netflix, Hulu or Amazon Prime.” TickBox encourages these customers to use TickBox TV to obtain infringing access to “Hollywood blockbusters,” further demonstrating its intent to target Plaintiffs and the State of California. TickBox further uses Plaintiffs’ or their affiliates’ trademarks for television channels (e.g., the Disney Channel) to demonstrate the range of available infringing content, and to advertise the availability of the latest “Hollywood blockbusters.” 18. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(b), 1400(a). FACTUAL OVERVIEW Plaintiffs and Their Copyrighted Works 19. Plaintiffs or their affiliates produce and distribute some of the most popular and critically acclaimed motion pictures and television shows in the world. 20. Plaintiffs or their affiliates have invested (and continue to invest) substantial resources and effort each year to develop, produce, distribute, and publicly perform their Copyrighted Works. 21. Plaintiffs or their affiliates own or have the exclusive U.S. rights (among others) to reproduce, distribute, and publicly perform Plaintiffs’ Copyrighted Works, including by means of streaming those works over the Internet to the public. 22. Plaintiffs authorize the distribution and public performance of their Copyrighted Works in various formats and through multiple distribution channels, including, by way of example: (a) for exhibition in theaters; (b) through cable and direct-to-home satellite services (including basic, premium, and “pay-per-view”); (c) through authorized, licensed Internet video-on-demand services, including those

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operated by iTunes, Google Play, Hulu, and VUDU, as well as those operated by Netflix and Amazon (which are affiliates of the copyright-owners Netflix and Amazon that are Plaintiffs here); (d) for private home viewing on DVDs and Blu- ray discs; and (e) for broadcast on television. 23. Plaintiffs have not authorized TickBox, the operators of the third-party sites to which its TickBox TV links, or TickBox’s customers, to exercise any of Plaintiffs’ exclusive rights under the Copyright Act, 17 U.S.C. § 106.

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TickBox’s Inducement of and Contribution to the Infringement of Plaintiffs’ Copyrighted Works

The TickBox TV Experience 24. TickBox TV is easy for customers to install and operate. Customers need only connect TickBox TV to the Internet and a screen (computer monitor or television) to operate. TickBox’s marketing materials illustrate how easy it is to install TickBox TV (the device itself appears within the red circle in TickBox’s ad below, underneath the words, “just plug and play!”):

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25. TickBox markets its device as one that gives its customers direct access to “the largest online media library on the planet,” with “virtually all the channels you get from your local cable company,” and “without you having to worry about paying rental fees or monthly subscriptions.” 26. TickBox TV primarily utilizes two types of software programs. The first is a software media player called “Kodi.” Kodi is a third-party “open source” media player, meaning that it operates with many different programs and file formats. Kodi is recognized as the most popular media player for supporting software “addons.” An addon is a software program that runs in conjunction with an underlying software program (like Kodi) to provide functionality over and above the functionality that the underlying software provides. 27. TickBox TV also uses individual addons that are designed and maintained for the overarching purpose of scouring the Internet for illegal sources of copyrighted content and returning links to that content. When TickBox TV customers click those links, those customers instantaneously receive unauthorized streams of popular motion pictures and television shows.

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28. From the customer’s perspective, TickBox TV works as follows. First, the customer boots up a newly delivered TickBox TV unit. The device prompts the customer to download “TickBox TV Player” software. As depicted below, the device then presents the customer with a home screen branded, “Welcome to TickBox TV.” This home screen directs the customer to various routes for obtaining infringing streams, including menu options labeled “WATCH MOVIES TV SPORTS,” “Select Your Theme,” and “3rd Party LIVE TV Suggestions.” The TickBox TV home menu also offers a link to a “One Click Webinar,” encouraging customers to “Learn how to view THOUSANDS of live tv channels for FREE!”

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29. The home menu also displays a “Support” button. Upon clicking that button, the customer sees a screen with the title: “TICKBOX TV TECH & INSTALLATION VIDEOS. BEFORE YOU DO ANYTHING ELSE, START HERE!” The TickBox TV installation video guides the customer step-by-step through the process of using the TickBox TV device to obtain access to unauthorized streams.

30. The TickBox TV instructional video further instructs the customer “how to” use the device to obtain infringing content. The tutorials include: “TickBox TV How to watch a TV Show,” “TickBox TV How to search for a Movie,” and “TickBox TV How to watch Live TV,” and “HOW TO DOWNLOAD ADDONS TO YOUR TICKBOX TV.” 31. The TickBox TV instructional video urges the customer to use the “Select Your Theme” button on the start-up menu for downloading addons. The “Themes” are curated collections of popular addons that link to unauthorized streams of motion pictures and television shows. Some of the most popular addons

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currently distributed—which are available through TickBox TV—are titled “Elysium,” “Bob,” and “Covenant.” 32. After completing the set-up and downloading addons per TickBox’s directions, the customers use TickBox TV for intended and unquestionably infringing purposes, most notably to obtain instantaneous, unrestricted, and unauthorized access to infringing streams of Plaintiffs’ Copyrighted Works. 33. As noted, “Covenant” is a very popular addon for accessing infringing content. It is one of the addons that TickBox makes it easy for customers for download and use to access infringing streams. The customer opens Covenant through the TickBox TV device. Once opened, the customer sees the following welcome screen, which presents TickBox’s customer with 15 different categories and search options. These curated categories include selections of obviously popular and copyrighted content, such as “Box Office,” “In Theaters,” and “New Movies”:

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34. A TickBox TV customer who selected the “In Theatres” category on September 11, 2017, would have viewed 51 curated results (as circled), the first page of which is depicted below:

35. In the above example, the third listed title, Fox’s War for the Planet of the Apes, was released to theaters on July 14, 2017. As of September 11, 2017, War for the Planet of the Apes was not authorized for in-home viewing via video-on- demand distribution, as its distribution was still limited exclusively to theaters. As of September 11, 2017, several other of the above-listed titles were also not authorized for video-on-demand distribution, as they were still being distributed exclusively to theaters.

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36. Once the TickBox TV customer selects a particular title to stream, he or she has nearly instantaneous access to dozens of links to sources of unauthorized content. For example, the screenshot below shows a list of results for War for the Planet of the Apes.

As the result of just one search, a TickBox TV customer would have had access to 44 different unauthorized sources for streaming War for the Planet of the Apes. 37. TickBox TV customers also have access to information about sources, including whether the source streams content in high-definition or standard- definition resolution. As the screenshot above shows, the sources for some movies that are still in theaters are listed as “CAM,” which indicates that the video was shot illegally by an individual using a camcorder or other recording device in a movie theater. 38. As depicted in the screenshot below, when a customer selects a source for War for the Planet of the Apes, TickBox TV presents a user-friendly interface with buttons to fast-forward, rewind, play, pause, stop, and turn on closed-

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captioning, among others. With just a few clicks, a TickBox TV customer can access an infringing stream of a motion picture that can be seen legally only in theatres.

TickBox Intentionally Induces Mass Infringement of Plaintiffs’ Copyrighted Works

39. TickBox promotes the use of TickBox TV for overwhelmingly, if not exclusively, infringing purposes, and that is how its customers use TickBox TV. 40. TickBox advertises TickBox TV as a substitute for authorized and legitimate distribution channels such as cable television or video-on-demand services like Amazon Prime and Netflix. With a wink and a nod, TickBox tells prospective customers they can “of course” still use “Amazon Video, Netflix or Hulu on Tickbox TV”— but TickBox confidently predicts that, “within a few days of using Tickbox TV™ you will find you no longer need those subscriptions” (because TickBox TV is intended to substitute for such services).

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41. TickBox promotes TickBox TV as making it easy and efficient for customers to find and access infringing streams and copies of Plaintiffs’ Copyrighted Works. TickBox highlights the ease of finding and watching content on TickBox TV in its online promotional videos, explaining that “the TickBox technology just sends the stream directly to your television … and the installation is as easy as plugging the box into the HDMI port on your TV.”1 42. TickBox markets TickBox TV as a way to “Get Instant Access to Any Movie, TV Show, or Sporting Events… Without Signing a Contract or Paying a Monthly Service Fee!” TickBox informs potential customers that once they purchase TickBox TV, all of the content they stream is “ABSOLUTELY FREE.”

43. TickBox urges its customers to stream infringing content. TickBox promotional materials inform customers that “[y]ou can see almost every movie and TV series ever made. You can even access movies and shows that are still on

1 Tickbox TV, Tickbox TV, YOUTUBE, at 1:40-52, https://www.youtube.com/watch?v=c8eF7jiANGI. 111 Case 2:17-cv-07496 Document 1 Filed 10/13/17 Page 17 of 21 Page ID #:17

Demand and episodes of TV that were just aired. You will never pay to watch any of them.” 44. TickBox boasts that TickBox TV offers automatic software updates. TickBox explains that “most content will update daily and if the add on or app needs to be updated it will update automatically.” For example, in September 2017, the automatic update added the “Covenant” addon (described above) to the TickBox TV devices of customers who had set up their devices before Covenant was available on TickBox’s download menu. TickBox thereby ensures that TickBox TV customers will enjoy uninterrupted access to the most popular and up-to-date addons for obtaining access to infringing streams any time. 45. The commercial value of TickBox’s business depends on high-volume infringing use through the TickBox TV devices. TickBox’s revenues grow based on the growth in demand for the TickBox TV devices. The demand for TickBox TV is driven by the promise of free access to infringing content. These promises depend on and form an integral part of an ecosystem built on the mass infringement of Plaintiffs’ Copyrighted Works. FIRST CAUSE OF ACTION (Intentionally Inducing the Infringement of Plaintiffs’ Copyrighted Works, 17 U.S.C. § 106) 46. Plaintiffs incorporate herein by reference each and every averment contained in paragraphs 1 through 45 inclusive. 47. TickBox has actual knowledge of third parties’ infringement of Plaintiffs’ exclusive rights under the Copyright Act. 48. TickBox intentionally induces the infringement of Plaintiffs’ exclusive rights under the Copyright Act, including infringement of Plaintiffs’ exclusive right to publicly perform their works. As intended and encouraged by TickBox, its device connects its customers to unauthorized online sources that stream Plaintiffs’ Copyrighted Works. The operators of these source repositories directly infringe

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Plaintiffs’ public performance rights by providing unauthorized streams of the works to the public, including to TickBox’s customers. These operators, or others operating in concert with them, control the facilities and equipment used to store and stream the content, and they actively and directly cause the content to be streamed when TickBox TV customers click on a link for the content. 49. TickBox induces the aforementioned acts of infringement by supplying the physical devices that facilitate, enable, and create direct links between TickBox TV customers and the infringing operators of the streaming services, and by actively inducing, encouraging and promoting the use of its devices for blatant copyright infringement. 50. TickBox’s intentional inducement of the infringement of Plaintiffs’ rights in each of their Copyrighted Works constitutes a separate and distinct act of infringement. 51. TickBox’s inducement of the infringement of Plaintiffs’ Copyrighted Works is willful, intentional, and purposeful, and in disregard of and with indifference to the rights of Plaintiffs. 52. As a direct and proximate result of the infringement that TickBox intentionally induces, Plaintiffs are entitled to damages and TickBox’s profits in amounts to be proven at trial. 53. Alternatively, at their election, Plaintiffs are entitled to statutory damages, up to the maximum amount of $150,000 per work infringed by virtue of TickBox’s willful inducement of infringement, or for such other amounts as may be proper under 17 U.S.C. § 504. 54. Plaintiffs further are entitled to recover their attorneys’ fees and full costs pursuant to 17 U.S.C. § 505. 55. As a direct and proximate result of the foregoing acts and conduct, Plaintiffs have sustained and will continue to sustain substantial, immediate and irreparable injury, for which there is no adequate remedy at law. Unless enjoined

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and restrained by this Court, TickBox will continue to induce infringement of Plaintiffs’ rights in their Copyrighted Works. Plaintiffs are entitled to injunctive relief under 17 U.S.C. § 502. SECOND CAUSE OF ACTION (Contributory Copyright Infringement by Knowingly and Materially Contributing to the Infringement of Plaintiffs’ Copyrighted Works, 17 U.S.C. §§ 106(1)) 56. Plaintiffs incorporate herein by reference each and every averment contained in paragraphs 1 through 45 inclusive. 57. TickBox has actual or constructive knowledge of third parties’ infringement of Plaintiffs’ exclusive rights under the Copyright Act. TickBox knowingly and materially contributes to such infringing activity. 58. TickBox knowingly and materially contributes to the infringement of Plaintiffs’ exclusive rights under the Copyright Act, including infringement of Plaintiffs’ exclusive right to publicly perform their works. TickBox designs and promotes the use of its device to connect customers to unauthorized online sources that stream Plaintiffs’ Copyrighted Works. The operators of these source repositories directly infringe Plaintiffs’ public performance rights by providing unauthorized streams of the works to the public, including to TickBox’s customers. The operators, or others operating in concert with them, control the facilities and equipment used to store and stream the content, and they actively and directly cause the content to be streamed when TickBox TV customers click on a link for the content. 59. TickBox knowingly and materially contributes to the aforementioned acts of infringement by supplying the physical devices that facilitate, encourage, enable, and create direct links between TickBox TV customers and infringing operators of the streaming services, and by actively encouraging, promoting, and contributing to the use of its devices for blatant copyright infringement.

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60. TickBox’s knowing and material contribution to the infringement of Plaintiffs’ rights in each of their Copyrighted Works constitutes a separate and distinct act of infringement. 61. TickBox’s knowing and material contribution to the infringement of Plaintiffs’ Copyrighted Works is willful, intentional, and purposeful, and in disregard of and with indifference to the rights of Plaintiffs. 62. As a direct and proximate result of the infringement to which TickBox knowingly and materially contributes, Plaintiffs are entitled to damages and TickBox’s profits in amounts to be proven at trial. 63. Alternatively, at their election, Plaintiffs are entitled to statutory damages, up to the maximum amount of $150,000 per work infringed by virtue of TickBox’s willful, knowing, and material contribution to infringement, or for such other amounts as may be proper under 17 U.S.C. § 504. 64. Plaintiffs further are entitled to recover their attorneys’ fees and full costs pursuant to 17 U.S.C. § 505. 65. As a direct and proximate result of the foregoing acts and conduct, Plaintiffs have sustained and will continue to sustain substantial, immediate and irreparable injury, for which there is no adequate remedy at law. Unless enjoined and restrained by this Court, TickBox will continue to knowingly and materially contribute to the infringement of Plaintiffs’ rights in their Copyrighted Works. Plaintiffs are entitled to injunctive relief under 17 U.S.C. § 502. PRAYER FOR RELIEF WHEREFORE, Plaintiffs pray for judgment against TickBox and for the following relief: 1. For Plaintiffs’ damages and TickBox’s profits in such amount as may be found; alternatively, at Plaintiffs’ election, for maximum statutory damages; or for such other amounts as may be proper pursuant to 17 U.S.C. § 504(c).

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2. For preliminary and permanent injunctions (a) enjoining TickBox, its officers, agents, servants, employees, attorneys, and all persons acting in active concert or participation with it, from publicly performing or otherwise infringing in any manner (including without limitation by materially contributing to or intentionally inducing the infringement of) any right under copyright in any of Plaintiffs’ Copyrighted Works, including without limitation by publicly performing those Works, or by distributing any software or providing any service or device that does or facilitates any of the foregoing acts; and (b) impounding all TickBox TV devices in TickBox’s possession, custody, or control, and any and all documents or other records in TickBox’s possession, custody, or control relating to TickBox’s contribution to and inducement of the infringement of Plaintiffs’ Copyrighted Works. 3. For prejudgment interest according to law. 4. For Plaintiffs’ attorneys’ fees and full costs incurred in this action pursuant to 17 U.S.C. § 505. 5. For all such further and additional relief, in law or in equity, to which Plaintiffs may be entitled or which the Court deems just and proper. DEMAND FOR JURY TRIAL Plaintiffs demand a trial by jury on all issues triable by jury.

DATED: October 13, 2017 MUNGER, TOLLES & OLSON LLP

By: /s/ Kelly M. Klaus KELLY M. KLAUS Attorneys for Plaintiffs

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1 Brandon J. Witkow (SBN 210443) 2 [email protected] Cory A. Baskin (SBN 240517) 3 [email protected] 4 witkow | baskin 21031 Ventura Boulevard, Suite 603 5 Woodland Hills, California 91364 6 Tel: 818.296.9508 Fax: 818.296.9510 7 8 John A. Christy (admitted pro hac vice) [email protected] 9 Schreeder, Wheeler & Flint, LLP 10 1100 Peachtree Street NE, Suite 800 Atlanta, Georgia 30309 11 Tel: 404.681.3450 12 Fax: 404.681.1046

13 Attorneys for Defendant TickBox TV, LLC 14

UNITED STATES DISTRICT COURT 15 CENTRAL DISTRICT OF CALIFORNIA 16 Universal City Studios LLC; Columbia ) Case No. 2:17-cv-07496-MWF(AS) 17 ) Pictures Industries, Inc.; Disney ) 18 Enterprises, Inc.; Twentieth Century Fox ) RESPONSE IN OPPOSITION TO Film Corporation; Paramount Pictures ) MOTION FOR PRELIMINARY 19 ) Corporation; Warner Bros. Entertainment, ) INJUNCTION 20 Inc.; Amazon Content Services, LLC; ) Netflix Studios, LLC, ) [Filed Concurrently with Declaration 21 ) ) of Prof. Amy Bruckman & Declaration 22 Plaintiffs, ) of Jeffrey Goldstein] vs. ) 23 ) ) Date: Jan. 29, 2017 24 TickBox TV, LLC, ) Time: 10:00 a.m. ) Ctrm: 5A [Hon. Michael W. 25 ) Defendant. ) Fitzgerald] 26 ______)

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1 TABLE OF CONTENTS

2 I. INTRODUCTION...... 1

3 II. PLAINTIFFS ARE NOT LIKELY TO SUCCEED ON THE MERITS...... 2

4 A. Defendant Does Not Provide the Product Which Allegedly Facilitates

5 Infringement...... 3

6 B. Plaintiffs Have Not Demonstrated Copyright Infringement by Users of

7 Defendant’s Product...... 5

8 C. Plaintiffs Cannot Show that Defendants Intend to Induce Copyright

9 Infringement...... 7

10 D. Defendant Does Not Have the Requisite Connections to Third-Party

11 Streaming Websites to be Held Liable for Their Actions...... 9

12 III. DEFENDANT’S VOLUNTARY ACTS OBVIATE THE NEED FOR

13 INJUNCTIVE RELIEF...... 10

14 IV. EVEN IF INJUNCTIVE RELIEF WERE APPROPRIATE, PLAINTIFF’S

15 PROPOSED RELIEF IS NOT TAILORED TO PREVENT THEIR

16 ALLEGED HARM...... 11

17 V. CONCLUSION...... 13 18 19 20 21 22 23 24 25 26 27 28

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1 TABLE OF AUTHORITIES 2 CASES 3 American Broadcasting Cos., Inc. v. Aereo, Inc. 4 134 S.Ct. 2498, 2509 (2014) ...... 6

5 Anderson v. United States 612 F.2d 1112, 1114 (9th Cir. 1979) ...... 2, 12 6 7 Columbia Pictures Industries, Inc. v. Fung 710 F.3d 1020 (9th Cir. 2013) ...... passim 8 Fox Television Stations, Inc. v. FilmOn X LLC 9 966 F.Supp. 2d 30, 46-47 (D.D.C. 2013) ...... 6 10 Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. 11 545 U.S. 913 (2005)...... 2, 4, 5, 8

Perfect 10, Inc. v. Amazon.com, Inc. 508 F.3d 1146, 1169 (9th Cir. 2007) ...... 5, 7, 9 13 14 Stanley v. Univ. of So. Cal. 13 F.3d 1313, 1320 (9th Cir. 1994) ...... 2, 12

15 Twentieth Century Fox Film Corp. v. iCraveTV 16 No. Civ. A. 00-120, 2000 WL 255989, at *7 (W.D. Pa. Feb. 8, 2000)...... 6 17 Video Pipeline, Inc. v. Buena Vista Home Entm’t, Inc. 18 192 F.Supp. 2d 321, 322 (D.N.J. 2002) ...... 6

19 Warner Bros. Entm’t Inc. v. WTV Sys., Inc. 824 F.Supp. 2d 1003, 1006-07 (C.D. Cal. 2011) ...... 6 20 21 Winter v. Natl. Res. Def. Council, Inc. 555 U.S. 7, 20 (2008) ...... 2, 11, 12 22 WPIX, Inc. v. ivi, Inc. 23 691 F.3d 275, 278 (2d Cir. 2012) ...... 6 24 25 STATUTES 26 17 U.S.C. § 101 ...... 7 27 17 U.S.C. § 106 ...... 6 28

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1 17 U.S.C. § 501(a) ...... 6 2

3 OTHER AUTHORITIES 4 1976 U.S.C.C.A.N. at 5676-77 ...... 7 5 6 7 8 9 10 11 12

13 14

15 16 17 18 19 20 21 22 23 24 25 26 27 28

iii

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1 MEMORANDUM OF POINTS AND AUTHORITIES 2 I. INTRODUCTION. 3 Defendant TickBox TV, LLC (“TickBox” or “Defendant”) sells a hardware 4 device (the “Box”) which allows users to perform common functions of a 5 smartphone, tablet, or desktop computer, and display those functions on the user’s 6 television screen or other monitor. See Declaration of Professor Amy S. Bruckman 7 (“Bruckman Decl.”) ¶¶ 6-8, 13. It allows users to search the Internet, access popular 8 social media websites such as Twitter, and download and use applications for the 9 Android operating system. Id. Users can download applications and access media 10 content from legitimate, non-infringing content sources. Id. ¶ 15. The Box is not 11 sold with any unauthorized or illegal content, nor is unauthorized or illegal software 12 installed. ¶¶ 8, 14. Nevertheless, Plaintiffs allege that Defendant is violating Id. 13 their rights because, just as with any other device connected to the Internet, users of 14 the Box can download and install third-party programs – not affiliated in any way

15 with Defendant – through which users could search for and view unauthorized or 16 illegal content from third-party sources. 17 Plaintiffs filed the Motion for Preliminary Injunction [Doc. No. 28] (hereafter, 18 the “Motion”) seeking a vague and overbroad preliminary injunction against 19 Defendant and its officers, directors, agents, servants, and employees from violating 20 copyright law or “distributing any device or software . . . or performing any service 21 that induces or facilitates” violation of copyright law. Plaintiffs also seek 22 mandatory relief to require Defendant to cease doing business, impound its 23 inventory, and hack into already sold devices to remove any software downloaded 24 by purchasers which might “facilitate” infringement of Plaintiffs’ copyrighted 25 works. 26 The Motion must be denied because Plaintiffs have failed to establish a 27 likelihood of success on the merits of their claim. As explained in detail herein, the 28 alleged “infringing conduct” on which this action is based is purportedly committed 1

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1 by third parties that have no affiliation with Defendant and over which Defendant 2 has no control. On the other hand, the actions of Defendant and its users can in no 3 way be construed as a copyright violation. Thus, Plaintiffs cannot show that 4 injunctive relief is necessary to prevent irreparable harm, that the balance of 5 hardships tips in Plaintiffs’ favor, or that injunctive relief serves the public interest. 6 Moreover, even assuming injunctive relief is warranted – which it is not – the 7 proposed injunctive relief sought in the Motion is so unreasonably broad and 8 ambiguous that it cannot be awarded. 9 II. PLAINTIFFS ARE NOT LIKELY TO SUCCEED ON THE 10 MERITS. 11 “A plaintiff seeking a preliminary injunction must establish that he is likely to 12 succeed on the merits[.]” , 555 U.S. 7, 20 Winter v. Natl. Res. Def. Council, Inc. 13 (2008). “A preliminary injunction is an extraordinary remedy never awarded as of 14 right.” Id. at 24. Mandatory injunctions, as opposed to prohibitory injunctions, are

15 particularly disfavored, and the Court should deny such relief “unless the facts and 16 law clearly favor the moving party.” Stanley v. Univ. of So. Cal., 13 F.3d 1313, 17 1320 (9th Cir. 1994) (quoting Anderson v. United States, 612 F.2d 1112, 1114 (9th 18 Cir. 1979). 19 Plaintiffs allege that they can successfully hold Defendant “secondarily 20 liable” under the theory of “contributory infringement” or “inducement liability” as 21 described in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 22 (2005) and Columbia Pictures Industries, Inc. v. Fung, 710 F.3d 1020 (9th Cir. 23 2013). To establish such liability, Plaintiffs must establish “(1) distribution of a 24 device or product, (2) acts of infringement [by users of Defendant’s product], (3) an 25 object of promoting its use to infringe copyright, and (4) causation.” Fung, 710 26 F.3d at 1032. Plaintiffs have failed to establish any of these four elements. 27 28

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1 A. Defendant Does Not Provide the Product Which Allegedly 2 Facilitates Infringement. 3 Defendant admittedly distributes a “device” – the Box. However, the alleged 4 infringing activity on which Plaintiffs’ Motion is based is not activity performed by 5 the Box. Rather, the heart of Plaintiffs’ allegations is that “Themes” – i.e., third- 6 party modifications of the open-source media player software which the Box utilizes 7 – can be installed on the Box by users to facilitate their access to online streams, 8 allegedly including unauthorized streams of Plaintiffs’ copyrighted works. 9 Plaintiffs repeatedly refer to these third-party “Themes” as if they are the Box, or 10 are otherwise Defendant’s product. See e.g. Plaintiffs’ Motion for Preliminary 11 Injunction (the “Motion”) at 2 (“TickBox TV utilizes illicit software tools that scour 12 the Internet for sources of infringing content and deliver links to those infringing

13 sources to TickBox’s customers in categories like ‘Most Popular,’ ‘in Theaters,’ and 14 ‘New Movies’ . . . .”). The Motion spends a great deal of time describing these

15 third-party “Themes” and how they operate to search for and stream videos. See 16 e.g. Motion at 8-10, 14. But the “Themes” on which Plaintiffs so heavily focus are 17 not the Box, and they have absolutely nothing to do with Defendant. Rather, they 18 are third-party modifications of the open-source media player software which the 19 Box utilizes. 20 Tellingly, the Motion does very little to describe the functionality of 21 Defendant’s product, the Box, and does not identify any objectionable function of 22 the Box absent this third-party software. This is because the Box is simply a small 23 computer which performs common and non-infringing functions of any smartphone, 24 tablet, or desktop computer, and allows its users the ability to download a number of 25 third-party applications that provide users access to authoried streaming content 26 directly from content providers, such as “CBS,” “WatchESPN,” “The Weather 27 Channel,” and “Cartoon Network.” Bruckman Decl. ¶ 15. 28

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1 Plaintiffs also allege, without evidence, that Defendant updates these third- 2 party “Themes” about which Plaintiffs complain and implies that Defendant offers 3 technical support for the “Themes.” See e.g. Motion at 19, citing Foster Decl. ¶¶ 4 24-30, 36-44. However, these allegations are patently untrue, and are not supported 5 by any evidence. To the contrary, Defendant has not created or updated any of the 6 “Themes” about which Plaintiffs complain. See Declaration of Jeffrey Goldstein 7 (“Goldstein Decl.”), ¶ 14. Plaintiffs’ own expert correctly explained that the media- 8 player software installed on TickBox devices, Kodi, “is a third-party media player 9 software . . . [that] supports third-party programs called ‘addons,’” created by third- 10 parties “not affiliated with Kodi itself.” Foster Declaration ¶ 18. Plaintiffs admit 11 that Kodi “is not inherently unlawful.” See Motion at 5. Professor Foster further 12 explained that third-party programmers can create customized versions of the Kodi

13 software with a set of addons, and bundle the addons to create “builds” or 14 “Themes.” Foster Decl. at ¶ 19. Plaintiffs have identified certain of these third-

15 party “builds” or “Themes” which are available on the internet and which can be 16 downloaded by users to view content streamed by third-party websites; however, 17 this same software can be installed on many different types of devices, even one 18 distributed by affiliates of Plaintiff Amazon Content Services, LLC. See Bruckman 19 Decl. ¶¶ 16-18. 20 In Grokster, copyright holders sued two software companies, whose software 21 allowed users to share and download copyrighted works through peer-to-peer 22 networks. Grokster, 545 U.S. at 919. The Supreme Court held that the respondents 23 could be liable for distributing a “device” – the respondents’ software – “with the 24 object of promoting its use to infringe copyright.” Id. at 936. Similarly, in Fung, 25 copyright holders sued the operator of websites which hosted “torrent” files – files 26 necessary for operation of the “BitTorrent protocol” version of peer-to-peer file 27 sharing. Fung, 710 F.3d at 1025-29. The 9th Circuit held that Fung’s provision of 28 torrent files similarly satisfied the first element of inducement liability. Id. at 1033. 4

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1 In contrast, Defendant’s product – the Box – is not software through which 2 users can access unauthorized content, as in Grokster, or even a necessary 3 component of accessing unauthorized content, as in Fung. Defendant offers a 4 computer, onto which users can voluntarily install legitimate or illegitimate 5 software. The product about which Plaintiffs complain is third-party software 6 which can be downloaded onto a myriad of devices, and which Defendant neither 7 created nor supplies. 8 B. Plaintiffs Have Not Demonstrated Copyright Infringement by 9 Users of Defendant’s Product. 10 “To prove copyright infringement on an inducement theory, [Plaintiffs must] 11 adduce evidence of actual infringement by users of [Defendant’s] services.” Fung, 12 710 F.3d at 1034. With the exception of Plaintiffs’ own employees and expert,

13 Plaintiffs have not pointed to any evidence that purchasers of the Box have actually 14 accessed Plaintiffs’ copyrighted material. See, Perfect 10, Inc. v. Amazon.com, Inc.,

15 508 F.3d 1146, 1169 (9th Cir. 2007) (finding there was “no evidence in the record 16 directly establishing that [Defendant’s] users [committed infringement], and the 17 district court did not err in declining to infer the existence of such evidence”). 18 More importantly, even if Plaintiffs had shown actual access to infringing 19 material by Defendant’s users, they have not shown that such access would 20 constitute actual infringement. Plaintiffs allege that they have the exclusive right 21 “to perform” certain copyrighted works “publicly,” that “transmission” of such 22 public works violates such exclusive right, and Internet streams constitute such 23 transmission in violation of Plaintiffs’ exclusive right to public performance. See 24 Motion, at § III.2. Plaintiffs have not alleged that Defendant, its product, or users of 25 Defendant’s product have “transmitted” any of Plaintiffs’ copyrighted works; 26 instead, Plaintiffs allege that users of Defendant’s product have the ability to view 27 performances which violate Plaintiffs’ exclusive right to perform its copyrighted 28 works. However, Plaintiffs have not cited any authority by which viewers of public 5

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1 performances can be held liable for violation of a copyright holder’s rights “to 2 perform the copyrighted works publicly.” See Fung, 710 F.3d at 1034 (“uploading 3 and downloading copyrighted material” violate the right to distribution under § 4 106(1) and to reproduction under § 106(3), respectively); American Broadcasting 5 Cos., Inc. v. Aereo, Inc., 134 S.Ct. 2498, 2509 (2014) (finding service which 6 transmitted Internet streams liable under § 106(4)); WPIX, Inc. v. ivi, Inc., 691 F.3d 7 275, 278 (2d Cir. 2012) (in which the defendant “captured and retransmitted 8 plaintiffs’ copyrighted television programming”); Warner Bros. Entm’t Inc. v. WTV 9 Sys., Inc., 824 F.Supp. 2d 1003, 1006-07 (C.D. Cal. 2011) (in which defendants 10 “transmit the performance via the internet to the customer”); Fox Television 11 Stations, Inc. v. FilmOn X LLC, 966 F.Supp. 2d 30, 46-47 (D.D.C. 2013) (in which 12 defendant captured television signals and broadcasted them over the Internet to

13 defendant’s users); Video Pipeline, Inc. v. Buena Vista Home Entm’t, Inc., 192 14 F.Supp. 2d 321, 322 (D.N.J. 2002) (Video Pipeline violated exclusive right to public

15 performance by transmitting portions of copyrighted works from Video Pipeline’s 16 website to users); Twentieth Century Fox Film Corp. v. iCraveTV, No. Civ.A. 00- 17 120, 2000 WL 255989, at *7 (W.D. Pa. Feb. 8, 2000) (defendant captured television 18 programming, converted such television signals into computerized data, and 19 streamed them over the Internet). 20 The text of the statute itself does not impose liability for viewing streaming 21 content. Under the statute, an “infringer” is one who violates any of the exclusive 22 rights of the copyright owner. 17 U.S.C. § 501(a). Plaintiffs complain that their 23 exclusive right under 17 U.S.C. § 106(4) is at issue here: “in the case of literary, 24 musical, dramatic, and choreographic works, pantomimes, and motion pictures and 25 other audiovisual works, to perform the copyrighted work publicly.” “To ‘perform’ 26 a work means to recite, render, play, dance, or act it, either directly or by means of 27 any device or process or . . . to show its images in any sequence or to make the 28 sounds accompanying it audible.” To perform “publicly” means “(1) to perform or 6

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1 display it at a place open to the public or at any place where a substantial number of 2 persons outside of a normal circle of a family and its social acquaintances is 3 gathered; or (2) to transmit or otherwise communicate a performance to a place 4 specified by clause (1) or the public[.]” 17 U.S.C. § 101 (emphasis added); see, also 5 1976 U.S.C.C.A.N. at 5676-77 (“Although any act by which the initial performance 6 or display is transmitted, repeated, or made to recur would itself be a “performance” 7 or “display” under the bill, it would not be actionable as an infringement unless it 8 were done “publicly” as defined in section 101.”) Plaintiffs do not allege that 9 Defendant, Defendant’s product, or the users of Defendant’s product “transmit or 10 otherwise communicate a performance” to the public; instead, Plaintiffs allege that 11 users view streaming material on the Box. It is clear precedent in this Circuit that 12 merely viewing copyrighted material online, without downloading, copying, or

13 retransmitting such material, is not actionable. Perfect 10, 508 F.3d at 1169 14 (Plaintiff failed to show direct infringement by users of Google’s search engine who

15 viewed unauthorized, copyrighted works, where plaintiff presented no evidence that 16 users saved copyrighted images to their computers and, to the extent temporary 17 “cache” copies of images were downloaded, the same would constitute fair use.) 18 Plaintiffs inappropriately seek judicial legislation by attempting to hold 19 Defendant liable for copyright infringement based upon acts which are not 20 infringing under the plain language of the statute. Because viewing copyrighted 21 material is not a public performance of such copyrighted material, Plaintiffs have 22 not pointed to actual acts of infringement by users of Defendant’s product. 23 C. Plaintiffs Cannot Show that Defendants Intend to Induce 24 Copyright Infringement. 25 As set forth above, the activities of Defendant’s users about which Plaintiffs 26 complain do not violate applicable copyright law. See II.B, supra. If Defendant’s 27 users are not infringing upon Plaintiffs’ rights, the Court cannot infer that Defendant 28 intended to induce its users to violate Plaintiffs’ rights. 7

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1 Moreover, this case is factually distinguishable from other cases in which 2 defendants were found to induce users to commit copyright infringement. For 3 example, in Grokster, the respondents expressly stated their intent to replace 4 Napster, a known source of copyright infringement in the marketplace. Grokster, 5 545 U.S. at 939. The respondents “respond[ed] affirmatively to requests for help in 6 locating and playing copyrighted materials.” Id. at 938. The respondents directly 7 advertised the ability to access specific, copyrighted works, and made their software 8 searchable for “Top 40” songs which “were inevitably copyrighted.” Id. at 926. 9 The respondents directly benefitted from users’ copyright infringement by selling 10 advertisements, which generated more revenue as illegal use increased. Id. at 939. 11 By contrast, Defendant does not profit if users access unauthorized content. 12 Goldstein Decl. ¶¶ 14, 17. Defendant does not sell or otherwise provide See 13 unauthorized content or software to access unauthorized content, and does not sell 14 advertising space as did the Grokster respondents. Id. ¶¶ 10, 14, 16. Defendant’s

15 place in the market does not replace or compete with some known copyright 16 infringement1; it competes with other streaming hardware devices, including the 17 “Firestick” sold by affiliates of Plaintiff Amazon Content Services, LLC. Id. ¶ 9. 18 Plaintiffs assert that Defendant has not taken steps “to develop filtering tools 19 or other mechanisms to diminish the infringing activity by its customers.” This 20 assumes that Defendant’s customers were committing some infringement, but they 21 were not. See Section II.B., supra. It further assumes that Defendant was aware of 22 users’ infringement and had a duty and ability to filter users’ activities, which it 23 does not. See Grokster, 545 U.S. at 939, n 12 (“Of course, in the absence of other 24 evidence of intent, a court would be unable to find contributory infringement 25

26 1 Plaintiffs assert that Defendant is “aiming to satisfy a known source of demand for 27 copyright infringement” by competing with Netflix, Hulu, and Amazon Prime. 28 Serving as an alternative to well-known streaming services is in no way analogous to Grokster, in which the defendants aimed to replace Napster, a known infringer. 8

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1 liability merely based on a failure to take affirmative steps to prevent infringement, 2 if the device was otherwise capable of substantial noninfringing uses.”) 3 Finally, no current advertisement or instruction from Defendant encourages or 4 instructs users to access unauthorized streams. See Goldstein Decl. ¶ 25. To the 5 contrary, Defendant requires users to agree not to use the Box for illegal purposes. 6 Id. ¶¶ 7-8. In short, Defendant does not induce its customers to violate Plaintiffs’ 7 copyrights. 8 D. Defendant Does Not Have the Requisite Connections to Third- 9 Party Streaming Websites to be Held Liable for Their Actions. 10 Undoubtedly, there are third-party sources which “transmit” copyrighted 11 works in violation of the copyright holders’ exclusive rights to perform such works. 12 However, when Plaintiffs’ theory of contributory liability flows from the

13 infringement of unknown third parties, with whom Defendant has no contact, much 14 less control, the Motion entirely breaks down. Plaintiff has not alleged any element

15 of contributory infringement vis-à-vis these unknown third-parties. Plaintiff has not 16 alleged that Defendant has distributed any product to those third parties, that 17 Defendant has committed any act which encourages those third parties’ 18 infringement, or that any act of Defendant has, in fact, caused those third parties to 19 infringe. See Fung, 710 F.3d at 1032. Plaintiffs have not shown how Defendant’s 20 advertisements to its potential users or technical support for its users in any way 21 incentivizes or encourages third parties to transmit copyrighted works. 22 To the extent Plaintiffs seek to argue that Defendant should or could take 23 affirmative steps to halt such third-party infringement, such argument is not 24 supported by precedent in this Circuit. In Perfect 10, the copyright holder 25 complained that Google’s search engine facilitated copyright infringement by 26 linking users to websites, from which they could view or download copyrighted 27 images. Perfect 10, Inc., 508 F.3d at 1157. Because Google’s customers were not 28 directly infringing, the copyright holder sought to hold Google vicariously liable for 9

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1 the acts of the third-party website operators. Id. at 1169, 1172-74. The Ninth Circuit 2 affirmed the trial court’s conclusion that Perfect 10 did not establish a likelihood of 3 success on the merits, noting that it had not established any contractual or legal right 4 of Google to stop or limit the infringement of third-party websites. Id. at 1174. 5 “Google cannot stop any of the third-party websites from reproducing, displaying, 6 and distributing unauthorized copies of Perfect 10’s images because that infringing 7 conduct takes place on the third-party websites.” Id. Similarly, Defendant has no 8 contracts with third-party infringers to provide unauthorized streams, is not aware of 9 what individuals or entities provide such streams, and has no ability to prevent third- 10 party infringers from infringing on Plaintiffs’ rights. See Goldstein Decl. ¶¶ 17-19. 11 III. DEFENDANT’S VOLUNTARY ACTS OBVIATE THE NEED FOR 12 INJUNCTIVE RELIEF.

13 The purpose of an injunction is to restrain conduct and preserve the status 14 quo. If the conduct about which Plaintiffs complain is not continuing and Plaintiffs

15 are not being harmed, then there is no need for an injunction because there is 16 nothing to restrain. The core of Plaintiffs’ complaint is that certain Themes of the 17 Kodi media player software enable users to search for and access Plaintiffs’ 18 copyrighted works. Although Defendant does not agree that the access Plaintiff has 19 identified constitutes copyright infringement, after receiving Plaintiffs’ Complaint, 20 Defendant voluntarily took steps to remove links to download those Themes on the 21 Box, intending to remove all such links. See Goldstein Decl. ¶¶ 21-23. 22 Inadvertently, some links remained at the time Plaintiffs filed the Motion; however, 23 any remaining links to such Themes have now been removed from the Box 24 interface. Id. ¶¶ 23-25. Defendant does not provide instructions on how to use the 25 Box to access unauthorized content. Id. ¶ 28. Nor is such access easy or obvious to 26 users of the Box. Bruckman Decl. ¶ 16. Although access to unauthorized streams is 27 possible, it is no easier or different on the Box than it would be on a computer or 28 mobile phone. Id. ¶¶ 16-18. 10

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1 Likewise, with no admission that its prior advertisements encouraged 2 infringement, Defendant has voluntarily modified its advertising and webpage to 3 attempt to appease Plaintiffs and resolve their complaint amicably. See Goldstein 4 Decl. ¶ 26-28. The current advertisements are substantially similar to that of other 5 streaming devices, such as Amazon Firestick and Roku, which encourage users to 6 stream television programs and movies. Id. Plaintiffs allege that Defendant 7 somehow continues to encourage infringement with phrases like, “[T]urn your TV 8 into a content filled home theatre system enjoying thousands of movies, TV shows 9 and apps like Youtube, HBO Now and many many more . . .” and “You Need to 10 Hurry” because “the popularity of TickBox TV™ is growing by leaps and bounds 11 every day.” See Motion at 13-14. Such language is consistent with advertisements 12 for other similar devices, including Amazon’s Firestick. Goldstein Decl. ¶ 27. See 13 Moreover, Plaintiffs’ quarrel with the specific language of Defendant’s advertising 14 highlights that this matter should not be resolved with a broad and ambiguous

15 injunction. 16 IV. EVEN IF INJUNCTIVE RELIEF WERE APPROPRIATE, 17 PLAINTIFF’S PROPOSED RELIEF IS NOT TAILORED TO 18 PREVENT THEIR ALLEGED HARM. 19 It is well established that “relief must be tailored to remedy the specific harm 20 alleged, and an overbroad preliminary injunction is an abuse of discretion.” See 21 Winter, 508 F.3d at 886; F.T.C. v. John Beck Amazing Profits, LLC, No. 2:09-cv- 22 4719-FMC (FFM), 2009 WL 7844076, AT *4 (C.D.Cal. Nov. 17, 2009) (citing 23 Price v. City of Stockton, 390 F.3d 1104, 1117 (9th Cir. 2004)) (“an injunction must 24 be narrowly tailored ... to remedy only the specific harms shown by the plaintiffs, 25 rather than ‘to enjoin all possible breaches of the law’”). Here, the proposed 26 injunction facially oversteps these bounds by enjoining all persons in any way 27 associated with Defendant from “infringing in any manner.” See [Proposed] Order 28 Granting Plaintiffs’ Motion for Preliminary Injunction at 2. Moreover, the proposed 11

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1 injunction is so ambiguous that almost any act could be construed to violate it. For 2 example and without limitation, the proposed injunction would enjoin “all of 3 [Defendants’] officers, directors, agents, servants . . . employees . . . persons in 4 active concert or participation or in privity with any of them . . . from . . . 5 performing any service that induces or facilitates” public performance of Plaintiffs’ 6 copyrighted works. Id. Read literally, the injunction would seem to prevent anyone 7 affected thereby from doing anything which “facilitates” even legitimate, authorized 8 public performances. Without any definition or limitation, no one “in privity” with 9 Defendant or its employees and officers can, for example, provide any computer 10 services, for fear that the computer might one day be used to watch a movie. More 11 specifically and significantly, the injunction would prevent officers and employees 12 of Defendant from interacting with SideTick, LLC, a related entity which does hold

13 legitimate, contractual rights to display certain copyrighted works. See Goldstein 14 Decl. ¶¶ 29-32.

15 Further, in order to be entitled to a preliminary injunction, Plaintiffs must 16 demonstrate that the balance of hardships tips in their favor. Winter, 555 U.S. at 20. 17 “In each case, courts must balance the competing claims of injury and must consider 18 the effect on each party of the granting or withholding of the requested relief.” Id. 19 (internal citations and quotation marks omitted). Mandatory injunctions, as opposed 20 to prohibitory injunctions, are disfavored, and the Court should deny such relief 21 “unless the facts and law clearly favor the moving party.” Stanley v. Univ. of So. 22 Cal., 13 F.3d 1313, 1320 (9th Cir. 1994) (quoting Anderson v. United States, 612 23 F.2d 1112, 1114 (9th Cir. 1979). 24 Not only do Plaintiffs seek a vague and overly broad injunction, but the 25 request – which includes disfavored mandatory relief – would impose an 26 impermissible hardship on Defendant. Namely, the injunctive relief sought would 27 shut down Defendant’s business, impound all of Defendant’s inventory, and require 28 Defendant to hack into and delete content which its customers have downloaded to 12

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1 the Box – an act which Defendant has no right to perform, and which could expose 2 Defendant to thousands of potential claims. See [Proposed] Order Granting 3 Plaintiffs’ Motion for Preliminary Injunction. 4 Plaintiffs, meanwhile, have failed to identify any hardship whatsoever. 5 Plaintiffs have stated only hypothetically that users of the Box could be accessing 6 copyrighted works by downloading certain software, but have failed to show that 7 users have actually downloaded such software or accessed Plaintiffs’ copyrighted 8 works, or that such access would infringe Plaintiffs’ rights. They have not 9 attempted to quantify the extent of such access, much less identify alleged damages 10 from such access. Nor have they articulated how the injunction they seek would 11 lessen their hardship, where the “Themes” about which they complain are not 12 created or distributed by Defendant, are readily available from third parties on the

13 internet, and can be installed on many types of devices. Notably, while vaguely 14 alleging that they are being “irreparably” harmed, Plaintiffs waited nearly two

15 months after filing the Complaint to seek a preliminary injunction in this case. 16 Rather than meet their burden of showing some irreparable harm tips the 17 balance of hardships in their favor, Plaintiffs rely only on the unsupported 18 assumption that Defendant has no cognizable interest in operating its business and 19 selling the Box – which does not currently provide any links to the software about 20 which Plaintiffs complain. The proposed injunction would entirely destroy 21 Defendant as an enterprise – tantamount to granting Plaintiffs the full relief they 22 seek without a trial on the merits – without curing any alleged “hardship” on 23 Plaintiffs. Plaintiffs have not demonstrated that the balance of hardships weigh in 24 their favor, and therefore are not entitled to the “extraordinary” remedy they seek. 25 See Winter, 555 U.S. at 24. 26 V. CONCLUSION. 27 For the foregoing reasons, Plaintiffs are not entitled to the preliminary 28 injunction they seek, because Plaintiffs have not demonstrated that they are likely to 13

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1 succeed on the merits of their claims, Plaintiffs cannot identify any continuing harm 2 in the absence of a preliminary injunction, and the balance of hardships weighs 3 decidedly in Defendant’s favor. Accordingly, the Motion must be denied. 4 Dated: December 28, 2017 witkow | baskin 5 Schreeder, Wheeler & Flint, LLP 6

7 By: /s/ Brandon J. Witkow 8 Brandon J. Witkow 9 Attorneys for Defendant Tickbox TV, LLC 10 11 12

13 14

15 16 17 18 19 20 21 22 23 24 25 26 27 28

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Present: The Honorable MICHAEL W. FITZGERALD, U.S. District Judge

Deputy Clerk: Court Reporter: Rita Sanchez Not Reported

Attorneys Present for Plaintiff: Attorneys Present for Defendant: None Present None Present

Proceedings (In Chambers): ORDER RE: PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION [28]

Before the Court is a Motion for Preliminary Injunction (the “Motion”) filed by Plaintiffs Universal City Studios Productions LLLP (“Universal”), Columbia Pictures Industries, Inc. (“Columbia”), Disney Enterprises, Inc. (“Disney”), Twentieth Century Fox Film Corporation (“Fox”), Paramount Pictures Corporation (“Paramount”), Warner Bros. Entertainment, Inc. (“Warner Bros.”), Amazon Content Services, LLC (“Amazon”), and Netflix Studios, LLC (“Netflix”), filed on December 7, 2017. (Docket No. 28). On December 28, 2017, Defendant TickBox TV LLC (“TickBox”) filed an Opposition. (Docket No. 34). On January 12, 2018, Plaintiffs filed a Reply. (Docket No. 37).

The Court has read and considered the papers filed in connection with the Motion, and held a hearing on January 29, 2018.

For the reasons set forth below the Motion is GRANTED. IT IS ORDERED that a preliminary injunction maintaining the status quo – i.e., compelling TickBox to maintain the current iteration of the Device’s user interface, which seemingly no longer contains links to the themes and addons that Plaintiffs have specifically flagged as problematic in their Complaint and Motion papers (e.g., Paradox, Lodi Black, and Covenant) – shall issue immediately.

During the hearing, the Court posed several questions to counsel that go to the propriety and feasibility of issuing a preliminary injunction that goes beyond requiring

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TickBox to maintain the changes to the Device’s user interface that it has already implemented. Specifically:

• What themes, if any, appear on the Device’s current user interface (i.e., on the home screen or on the screens that appear upon clicking any of the tiles on the home screen)?

• If themes do remain, do they contain links to the Covenant addon or any other addons that provide access to unauthorized streaming versions of Plaintiffs’ copyrighted works?

• Plaintiffs request that the Court direct TickBox to perform a software update that removes from every already-distributed Device all “themes,” “builds” or “addons” that facilitate unauthorized public performances of Plaintiffs’ copyrighted works, including Spinz, Lodi Black, Stream on Fire, Wookie, Aqua, CMM, Spanish Quasar, Paradox, Covenant, Elysium, UK Turk, Gurzil, Maverick, and Poseidon. Have Plaintiffs tested each of these themes and/or addons? Does each one of them provide access to unauthorized versions of Plaintiffs’ copyrighted works?

• What is the best way to address the issue of themes (such as Paradox or Lodi Black) and/or addons (such as Covenant) that provide access to unauthorized versions of Plaintiffs’ copyrighted work but that Device users have already installed? Is there a way to address this issue? Plaintiffs frame the solution as a simple software update whereby TickBox removes these previously-downloaded themes from its customers’ Devices. TickBox suggests that, in order to remove previously downloaded themes or addons from its customers’ Devices it would need to “hack into and delete content which its customers have downloaded,” something that TickBox contends it “has no right to perform, and which could expose [it] to thousands of potential claims.” TickBox obviously has the right and the capability to perform generally applicable software

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updates, as it did in October and December. Is it possible to perform a similar software update whereby all Devices are reset, previously downloaded themes and addons are deleted, and TickBox’s customers start anew with an offending-theme-free user interface? Why would this expose TickBox to legal claims from its customers (particularly in light of the fact that it was done pursuant to court order)?

Keeping these questions and the discussion that follows in mind, counsel for Plaintiffs and TickBox, working with others who possess relevant technical expertise as necessary, shall negotiate and attempt to reach agreement upon a stipulated preliminary injunction that will supersede the Court’s initial preliminary injunction order. If counsel are able to reach an agreement, they shall file a stipulated preliminary injunction order by February 7, 2018. In the event that counsel are unable to reach an agreement, Plaintiffs and TickBox shall each file a proposed preliminary injunction order along with a memorandum of law, not to exceed seven pages, explaining their positions by February 12, 2018.

I. BACKGROUND

The following facts are alleged in the Complaint or included in declarations filed by the parties in connection with the Motion.

A. Plaintiffs and their Copyrighted Works

Plaintiffs and their affiliates create and distribute motion pictures and television programs and own or control the copyrights relating to those motion pictures and television programs. (Complaint ¶¶ 4-12, 19-20, Ex. A). Some of Plaintiffs’ recent titles include Despicable Me 3 (Universal), Spiderman: Homecoming (Columbia), Pete’s Dragon (Disney), War for the Planet of the Apes (Fox), Zoolander 2 (Paramount), Dunkirk (Warner Bros.), Mozart in the Jungle (Amazon), and Stranger Things (Netflix). (Id., Ex. A).

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Plaintiffs or their affiliates own or have the exclusive U.S. rights to reproduce, distribute, and publicly perform their copyrighted works, including by means of streaming those works over the internet. (Id. ¶ 21). Plaintiffs authorize the distribution and public performance of their copyrighted works in various formats and through multiple distribution channels, including, for example: (1) for exhibition in theaters; (2) through cable and satellite television services; (3) through authorized internet video- on-demand services, including those operated by iTunes, Google Play, Hulu, VUDU, Netflix, and Amazon (affiliates of Plaintiffs Netflix and Amazon); (4) on DVDs and Blu-ray discs; and (5) for broadcast on television. (Id. ¶ 22).

Plaintiffs have not authorized TickBox, the operators of third-party sites to which the TickBox TV device (the “Device”) connects, or TickBox’s customers, to exercise any of Plaintiffs’ rights under the Copyright Act, 17 U.S.C. § 106. (Id. ¶ 23).

B. TickBox and its Device

TickBox is a Georgia limited liability company that sells the relevant Device and operates an eponymous website (www.tickboxtv.com), on which it promotes and sells the Device and offers “live chat” technical support. (Complaint ¶¶ 13, 15; Declaration of Amy Bruckman in Opposition to Plaintiff’s Motion for Preliminary Injunction (“Bruckman Decl.”) ¶¶ 3, 6; Declaration of Jeffrey Goldstein in Opposition to Plaintiff’s Motion for Preliminary Injunction (“Goldstein Decl.”) ¶¶ 5-6).

The Device allows users to perform many of the functions of a computer or tablet on their television set or other monitor, including browsing the internet and streaming media content through applications. (Goldstein Decl. ¶ 6). The Device is a small computer that operates on the Android system. (Bruckman Decl. ¶ 6; Declaration of Prof. Ian Foster in Support of Plaintiffs’ Motion for Preliminary Injunction (“Foster Decl.”) ¶ 9). The hardware within the Device is comprised of the type of components found in most home computers, including a 64 Bit CPU, Quad Core processer, eight gigabytes of storage, one gigabyte of SDRAM, a graphics card, and hardware allowing users to connect to the internet. (Id. ¶ 7). Below is a picture of the Device:

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(Foster Decl. ¶ 9, Fig. 1).

As shown in the picture, the Device has various ports for connecting to other devices and a power source, including an HDMI port, an Ethernet port, and multiple USB ports. (Id. ¶¶ 9-10). The Device connects to a television through the HDMI port and to the internet through either the Ethernet port or wirelessly over a Wi-Fi network, as represented in the picture below:

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(Id. ¶¶ 9-10, Fig. 2).

C. Pre-Lawsuit User Experience

The following is a description of what a Device-user would have experienced prior to Plaintiffs’ commencement of this action. As discussed below, TickBox has made some changes to its user interface following receipt of the Complaint and the Motion.

Upon connecting the Device to a television and the internet, a user is prompted by on-screen pictures and messages directing her to download and install software that will ultimately allow the user to view online content on their television screen via the Device. (Id. ¶¶ 12-16). Once the relevant software is installed, upon turning on the Device and the television, a user will see a TickBox home page where he may choose among eight clickable options: (1) Welcome to TickBox TV; (2) WATCH MOVIES TV SPORTS; (3) Select your Theme; (4) Android Apps; (5) Live TV; (6) Settings; (7) OneClick Webinar; and (8) Support. (Id. ¶ 16). Below is a picture of the TickBox homepage:

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(Id., Fig. 7).

When a user selects the “WATCH MOVIES TV SPORTS” option for the first time, he receives a message to “Please close this window and install a theme or select IPTV Premium”; the only option is to close the screen and return to the TickBox TV home page. (Id. ¶ 17). Back at the home page, the user can click on the “Select your Theme” option. In this context, “theme” refers to a customized version of software known a “Kodi.” (Id. ¶ 18).

Kodi is media-player software that organizes, stores, and plays video files. Kodi is “open-source,” which means that its creators have published its source code so that third-party programmers can modify it and create their own versions. Kodi also supports third-party programs called “addons,” which are designed to run in conjunction with Kodi and provide supplemental features. (Id.). Anyone with the requisite skill and knowledge can create addons for Kodi, and there are hundreds of addons available, many of which allow a user to search through catalogs of video content available online and stream films and television shows. (Id.; Bruckman Decl. ¶¶ 9-10).

When a user clicks the “Select your Theme” option, a screen offering several Kodi “themes” (also referred to interchangeably as “builds”) appears. (Foster Decl. ¶ 20). The various Kodi themes differ in their look and feel. (Id. ¶ 19). The preloaded Kodi theme options include “Spinz,” “Stream on Fire,” “Wookie,” “Paradox,” “Lodi,” “Aqua,” “CMM,” and “Spanish Quasar,” as depicted below:

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(Id. ¶ 20, Fig. 9).

Each of these themes contain a bundle of Kodi addons, including “streaming” addons that provide users with lists of film and television titles and allow users to attempt to access selected titles from various internet-linked sources. When a streaming addon finds a working source for a desired title, the addon facilitates the transmission of a stream from the remote content source to the Device. When a working source is located, the user must agree to a general disclaimer absolving the “author” (seemingly the “theme” creator) of any responsibility for the content or reliability of the addon, as depicted below:

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(Id. ¶ 21, Fig. 10). Clicking “I AGREE” results in the automatic downloading and installation of the selected theme (or build), and the Device then prompts the user to “launch the build” – i.e., run the selected customized (by a third party) version of Kodi. (Id. ¶¶ 22-23). Once the selected theme is installed, clicking the “WATCH MOVIES TV SPORTS” title on the home screen will launch the installed theme. (Id. ¶ 23). A user may install a different theme through this same process at any time. (Id. ¶ 29).

D. Accessing Infringing Content with TickBox’s Device

Device users are able to access unauthorized versions of copyrighted content through their selected themes. For example, Professor Foster installed the “Paradox” theme (mentioned above) for the purposes of this case. (Id. ¶ 25). The Paradox home screen presents different categories of content, including “TV,” “TV SHOWS,” “MOVIES,” and “KIDS,” as depicted below:

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(Id. ¶ 25, Fig. 12). When a user selects one of the content categories, for example “TV SHOWS,” a list of installed streaming addons that provide access to that category is shown at the bottom of the screen. In the picture above, the featured addons are “Elysium,” “UK Turk,” “Maverick,” “Gurzil,” “Covenant,” and “Poseidon.” These addons allow a user to access film and television content available at disparate internet locations. They allow a user to search for specific titles or to browse by other criteria, such as genre or films currently in theaters. They compile lists of sources for a selected title, and allow the user to select a source. If the selected source is unavailable, the addon automatically tries others. The addon plays the selected content within the Kodi theme environment (in this case Paradox), allowing the user to control the content (e.g., pause, rewind, fast-forward) within his selected theme. (Id. ¶ 26).

A user who selects the “Covenant” addon would be presented with a menu offering, among other things, “Movies,” “TV Shows,” and “Search.” (Id. ¶ 30). If the user selects “Movies,” he will be brought to another screen that presents different

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categories of movies, such as “Most Popular,” “Box Office,” and “In Theaters,” as depicted below:

(Id. ¶ 30, Fig. 13). When a user selects a category, he will be presented with a list of movies that fall within the particular category. (Id. ¶ 31).

For example, on November 22, 2017, Professor Foster selected the “In Theaters” category and accessed a list of recently released movie titles (along with year of release and running time) that were still (at least in an authorized manner) being shown exclusively in theaters, as depicted below:

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(Id. ¶ 31, Fig. 14).

Once the user clicks on a title, he is informed that Covenant is searching for “providers” of that particular title, and then is shown how many sources have been located and their quality. For example, Professor Foster clicked on Fox’s Murder on the Orient Express, and Covenant located versions of the film in varying quality (e.g., 4K, 1080p, 720p, and standard definition), from 179 sources, as depicted below:

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(Id. ¶ 32, Fig. 15). Once the compilation process (which generally takes less than a minute) is complete, the user receives a list of providers from which to stream the selected title along with information about the quality of each version. (Id. ¶¶ 32, 34). If the first entry a user selects does not work, Covenant will automatically try other options until it locates a functional version. (Id. ¶ 34). Once a functional link is located, Covenant will play the selected title within the pre-installed theme environment (in this case, Paradox). (Id. ¶ 35).

Professor Foster was also able to access copyrighted content through themes other than Paradox. For example, he installed the Lodi Black theme and utilized the Covenant addon within it to browse titles of movies that were otherwise only in the theaters at that time, including Murder on the Orient Express. (Id. ¶ 36). While the look and feel of the Covenant addon is different within the Lodi Black theme than in the Paradox theme, it is functionally the same. (Id. ¶ 36). A screen shot of the Covenant “In Theaters” screen within the Lodi Black theme is depicted below:

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(Id., Fig. 17).

E. TickBox’s Advertising and Customer Support

Plaintiffs have compiled a variety of TickBox advertising and promotional material and support-related communications with Device users to bolster their argument that TickBox has actively encouraged copyright infringement.

Advertising. TickBox has advertised its Device as a way to “cut the cord” if “you’re sick of paying high monthly fees and expensive bills for your regular cable … and premium cable channels like HBO and SHOWTIME… [o]r if you’re tired of wasting money with online streaming services like Netflix, Hulu, or Amazon Prime…” (Complaint ¶ 1; Declaration of Kelly M. Klaus in Support of Plaintiffs’ Motion for Preliminary Injunction (“Klaus Decl.”), Ex. A). In the same advertisement, it directed prospective customers to “[s]imply plug the Tickbox TV [the Device] into your current television and enjoy unlimited access to ALL the hottest TV shows, Hollywood blockbusters and LIVE sporting events in one convenient little device … ABSOLUTELY FREE.” (Complaint ¶ 1; Klaus Decl., Ex. A). That advertisement is depicted below:

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(Klaus Decl. Ex. A).

TickBox has advertised that its Device “searches the internet where it will locate and stream … virtually any television show [or] [H]ollywood movie … without you having to worry about paying rental fees or monthly subscriptions.” (Complaint ¶ 25; Klaus Decl., Ex. B). That advertisement is depicted below:

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(Klaus Decl., Ex. B)

Prior to this lawsuit, TickBox’s home page referred to the Device as a means to “Get Instant Access to Any Movie, TV Show, or Sporting Events… Without Signing a Contract or Paying a Monthly Service Fee!” (Complaint ¶ 42; Klaus Decl. Ex. C). That advertisement is depicted below:

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(Klaus Decl., Ex. C).

Customer support. TickBox’s website and its Device home page contain links for technical and other customer support, which provide information that would assist an untrained user in accessing unauthorized copyrighted material. (Complaint ¶ 29; Klaus Decl. ¶ 5, Ex. D). For example TickBox’s website contains a “How to search for a Movie” instructional video, in which TickBox urges users to utilize the “Select Your Theme” option on the Device’s home page. (Complaint ¶¶ 30, 31; Klaus Decl. ¶ 5, Ex. D).

TickBox advises customers when certain themes are not functioning well and recommends other themes. For example, a TickBox support message that Professor Foster located said that TickBox had “noticed that a few of the themes are not returning searches for movies or shows,” but that TickBox has “had good experience with the Wookie Theme at this time.” (Foster Decl. ¶ 24, Fig. 11).

TickBox’s website also has a “Frequently Asked Questions” page. (Klaus Decl. Ex. E). On that page, TickBox advises customers that they may “of course” “still [use] Amazon Video, Netflix or Hulu on” the Device, but that “within a few days of using

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[the Device] you will find you no longer need those subscriptions.” (Id.). On another question-and-answer page, TickBox advises customers that they “can see almost every movie and TV series ever made” and “can even access movies and shows that are still on Demand and episodes of TV that were just aired,” and “will never need to pay to watch any of them.” (Id., Ex. F).

F. TickBox’s Post-Lawsuit Modifications

In October 2017, following Plaintiffs’ commencement of this action, TickBox altered some aspects of the Device’s user interface and of its advertising. As to advertising, the TickBox website homepage no longer refers to the Device as a means to “Get Instant Access to Any Movie, TV Show, or Sporting Events… Without Signing a Contract or Paying a Monthly Service Fee!” (Klaus Decl. ¶ 8). The homepage now says: “[T]urn your TV into a content filled home theatre system enjoying thousands of movies, TV shows and apps like Youtube, HBO Now and many many more…” (Id.). The website still says that “Tickbox TV can search the entire internet where it can locate and stream any television show, movie, sporting event, music or game that is available for you to watch.” (Id.).

As to the Device’s user interface, in October 2017, TickBox relabeled the “Select your Theme” option as “Select Streaming Channels.” (Goldstein Decl. ¶ 22). When users click on the “Select Streaming Channels” option, they are now presented with options to download apps from mainstream media companies such as ESPN and A&E, in addition to various “themes” (and thereby addons). (Id. ¶¶ 23-24). Following the filing of the Complaint, certain themes that provided access to the Covenant addon were still available. (Foster Decl. ¶¶ 44-46). In December 2017, following Plaintiffs’ filing of this Motion, TickBox issued a second software update pursuant to which “links to the remaining offending ‘Themes’” were removed. (Goldstein Decl. ¶ 26).

Professor Foster utilized the Device again on January 4, 2018. (Reply Declaration of Prof. Ian Foster in Support of Plaintiffs’ Motion for Preliminary Injunction (“Foster Reply Decl.”) ¶ 17). When he powered the Device on, it automatically performed the software update that TickBox had issued in December in

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response to the Motion. (Id.). After the update was complete, the home screen was revised so that the “My Apps & Addons” tile was renamed “My Apps,” and the “Settings” tile was replaced with a Kodi icon tile, as depicted below:

(Id. ¶ 18, Fig. 3). Additionally, the “Lodi Black” theme was no longer listed within the “Select Streaming Channels” option. (Id. ¶ 18). Professor Foster was still able to access his previously-downloaded Paradox theme and the Covenant addon within it (and all of the movies within Covenant, including Murder on the Orient Express) by clicking on the “Media Player” tile on the home screen. (Id. ¶ 19).

II. DISCUSSION

Federal Rule of Civil Procedure 65 governs the issuance of temporary restraining orders and preliminary injunctions, and courts apply the same standards to both. Stuhlbarg Intern. Sales Co., Inc. v. John D. Brush & Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). In order to prevail on its Motion, Plaintiffs must demonstrate that (1) they are likely to succeed on the merits; (2) they are likely to suffer irreparable harm in the absence of preliminary relief; (3) the balance of the equities tips in their favor; and (4) an injunction is in the public interest. Toyo Tire Holdings of Ams. Inc. v. Cont’l

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Tire N. Am., Inc., 609 F.3d 975, 982 (9th Cir. 2010) (citing Winter v. Nat. Res. Def. Council, 555 U.S. 7 (2008)).

Plaintiffs must “make a showing on all four prongs.” Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011). The Ninth Circuit employs the “serious questions” version of the “sliding scale” approach when applying the four- element Winter test. Id. at 1134. “That is, ‘serious questions going to the merits’ and a balance of hardships that tips sharply towards the plaintiff can support issuance of a preliminary injunction, so long as the plaintiff also shows that there is a likelihood of irreparable injury and that the injunction is in the public interest.” Id. at 1135.

A. Likelihood of Success on the Merits

Plaintiffs allege that TickBox is liable for intentionally inducing the infringement of Plaintiffs’ copyrighted works and contributory copyright infringement. (See Complaint ¶¶ 46-65).

In order to prevail on their copyright infringement claims, Plaintiffs will need to demonstrate two basic things: (1) “ownership of the allegedly infringed material”; and (2) violation of “at least one exclusive right granted to copyright holders under 17 U.S.C. § 106.” A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001). Plaintiffs have demonstrated that they own the allegedly infringed material. (See Complaint Ex. A; Klaus Decl. Exs. G-PP). TickBox does not dispute the issue of ownership.

Plaintiffs rely primarily on two cases to support their argument that Defendants are liable for the infringement of their exclusive rights under an inducement / contributory infringement theory: Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), and Columbia Pictures Industries, Inc. v. Fung, 710 F.3d 1020 (2013).

In Grokster, the Supreme Court held that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other

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affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.” Grokster, 545 U.S. at 936-37.

In Fung, the Ninth Circuit analyzed Grokster and held that a defendant may be held liable for copyright infringement under Grokster’s inducement theory where four elements are present: “(1) the distribution of a device or product [by the defendant], (2) acts of infringement [by third parties], (3) an object [of the defendant] of promoting [the device’s or product’s] use to infringe copyright, and (4) causation. Fung, 710 F.3d at 1032.

1. Distribution of a device or product

In Fung, the Ninth Circuit explained that one may be liable for copyright infringement under the Grokster inducement theory if he distributes a physical device or product that is utilized for copyright infringement or if he provides a service that facilitates copyright infringement. Id. at 1033 (“one can infringe a copyright through culpable actions resulting in the impermissible reproduction of copyrighted expression, whether those actions involve making available a device or product or providing some service used in accomplishing the infringement”).

There is no doubt that TickBox’s distribution of the Device satisfies this first prong of the Fung test. TickBox acknowledges as much. (See Opp. at 3).

2. Acts of infringement

Plaintiffs argue that TickBox and its Device facilitate the infringement of Plaintiffs’ exclusive rights “to perform” their copyrighted movies and television shows “publicly” pursuant to 17 U.S.C. § 106(4). (Mot. at 17). TickBox argues that: (1) it is not the Device that facilitates infringement, but third-party themes over which TickBox exercises no control; (2) Plaintiffs produced no evidence that anyone apart from Plaintiffs’ expert has utilized the Device to access Plaintiffs’ copyrighted movies and television shows; and (2) even if Device users have in fact utilized the Device to view Plaintiffs’ copyrighted movies and television shows, the mere viewing of streaming

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content does not infringe upon Plaintiffs’ public performance rights. (See Opp. at 5-7). The Court is not persuaded by TickBox’s arguments.

Third-party themes. TickBox argues that it simply “offers a computer, onto which users can voluntarily install legitimate or illegitimate software” and that the “product about which Plaintiffs complain is third-party software which can be downloaded onto a myriad of devices, and which [TickBox] neither created nor supplies.” (Opp. at 5). In Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), the Supreme Court addressed the question of whether Sony may be held secondarily liable for copyright infringement as a result of its distribution of the Betamax (the competitor to the VCR, when VCRs were first on the market), which consumers could utilize to record copyrighted television programs. 464 U.S. at 423- 24. Looking to patent law’s “staple article of commerce” doctrine, under which distribution of a component of a patented device will not violate the patent if it is suitable for use in other ways, the Court held that Sony could not be liable solely on the basis of distribution because the Betamax was “capable of commercially significant noninfringing uses.” Id. at 442. In Grokster, the Court held that “where evidence goes beyond a product’s characteristics or the knowledge that it may be put to infringing uses, and shows statements or actions directed to promoting infringement, Sony’s staple-article rule will not preclude liability.” Grokster, 545 U.S. at 935. Thus, the fact that the Device is just a “computer” that can be used for infringing and noninfringing purposes does not insulate TickBox from liability if (as discussed further below) the Device is actually used for infringing purposes and TickBox encourages such use.

TickBox also emphasizes that the themes through which Device users are able to access (via addons such as Covenant) copyrighted content “are not the [Device], and … have absolutely nothing to do with Defendant.” (Opp. at 3). But the evidentiary record establishes that, at least prior to Plaintiffs’ filing of the Motion, TickBox preloaded the Device with third-party themes that provided easy access to copyrighted content and actually directed Device users to “install a theme” in order to gain access to the (since renamed) “WATCH MOVIES TV SPORTS” option on the home screen.

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TickBox has also instructed its customers to try the “Wookie Theme” when other themes were not functioning well. In short, TickBox’s behavior was hardly passive with respect to the themes.

Evidence of Device users’ access to Plaintiffs’ content. “To prove copyright infringement on an inducement theory, [a plaintiff must] adduce ‘evidence of actual infringement’ by users” of the defendant’s device. Fung, 710 F.3d at 1034 (quoting Grokster, 545 U.S. at 940). Professor Foster’s repeated access to Plaintiffs’ copyrighted content via the Device is sufficient evidence of actual access to that content by Device users. See Arista Records LLC v. Lime Group LLC, No. 06 CV 5936 (KMW), 2011 WL 1641978, at *8 (S.D.N.Y. Apr. 29, 2011) (“Courts have consistently relied upon evidence of downloads by a plaintiff’s investigator to establish both unauthorized copying and distribution of a plaintiff’s work.”) (collecting cases); Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 150 n. 16 (S.D.N.Y. 2009) (“Defendants’ argument that these downloads are not proof of unauthorized copying because Plaintiffs had ‘authorized’ the downloads by their investigators is without merit. Courts routinely base findings of infringement on the actions of plaintiffs’ investigators.”) (collecting cases). Moreover, TickBox’s CEO, Mr. Goldstein, stated that “[i]f a user of [the Device] were to access unauthorized content, TickBox … would not have any way of knowing about such use…” (Goldstein Decl. ¶ 21). If TickBox itself does not know what content Device users have accessed, it is not clear how Plaintiffs might go about gathering such evidence at this early stage of the action. The Court thus rejects TickBox’s argument that Plaintiffs have failed to produce evidence of Device users’ access to Plaintiffs’ content.

Infringement of Plaintiffs’ public performance right. Broadcasting copyrighted video content to the public over the internet without authorization infringes upon the copyright owner’s public performance right. See, e.g., American Broadcasting Companies, Inc. v. Aereo, Inc., 134 S. Ct. 2498, 2509-10 (2014) (streaming television programming to subscribers over the internet violated program owners’ public performance rights); WPIX, Inc. v. ivi, Inc., 691 F.3d 275, 278-79 (2d Cir. 2012) (same). TickBox does not dispute this, but argues that it is third parties (i.e.,

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the creators of addons, such as Covenant, and/or the those who operate the disparate streaming video sources that the addons access) who are violating Plaintiffs’ public performance rights by broadcasting streaming versions of Plaintiffs’ content to the public, not Device users who are merely viewing that streaming content. (See Opp. at 5-7). Citing Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007), TickBox contends that “merely viewing copyrighted material online, without downloading, copying, or retransmitting such material, is not actionable.” (Opp. at 7).

In Perfect 10, the district court had preliminarily enjoined Google (one of the multiple defendants) from creating and publicly displaying thumbnail versions of the plaintiff’s copyrighted pictures of nude models, but did not enjoin Google from linking to third-party websites that displayed the plaintiff’s pictures. See Perfect 10, 508 F.3d at 1154. The Ninth Circuit agreed with the district court’s analysis that, because there was no evidence that individual Google users had downloaded (rather than simply viewed) the plaintiff’s copyrighted photographs of nude models and because a computer’s reproduction of those images by way of “cache” copies was fair use, the individual Google users (who viewed the images via Google’s search engine) did not directly infringe the plaintiff’s copyrights. See id. at 1169-70. But the Court disagreed with the district court’s conclusion that Google could not be contributorily liable under Grokster on the basis of the assistance it provided to third-party websites to display the plaintiff’s images and to Google users to access those websites. See id. at 1172. “Google could be held contributorily liable if it had knowledge that infringing Perfect 10 images were available [through third-party websites] using its search engine, could take simple measures to prevent further damage to Perfect 10’s copyrighted works, and failed to take such steps.” Id. Thus, while Google could not be held liable under a contributory infringement theory based solely upon its individual users viewing (but not downloading) Perfect 10’s images, it could be held liable based on the fact that its users were accessing those images through links on Google’s search engine to third- party websites that were directly infringing Perfect 10’s rights under the Copyright Act by displaying its images. See id.

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Perfect 10 is thus instructive in this case, though not in the way that TickBox would like. Here, as in Perfect 10, the defendant provides a device or service that its customers utilize to access copyrighted content that is displayed or broadcasted by third parties without authorization. Here, as in Perfect 10, the actions of the defendant’s customers (i.e., viewing still images or motion pictures without downloading them), standing on their own, do not infringe upon any of the plaintiffs’ exclusive rights under the Copyright Act. Here, as in Perfect 10, the defendant’s device or service is funneling users to third parties that are directly infringing upon the plaintiffs’ exclusive rights under the Copyright Act (i.e., displaying copyrighted images or broadcasting copyrighted video content). See id. at 1172 (“There is no dispute that Google substantially assists websites to distribute their infringing copies to a worldwide market and assists a worldwide audience of users to access infringing materials.”). Absent viewers, including Device users, the third-party streamers of video content would have no audience to broadcast unauthorized versions of Plaintiffs’ (and others’) copyrighted works to, and thus would not be infringing upon Plaintiffs’ public performance rights. But there is an audience, and the Device (via the pre- installed themes and the addons within those themes), by aggregating various unauthorized sources of copyrighted work and simplifying the process of accessing that work, undoubtedly enlarges that audience and thereby enlarges the scope of the infringement. In sum, as with Google in Perfect 10, TickBox may be held contributorily liable under Grokster and Fung because it has served as the intermediary between third parties who directly infringe upon Plaintiffs’ public performance rights and its customers, who become a necessary component of the infringement (i.e., the audience).

In sum, the “acts of infringement” prong of the Fung test has been established.

3. An object of promoting the device’s use to infringe copyright

“The third, usually dispositive, requirement for inducement liability is that the ‘device’ or service be distributed ‘with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.’” Fung, 710 F.3d at 1034 (quoting Grokster, 545 U.S. at 936-37).

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“[J]ust as Sony did not find intentional inducement despite the knowledge of the [Betamax] manufacturer that its device could be used to infringe …, mere knowledge of infringing potential or of actual infringing uses would not be enough here to subject a distributor to liability.” Grokster, 545 U.S. at 937.

Advertisements. “The classic instance of inducement is by advertisement or solicitation that broadcasts a message designed to stimulate others to commit violations.” Id. There is ample evidence that, at least prior to Plaintiffs’ commencement of this action, TickBox explicitly advertised the Device as a means to accessing unauthorized versions of copyrighted audiovisual content. As discussed above:

• TickBox advertised the Device as a way to “cut the cord” if “you’re sick of paying high monthly fees and expensive bills for your regular cable … and premium channels like HBO and SHOWTIME … [o]r if you’re tired of wasting money with online streaming services like Netflix, Hulu, or Amazon Prime…”

• TickBox advertised the Device as a way to “enjoy unlimited access to ALL the hottest TV shows, Hollywood blockbusters and LIVE sporting events in one convenient little device … ABSOLUTELY FREE.”

• TickBox advertised that the Device “searches the internet where it will locate and stream … virtually any television show [or] [H]ollywood movie … without you having to worry about paying rental fees or monthly subscriptions.”

• TickBox advertised the Device as a means to “Get Instant Access to Any Movie, TV Show, or Sporting Events … Without Signing a Contract or Paying a Monthly Service Fee.”

TickBox argues that its situation is distinguishable from the defendant’s in Grokster because, in that case, the defendant had advertised itself as a replacement for

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another illicit song-sharing service (Napster), whereas TickBox’s “place in the market does not replace or compete with some known copyright infringe[r]; it competes with other streaming hardware services, including the ‘Firestick’ sold by affiliates of Plaintiff Amazon…” (Opp. at 8). The Court’s analysis in Grokster did not turn on the type of competitor the defendant was trying to displace; it turned on whether the defendant advertised its product as a means of accessing infringing content. See Grokster, 545 U.S. at 938 (“Grokster distributed an electronic newsletter containing links to articles promoting its software’s ability to access popular copyrighted music.”). Here, TickBox advertised the Device as a means of accessing a trove of copyrighted content for “free.” Whether its aim was to take business away from other known infringers or legitimate video-streaming services is irrelevant.

Customer support. Apart from advertising, a defendant may express its object of promoting infringement by issuing “communications that, while not in haec verba promoting infringing uses, provide[ ] information actively supporting such uses.” Fung, 710 F.3d at 1035. In Grokster, such communications included “responding affirmatively to requests for help in locating and playing copyrighted materials.” Grokster, 545 U.S. at 938.

As discussed above, at least prior to this lawsuit, TickBox affirmatively provided instructions to Device owners concerning how to effectively access copyrighted material via the pre-loaded themes:

• TickBox’s website contained a “How to search for a Movie” instructional video, which urged users to utilize the “Select Your Theme” option on the home page.

• TickBox has advised customers to try other themes, such as the “Wookie Theme,” when certain themes were not functioning well.

• On its “Frequently Asked Questions” page, TickBox advised customers that “within a few days of using [the Device] you will find that you no longer need those subscriptions [to Amazon Video, Netflix, or Hulu].”

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Lack of filtering mechanisms. While the failure to “develop filtering tools or other mechanisms to diminish the infringing activity” that a device otherwise enables does not, on its own support a finding of contributory infringement, it may, in the presence of other evidence, “underscore[ ] [a defendant’s] intentional facilitation of [its] users’ infringement.” Grokster, 545 U.S. at 939 n. 12. TickBox does not dispute that the Device is devoid of any mechanisms to curb users’ access to infringing content. Given the presence of affirmative inducement-related activity, in the form of advertisements and customer support, the lack of any filtering mechanisms “underscores [TickBox’s] intentional facilitation” of infringement.

Infringement-related profits. In Grokster, the Court noted that the defendants “make money by selling advertising space,” which was dependent on “high-volume use, which the record shows is infringing.” Id. at 940. While evidence of infringement-related profits “alone would not justify an inference of unlawful intent, … viewed in the context of the entire record its import [was] clear.” Id. TickBox argues that it “does not profit if its users access unauthorized content.” (Opp. at 8). TickBox ignores the fact that many customers would presumably not have purchased the Device in the first place if they had not been convinced that they would be able to use it to access unauthorized content. Accordingly, the fact that TickBox undoubtedly sold more Devices than it otherwise would have as a result of affirmatively advertising it as a means of accessing unauthorized content underscores TickBox’s illicit intent.

In sum, given the evidence of advertising, customer support, the lack of filtering mechanisms, and infringement-related profits, the third prong of the Fung test is satisfied.

4. Causation

In Fung, the Ninth Circuit explicitly discussed causation as necessary component of liability under the Grokster inducement theory where the Supreme Court in Grokster had not. See Fung, 710 F.3d at 1037 (“Grokster … mentions causation only indirectly, by speaking of ‘resulting acts of infringement by third parties.’”) (emphasis in original). Faced with the parties’ competing interpretations of what the

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Grokster Court meant by “resulting acts of infringement,” the Ninth Circuit found the plaintiffs-appellees’ broader interpretation that a plaintiff “need only prove that the ‘acts of infringement by third parties’ were caused by the product distributed or services provided [by defendants]” more compelling than the defendants-appellants narrower interpretation that “the infringement must be caused … by the inducing messages themselves.” Id.

“[I]f one provides a service that could be used to infringe copyrights, with the manifested intent that the service actually be used in that manner, that person is liable for the infringement that occurs through the use of that service.” Id. In other words, “where there is sufficient evidence of fault – that is, an unlawful objective – distributors are liable for causing the infringement that resulted from use of their products.” Id. at 1038.

There is sufficient evidence that the Device can be and is used to access infringing content, and there is sufficient evidence of TickBox’s fault – primarily in the form of its advertisements and customer-support efforts. While there are undoubtedly other avenues to access infringing content than the Device (via the pre-installed themes and addons), the Device is one such avenue, and one that is user friendly and requires no particular knowledge or effort. TickBox obviously has not “caused” third parties to broadcast Plaintiffs’ (or others’) copyrighted works over the internet, at least in any direct sense. But TickBox, through the Device, has delivered to those third parties viewers they would not otherwise have had, broadening those third parties’ audiences and the scope of their infringement. TickBox may be held responsible for the instances of infringement that would not have otherwise occurred in the absence of the Device.

In sum, the “causation” prong of Fung is satisfied, and Plaintiffs have thus established that they are likely to succeed on the merits of their Grokster / Fung inducement liability claim against TickBox.

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B. Irreparable Harm

“A preliminary injunction may issue only upon a showing that ‘irreparable injury is likely in the absence of an injunction.’” Disney Enterprises, Inc. v. VidAngel, Inc., 869 F.3d 848, 865 (9th Cir. 2017) (quoting Winter, 555 U.S. at 22) (emphasis in original). Plaintiffs argue that, in the absence of a preliminary injunction, they are likely to suffer the following types of irreparable harm: (1) deprivation of “their exclusive rights to control how, when, and to whom they will disseminate their Copyrighted Works”; (2) the undermining of “the legitimate market in which consumers can purchase access to these same works”; and (3) disruption of “Plaintiffs’ relationships and goodwill with authorized licensees.” Apart from rehashing the merits-related arguments that Plaintiffs “have failed to show that [Device] users have actually downloaded such software [the themes and addons] or accessed Plaintiffs’ copyrighted works, or that such access would infringe Plaintiffs’ rights” (Opp. at 13), which the Court has already considered and rejected, TickBox does not contest Plaintiffs’ arguments regarding irreparable harm. Plaintiffs have made an ample showing that they are likely to suffer irreparable harm absent a preliminary injunction.

In support of their irreparable harm arguments, Plaintiffs have filed a declaration from David Kaplan, a senior vice president and intellectual property counsel at Plaintiff Warner Bros. (Declaration of David P. Kaplan (“Kaplan Decl.”)). Mr. Kaplan explains that Warner Bros., like other movie studios, “utilizes a practice that is known as ‘windowing’” whereby Warner Bros. makes its works “available through different distribution channels at different times following the initial theatrical release of a particular title,” and “[d]istributors and licensees generally will pay more for the right to distribute or perform movies in an earlier window – when the content is new, or newer – than for comparable rights during later windows.” (Kaplan Decl. ¶ 8). Beyond losing out on the compensation it would otherwise receive if Device users were forced to view authorized versions of Warner Bros. copyrighted work (rather than free, unauthorized versions), Mr. Kaplan explains TickBox (via the Device) interferes with Warner Bros.’ windowing strategy and its relationships with distributors and licensees. (See id. ¶¶ 14-21). He explains:

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Because TickBox operates free from licensing restrictions, its distribution of TickBox TV [the Device] has the result of making our content available during windows occupied by different distribution channels or exclusivity periods held by authorized distributors or licensees. For example, new releases are, following their theatrical release, first released to distributors that sell digital download copies or physical copies on DVDs or Blu-ray discs. During these initial home entertainment release windows, Warner Bros.’ movies generally are not available for VOD [video-on-demand] streaming. TickBox TV, however, offers Defendant’s customers access to numerous links to newly released titles without regard for these exclusive windows. The effect of this is to interfere with and undermine Warner Bros.’ contractual commitments to and relationships with its distributors and licensees, and to undermine Warner Bros.’ negotiating position for future agreements with authorized distributors and licensees.

(Id. ¶ 18).

Mr. Kaplan also explains that TickBox threatens the entire market for authorized in-home video streaming:

Defendant’s [Device] poses a significant threat to the entire legitimate market for home entertainment, and in particular, for the online distribution market. Defendants’ [sic] unlicensed offering further threatens the development and growth of the legitimate on-demand streaming market because use of the device inculcates Defendant’s customers to believe that high-speed and high-quality content can be accessed at no cost and with no advertisements. This

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threatens the very foundation of Warner Bros.’ business and the businesses of its distributors and licensees.

(Id. ¶ 31).

Mr. Kaplan’s declaration is uncontroverted and, at least as to the portions relied upon by the Court, persuasive. Moreover, the harms he has cited – interference with relationships with distributors and licensees, and the undermining of the market and Warner Bros.’ business model more generally – have been recognized as sufficiently irreparable to support the issuance of a preliminary injunction. See, e.g., VidAngel, 869 F. 3d at 866 (affirming issuance of preliminary injunction where “[t]he district court had substantial evidence before it [in the form of an uncontested declaration] that VidAngel’s service undermines the value of the Studios’ copyrighted works, their ‘windowing’ business model, and their goodwill and negotiating leverage with licensees”).

Additionally, it is unlikely that money damages could adequately compensate for difficult-to-quantify harms to Plaintiffs’ business models and relationships. TickBox does not argue otherwise. See id. (“although VidAngel argues that damages could be calculated based on licensing fees, the district court did not abuse its discretion in concluding that the loss of goodwill, negotiating leverage, and non-monetary terms in the Studios’ licenses cannot readily be remedied with damages”).

Accordingly, Plaintiffs have established that they are likely to suffer irreparable harm absent a preliminary injunction.

C. Balance of the Equities and Public Interest

Before issuing a preliminary injunction, a court “must balance the competing claims of injury and must consider the effect on each party of the granting or withholding of the requested relief.” Winter, 555 U.S. at 24 (internal quotation marks and citation omitted).

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The harms that Plaintiffs are likely to suffer in the absence of a preliminary injunction – including the undermining of their business relationships and overall business models – are discussed above. TickBox argues that the specific injunction that Plaintiffs propose would “shut down Defendant’s business, impound all of Defendant’s inventory, and require Defendant to hack into and delete content which its customers have downloaded to the [Device]…” (Opp. at 12-13).

The Court will not issue an injunction that prohibits TickBox from distributing the Device entirely or that requires TickBox to “hack into” its customers’ Devices. The Court is inclined, however, issue an injunction that: (1) prohibits TickBox from distributing any Device that is, in any manner, pre-loaded with any “themes” that, directly or indirectly, provide access to unauthorized versions of Plaintiffs’ copyrighted works; and (2) requires TickBox to perform a software update (as it has done very recently) that removes all such “themes” from all Devices that TickBox has already distributed.

Assuming the Device is useful for purposes other than accessing infringing content, an injunction of this scope will not “shut down Defendant’s business” as TickBox contends. In the event that such an injunction does shut TickBox down, that will be indicative not of an unjustifiably burdensome injunction, but of a nonviable business model. See Warner Bros. Entertainment Inc. v. WTV Systems, Inc., 824 F. Supp. 2d 1003, 1014-15 (C.D. Cal. 2011) (“Defendants ‘cannot complain of the harm that will befall them when properly forced to desist from their infringing activities.”) (quoting Triad Systems Corp. v. Southeastern Exp. Co., 64 F.3d 1330, 1338 (9th Cir. 1995)) (alterations omitted).

Finally, the Court concludes that the issuance of an appropriately tailored preliminary injunction is in the public interest. The Court’s injunction will not prohibit TickBox from developing or distributing the Device; it will prohibit TickBox from distributing the Device in its current form – that is, preloaded with themes that provide easy access to unauthorized versions of Plaintiffs’ copyrighted work. To the extent the Device is useful for non-infringing purposes, the public will still enjoy access to it. “On the other hand …, ‘the public has a compelling interest in protecting copyright

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owners’ marketable rights to their work and the economic incentive to continue creating television programming’ and motion pictures.” VidAngel, 869 F.3d at 867 (quoting WPIX, 691 F.3d at 287).

A preliminary injunction is in the public interest, and the balance of hardships between the parties supports the issuance of a preliminary injunction. Accordingly, all preconditions for the issuance of a preliminary injunction have been satisfied.

As noted at the outset, however, outstanding questions pertaining to offending themes and addons, and TickBox’s ability to remove already-downloaded offending themes and addons from its users’ Devices, prevent the Court at this time from issuing a preliminary injunction that goes beyond maintaining the status quo. The parties shall thus work together to gather answers to these outstanding questions and attempt to agree upon a stipulated preliminary injunction.

D. Post-Litigation Modifications

TickBox argues that, “after receiving Plaintiffs’ Complaint, [it] voluntarily took steps to remove links to download those Themes [referenced in the Complaint] on the [Device],” that it inadvertently failed to remove some themes, and that all themes that Plaintiffs have specifically complained about “have now been removed from the [Device] interface.” (Opp. at 10). Thus, according to TickBox, “there is no need for an injunction because there is nothing to restrain.” (Id.).

TickBox’s voluntary cessation of infringing activity would not render the Motion moot unless it were “absolutely clear that the allegedly wrongful behavior could not reasonably be expected to recur.” LGS Architects, Inc. v. Concordia Homes of Nevada, 434 F.3d 1150, 1153 (9th Cir. 2006) (quoting Adarand Constructors, Inc. v. Slater, 528 U.S. 216, 222 (2000)); see also Rouser v. White, 707 F. Supp. 2d 1055, 1071 (E.D. Cal. 2010) (voluntary cessation does not preclude issuance of preliminary injunction). Absent an injunction, there is nothing preventing TickBox from again promoting the offending themes to Device users. Moreover, as Plaintiffs point out, as of January 4, 2018, after TickBox’s most recent software update, Professor Foster still

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had access to the “Paradox” theme and all of the addons therein (including Covenant) that he had previously downloaded. So it is clear that TickBox has not taken any steps to remove previously-downloaded themes that provide ready access to Plaintiffs’ copyrighted works from its Devices. Whether this is ultimately possible or feasible is still an open question.

Accordingly, TickBox’s post-litigation modifications have not mooted the Motion.

III. CONCLUSION

For the foregoing reasons, the Motion is GRANTED. An initial preliminary injunction that maintains the status quo will issue in a separate order.

Counsel for Plaintiffs and TickBox, working with others who possess relevant technical expertise as necessary, shall negotiate and attempt to reach agreement upon a stipulated preliminary injunction that will supersede the Court’s initial preliminary injunction order. If counsel are able to reach an agreement, they shall file a stipulated preliminary injunction order by February 7, 2018. In the event that counsel are unable to reach an agreement, Plaintiffs and TickBox shall each file a proposed preliminary injunction order along with a memorandum of law, not to exceed seven pages, explaining their positions by February 12, 2018.

IT IS SO ORDERED.

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1 2/13/2018 2

3 CW

8 UNITED STATES DISTRICT COURT 9 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION 10 11 Universal City Studios Productions Case No. 2:17-cv-07496-MWF(AS) LLLP; Columbia Pictures Industries, 12 Inc.; Disney Enterprises, Inc.; PRELIMINARY INJUNCTION Twentieth Century Fox Film 13 Corporation; Paramount Pictures Corporation; Warner Bros. 14 Entertainment Inc.; Amazon Content Services, LLC; Netflix Studios, LLC, 15 Plaintiffs, 16 vs. 17 TickBox TV LLC, 18 Defendant. 19

20 21 22 23 24 25 26 27 28 37876123.1 PRELIMINARY INJUNCTION 2:17-CV-07496-MWF(AS)170

Case 2:17-cv-07496-MWF-AS Document 44 Filed 02/13/18 Page 2 of 4 Page ID #:672

1 Pursuant to the Court’s Order re Plaintiffs’ Motion for Preliminary Injunction 2 (Dkt. No. 40), Plaintiffs Universal City Studios Productions LLLP, Columbia 3 Pictures Industries, Inc., Disney Enterprises, Inc., Twentieth Century Fox Film 4 Corporation, Paramount Pictures Corporation, Warner Bros. Entertainment Inc., 5 Amazon Content Services, LLC, and Netflix Studios, LLC (collectively, 6 “Plaintiffs”) are entitled to a Preliminary Injunction. 7 Accordingly, IT IS HEREBY ORDERED THAT, during the pendency of this 8 case, Defendant TickBox TV LLC and its officers, agents, servants, employees, and 9 attorneys, and other persons acting in active concert or participation with any of 10 them who receive actual notice of this Preliminary Injunction (collectively, 11 “TickBox”) are RESTRAINED and ENJOINED as follows: 12 1. Not later than two (2) calendar days after the entry of this Preliminary 13 Injunction: 14 a. TickBox’s launcher software shall not include or provide links to 15 any “build,” “theme,” “app,” “addon” or other software program that TickBox 16 knows or has reason to know links directly or indirectly to third-party 17 cyberlockers or streaming sites that transmit unauthorized performances of 18 copyrighted motion pictures or television shows (“Subject Software”). 19 Internet Explorer, Google Chrome, Safari, and Firefox are not Subject 20 Software. 21 b. TickBox shall issue an update to the TickBox launcher software 22 to be automatically downloaded and installed onto any previously distributed 23 TickBox TV device and to be launched when such device connects to the 24 internet. Upon being launched, the update will delete the Subject Software 25 downloaded onto the device prior to the update, or otherwise cause the 26 TickBox TV device to be unable to access any Subject Software downloaded 27 onto or accessed via that device prior to the update. TickBox shall ensure that 28 37876123.1 -1- PRELIMINARY INJUNCTION 2:17-CV-07496-MWF(AS)171

Case 2:17-cv-07496-MWF-AS Document 44 Filed 02/13/18 Page 3 of 4 Page ID #:673

1 such updated launcher software is installed on all TickBox TV devices 2 shipped after the date of this Preliminary Injunction. 3 c. TickBox shall remove all tiles on TickBox’s home screen that 4 take users to menus for downloading Subject Software to the TickBox TV 5 device, other than a tile that links users exclusively to the Google Play Store 6 or to Kodi within the Google Play Store. 7 2. Within twenty-four (24) hours of receiving written notice that a 8 Plaintiff reasonably asserts that any build, theme, app, or addon available through 9 TickBox devices is Subject Software, TickBox shall remove from or disable access 10 through its menus to such build, theme, app, or addon. If such notice is received 11 after 6:00 p.m eastern time on a Friday, on a Saturday, or before 6:00 p.m. eastern 12 time on a Sunday, TickBox shall complete the removal by 6:00 p.m. eastern time on 13 the immediately following Monday. 14 3. TickBox shall not: 15 a. Curate any tile or menu of user options to download or access 16 any Subject Software. 17 b. Encourage or induce any person to locate, upload, download, 18 install, or use Subject Software, or knowingly support or assist any person in 19 locating, uploading, downloading, installing, or using Subject Software. 20 c. Knowingly take any action for the purpose or that has the effect 21 of circumventing the requirements of the Preliminary Injunction, including 22 without limitation impairing the effectiveness of this Preliminary Injunctions’ 23 requirements that TickBox limit the ability of users of TickBox TV devices to 24 use the devices to access or use Subject Software. 25 4. Plaintiffs shall post security in the amount of $50,000 to compensate 26 TickBox for its losses in the event that this injunction is reversed or vacated. 27 28 37876123.1 -2- [PROPOSED] PRELIMINARY INJUNCTION

2:17-CV-07496-MWF(AS)172

Case 2:17-cv-07496-MWF-AS Document 44 Filed 02/13/18 Page 4 of 4 Page ID #:674

1 5. Once signed and entered as an Order by the Court, this Preliminary 2 Injunction replaces and supersedes the Order for Preliminary Injunction (Dkt. No. 3 41) entered by the Court January 30, 2018. 4

5 IT IS SO ORDERED

6 DATED: February 13, 2018 7 8 The Honorable Michael W. Fitzgerald 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 37876123.1 -3- [PROPOSED] PRELIMINARY INJUNCTION

2:17-CV-07496-MWF(AS)173

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1 KELLY M. KLAUS (State Bar No. 161091) [email protected] 2 ELIZABETH A. KIM (State Bar No. 295277) [email protected] 3 MUNGER, TOLLES & OLSON LLP 350 South Grand Avenue 4 Fiftieth Floor Los Angeles, California 90071-3426 5 Telephone: (213) 683-9100 Facsimile: (213) 687-3702 6 MICHAEL B. DESANCTIS (pro hac vice pending) 7 [email protected] MUNGER, TOLLES & OLSON LLP 8 1155 F Street N.W., Seventh Floor Washington, D.C. 20004-1357 9 Telephone: (202) 220-1100 Facsimile: (202) 220-2300 10 Attorneys for Plaintiffs 11 12 UNITED STATES DISTRICT COURT 13 CENTRAL DISTRICT OF CALIFORNIA, WESTERN DIVISION 14 Amazon Content Services, LLC; Case No. 15 Columbia Pictures Industries, Inc.; Disney Enterprises, Inc.; Netflix COMPLAINT 16 Studios, LLC; Paramount Pictures Corporation; Sony Pictures Television DEMAND FOR JURY TRIAL 17 Inc.; Twentieth Century Fox Film Corporation; Universal City Studios 18 Productions LLLP; Universal Cable Productions LLC; Universal Television 19 LLC; Warner Bros. Entertainment Inc., 20 Plaintiffs, 21 vs. 22 Set Broadcast, LLC d/b/a Setvnow; Jason Labossiere; Nelson Johnson, 23 Defendants. 24 25 26 27 28

-1- COMPLAINT 174 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» î ±º îë Ð¿¹» ×Ü ýæî

1 Plaintiffs Amazon Content Services, LLC (“Amazon”); Columbia Pictures 2 Industries, Inc. (“Columbia”); Disney Enterprises, Inc. (“Disney”); Netflix Studios, 3 LLC (“Netflix”); Paramount Pictures Corporation (“Paramount”); Sony Pictures 4 Television Inc. (“Sony Pictures Television”); Twentieth Century Fox Film 5 Corporation (“Fox”); Universal City Studios Productions LLLP, Universal Cable 6 Productions LLC, and Universal Television LLC, (collectively, “Universal”); and 7 Warner Bros. Entertainment Inc. (“Warner Bros.”) (collectively, “Plaintiffs”) bring 8 this Complaint against Set Broadcast, LLC d/b/a Setvnow, Jason Labossiere, and 9 Nelson Johnson (Labossiere and Johnson are referred to jointly as the “Individual 10 Defendants,” and the Individual Defendants and Set Broadcast, LLC are referred to 11 collectively as “Defendants”) under the Copyright Act (17 U.S.C. § 101 et seq.). 12 This Court has subject matter jurisdiction pursuant to 28 U.S.C. §§ 1331, 1338(a), 13 and 17 U.S.C. § 501(b). Plaintiffs allege, on personal knowledge as to themselves 14 and information and belief as to others, as follows: 15 INTRODUCTION 16 1. Defendants market and sell subscriptions to “Setvnow,” a software 17 application that Defendants urge their customers to use as a tool for the mass 18 infringement of Plaintiffs’ copyrighted motion pictures and television shows 19 (“Copyrighted Works”). Defendants tell customers that for “only $20/month,” 20 customers can “Stream over 500 live channels” of television and “Thousands of On 21 Demand entertainment options,” all with “No long term commitments,” “No 22 activation fees,” “No cancellation fees,” and “No credit check.” Defendants 23 encourage their customers to download and install Setvnow on their mobile devices, 24 computers, and other computer hardware devices. 25 26 27 28

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1 2 3 4 5 6 7 8 9 2. To attract customers who would prefer a preloaded box, Defendants 10 also market and sell “ST-110 Set Top Box” computer hardware devices that come 11 preloaded with the Setvnow software. Defendants tell “customers who want more 12 of a cable box experience” that for just $89, they can “simply turn it on and watch 13 TV” without having to do anything more than “PLUG AND PLAY.” 14 3. Whether their customers choose a subscription or a preloaded box, 15 what Defendants actually sell is illegal access to Plaintiffs’ Copyrighted Works. 16 When used as Defendants intend and instruct, Setvnow gives Defendants’ customers 17 access to sources that stream Plaintiffs’ Copyrighted Works without authorization. 18 These streams are illegal public performances of Plaintiffs’ Copyrighted Works. 19 4. For the customers who use Setvnow, the service provides hallmarks of 20 using authorized streaming services—a user-friendly interface and reliable access to 21 popular content—but with a notable exception: the customers only pay money to 22 Defendants, not to Plaintiffs and other content creators upon whose copyrighted 23 works Defendants’ business depends. Plaintiffs bring this action to stop 24 Defendants’ intentional inducement of, and knowing and material contribution to, 25 the widespread infringement of Plaintiffs’ rights. 26 THE PARTIES 27 5. Plaintiff Amazon Content Services, LLC is a corporation duly 28 incorporated under the laws of the State of Delaware with its principal place of -2- COMPLAINT 176 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ì ±º îë Ð¿¹» ×Ü ýæì

1 business in Seattle, Washington. Amazon owns or controls the copyrights or 2 exclusive rights in the content that it or its affiliates produce or distribute. 3 6. Plaintiff Columbia Pictures Industries, Inc. is a corporation duly 4 incorporated under the laws of the State of Delaware with its principal place of 5 business in Culver City, California. Columbia owns or controls the copyrights or 6 exclusive rights in the content that it or its affiliates produce or distribute. 7 7. Plaintiff Disney Enterprises, Inc. is a corporation duly incorporated 8 under the laws of the State of Delaware with its principal place of business in 9 Burbank, California. Disney owns or controls the copyrights or exclusive rights in 10 the content that it or its affiliates produce or distribute. 11 8. Plaintiff Netflix Studios, LLC is a corporation duly incorporated under 12 the laws of the State of Delaware with its principal place of business in Los Gatos, 13 California. Netflix owns or controls the copyrights or exclusive rights in the content 14 that it or its affiliates produce or distribute. 15 9. Plaintiff Paramount Pictures Corporation is a corporation duly 16 incorporated under the laws of the State of Delaware with its principal place of 17 business in Los Angeles, California. Paramount owns or controls the copyrights or 18 exclusive rights in the content that it or its affiliates produce or distribute. 19 10. Plaintiff Sony Pictures Television Inc. is a corporation duly 20 incorporated under the laws of the State of Delaware with its principal place of 21 business in Culver City, California. Sony Pictures Television owns or controls the 22 copyrights or exclusive rights in the content that it or its affiliates produce or 23 distribute. 24 11. Plaintiff Twentieth Century Fox Film Corporation is a corporation duly 25 incorporated under the laws of the State of Delaware with its principal place of 26 business in Los Angeles, California. Fox owns or controls the copyrights or 27 exclusive rights in the content that it or its affiliates produce or distribute. 28

-3- COMPLAINT 177 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ë ±º îë Ð¿¹» ×Ü ýæë

1 12. Plaintiff Universal City Studios Productions LLLP is a limited liability 2 limited partnership duly organized under the laws of the State of Delaware with its 3 principal place of business in Universal City, California. Universal City Studios 4 Productions LLLP owns or controls the copyrights or exclusive rights in the content 5 that it or its affiliates produce or distribute. 6 13. Plaintiff Universal Cable Productions LLC (formerly known as 7 Universal Network Television LLC) is a limited liability company duly organized 8 under the laws of the State of Delaware with its principal place of business in 9 Universal City, California. Universal Cable Productions LLC owns or controls the 10 copyrights or exclusive rights in the content that it or its affiliates produce or 11 distribute. 12 14. Plaintiff Universal Television LLC is a limited liability company duly 13 organized under the laws of the State of New York with its principal place of 14 business in Universal City, California. Universal Television LLC owns or controls 15 the copyrights or exclusive rights in the content that it or its affiliates produce or 16 distribute. 17 15. Plaintiff Warner Bros. Entertainment Inc. is a corporation duly 18 incorporated under the laws of the State of Delaware with its principal place of 19 business in Burbank, California. Warner Bros. owns or controls the copyrights or 20 exclusive rights in the content that it or its affiliates produce or distribute. 21 16. Plaintiffs have obtained Certificates of Copyright Registration for their 22 Copyrighted Works. Exhibit A contains a representative list of titles, along with 23 their registration numbers, as to which Defendants have contributed to and induced 24 infringement and continue to contribute to and induce infringement. 25 17. Defendant Set Broadcast, LLC is a corporation duly incorporated under 26 the laws of the State of Florida with its principal place of business at 11125 Park 27 Blvd., Suite 104-148, Seminole, Florida 33772. Defendant Set Broadcast, LLC does 28

-4- COMPLAINT 178 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ê ±º îë Ð¿¹» ×Ü ýæê

1 business under the name Setvnow and operates an interactive website available at 2 http://www.setvnow.com. 3 18. Defendant Jason Labbosiere is the owner and operator of Set 4 Broadcast, LLC. Labossiere is a resident of Largo, Florida. 5 19. Defendant Nelson Johnson is an employee and former authorized 6 manager of Set Broadcast, LLC. Johnson is a resident of Riverview, Florida. 7 JURISDICTION AND VENUE 8 20. This Court has subject matter jurisdiction over this Complaint pursuant 9 to 28 U.S.C. §§ 1331, 1338(a), and 17 U.S.C. § 501(b). 10 21. Defendants knowingly and intentionally targets Plaintiffs and the State 11 of California by openly encouraging Setvnow customers in California, among other 12 places, to obtain streams of infringing content. Defendants intend that their 13 customers will use Setvnow overwhelmingly to stream infringing performances of 14 Plaintiffs’ Copyrighted Works. Defendants know and intend that their activities will 15 cause significant harm in the State of California, which is the locus of most of 16 Plaintiffs’ production and distribution operations. Setvnow also uses Plaintiffs’ or 17 their affiliates’ trademarks for television channels (e.g., the Disney Channel) to 18 demonstrate the range of available infringing content. 19 22. Setvnow advertises, sells, and provides its subscriptions and “ST-110 20 Set Top Boxes” to California residents. It also provides ongoing technical support 21 and updates to California residents. Defendants use the services of companies in 22 California, including Facebook and YouTube, to advertise and promote Setvnow to 23 potential customers in California. 24 23. Venue is proper in this District pursuant to 28 U.S.C. §§ 1391(b) and 25 1400(a). 26 27 28

-5- COMPLAINT 179 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» é ±º îë Ð¿¹» ×Ü ýæé

1 FACTUAL OVERVIEW 2 Plaintiffs and Their Copyrighted Works 3 24. Plaintiffs or their affiliates produce and distribute some of the most 4 popular and critically acclaimed motion pictures and television shows in the world. 5 25. Plaintiffs or their affiliates have invested (and continue to invest) 6 substantial resources and effort each year to develop, produce, distribute, and 7 publicly perform their Copyrighted Works. 8 26. Plaintiffs or their affiliates own or have the exclusive U.S. rights 9 (among others) to reproduce, distribute, and publicly perform their Copyrighted 10 Works, including by means of streaming those works over the Internet to the public. 11 27. Plaintiffs authorize the distribution and public performance of their 12 Copyrighted Works in various formats and through multiple distribution channels, 13 including, by way of example: (a) for exhibition in theaters; (b) through cable and 14 direct-to-home satellite services (including basic, premium, and “pay-per-view”); 15 (c) through authorized, licensed Internet video-on-demand services, including those 16 operated by iTunes, Google Play, Hulu, VUDU, Netflix, Inc. and Amazon.com, 17 Inc.; (d) for private home viewing on DVDs and Blu-ray discs; and (e) for broadcast 18 on television. 19 28. Plaintiffs have not authorized Defendants, the operators of the sources 20 to which Setvnow links, or Defendants’ customers, to exercise any of Plaintiffs’ 21 exclusive rights under the Copyright Act. 22 Defendants’ Inducement of and Contribution to the Infringement of Plaintiffs’ Copyrighted Works 23 24 The Setvnow Experience 25 29. Defendants promote Setvnow as a substitute for cable television 26 subscriptions, telling customers that for “ONLY $20 PER MONTH,” customers will 27 have “Thousands of On Demand entertainment options” and “500 + Channels” with 28

-6- COMPLAINT 180 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» è ±º îë Ð¿¹» ×Ü ýæè

1 “No long term commitments,” “No activation fees,” “No cancellation fees,” “No 2 Credit Check,” and “Professional Support.” 3 4 5 6 7 8 9 10 11 12 13 14 30. Once customers purchase a monthly subscription plan, they need only 15 download and install the Setvnow application on their laptop, mobile device, tablet, 16 or other hardware device to have access to high-quality, high-speed streams of 17 infringing content. 18 31. Defendants’ customers access infringing streams through use of the 19 Setvnow software application. The Setvnow application provides a built-in media 20 player and curated menus of live television channels and on-demand television show 21 episodes and movies. As depicted below, Setvnow’s user interface provides simple 22 click-to-play options for content. 23 24 25 26 27 28

-7- COMPLAINT 181 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ç ±º îë Ð¿¹» ×Ü ýæç

1 2 3 4 5 6 7 8 9 10 11

12 32. When a user selects any of the menu links above, Setvnow begins 13 streaming the selected content from third-party sources. These sources capture live 14 transmissions of the above-listed television channels, convert the copies of the 15 television programs into streaming-friendly formats, and then retransmit the entirety 16 of the live broadcasts over the Internet. In the screenshot above, a customer who 17 simply clicked once on “DISNEY CHANNEL” would have instant access to a live 18 stream of the Disney Channel. 19 33. For its on-demand options, Setvnow relies on third-party sources that 20 illicitly reproduce copyrighted works and then provide streams of popular content 21 such as movies still exclusively in theaters and television shows. 22 34. Defendants’ customers use Setvnow as follows. First, the customer 23 downloads the Setvnow application on his or her laptop, mobile device, tablet, or 24 other hardware device. The customer then inputs his or her login information. 25 26 27 28

-8- COMPLAINT 182 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ïð ±º îë Ð¿¹» ×Ü ýæïð

1 35. Upon login, Setvnow presents the customer with an easy-to-navigate 2 user interface, with top-menu selections that include “TV” and “VOD”: 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 36. From the “TV” page, Defendants’ customers can select any one of the 18 “500+ channels” of live television, including Plaintiffs’ copyrighted television 19 programs. In addition to the channel guide on the right-side of the media player, 20 Setvnow also offers its customers a “Whats Next” menu below the media player. 21 22 23 24 25 26 27 28

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1 37. Setvnow’s built-in media player can be expanded to full-screen for a 2 high-quality streaming and viewing experience. 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

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1 38. On the “VOD” page, Setvnow presents customers curated menu of on- 2 demand television shows and movies, organized into categories such as “NEW 3 RELEASES,” “TV SHOWS,” “ACTION,” “FAMILY,” and “COMEDY.” 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 39. On April 10, 2018, a Setvnow customer who selected the “NEW 19 RELEASES” category would have had the ability to access immediately hundreds 20 of titles, including movies still in theaters. 21 40. Defendants’ customers use Setvnow for intended and unquestionably 22 infringing purposes, most notably to obtain immediate, unrestricted, and 23 unauthorized access to unauthorized streams of Plaintiffs’ Copyrighted Works. 24 Defendants Intentionally Induce Mass Infringement of Plaintiffs’ 25 Copyrighted Works 26 41. Defendants promote the use of Setvnow for overwhelmingly, if not 27 exclusively, infringing purposes, and that is how their customers use Setvnow. 28

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1 42. Defendants advertise Setvnow as a substitute for authorized and 2 legitimate distribution channels such as cable television or video-on-demand 3 services like Amazon Prime Video and Netflix. Defendants urge Setvnow 4 customers to stream infringing content. Defendants tell customers in promotional 5 videos that customers can “start enjoying live TV and videos on demand easily and 6 conveniently,”1 and that Setvnow will “provide the on-demand television shows and 7 movies that you were looking for.”2 8 43. Defendants also pay for sponsored reviews to reach a broader audience 9 of customers. For example, in one sponsored review with over 80,000 video views, 10 the paid reviewer explains to potential customers that “another huge win for Set 11 TV[3] is this on-demand feature and there are new movies, new releases that you can 12 see … so some things that you might have to rent somewhere else it’s free here in 13 your $20 subscription per month and your favorite TV shows are here too,” 14 including “some Netflix exclusive shows.” 4 In another sponsored review with over 15 120,000 video views, the sponsored reviewer promotes Setvnow as a quick and easy 16 way to access on demand movies: “You have new releases right there and you 17 simply click on the movie … you click it and click on play again and here you have 18 the movie just like that in 1 2 3 in beautiful HD quality.”5 This same reviewer 19 20 1 SET TV NOW Sales, Tired of Paying to much money on Cable TV (posted May 4, 21 2017) https://www.youtube.com/watch?v=xtLZNF6rxyo 2 SET TV NOW Sales, Install Set TV on Android Box 2018 Guide at 7:30 (posted 22 Feb. 24, 2018), https://www.youtube.com/watch?v=uRdbBAvFHgE 23 3 The sponsored reviewers sometimes use “Set TV” as shorthand for the Setvnow 24 application. 4 25 SET TV NOW Sales, Best IPTV Cable Killer Set TV 500+ Channels for $20! at 3:50-4:28 (posted Oct. 11, 2017) 26 https://www.youtube.com/watch?v=ZghyFUrrbwY&t=24s 27 5 SET TV NOW Sales, 4 1 at 1:51 (posted Apr. 19, 2017) 28 https://www.youtube.com/watch?v=BBy-4fx_I_8

-12- COMPLAINT 186 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ïì ±º îë Ð¿¹» ×Ü ýæïì

1 promotes the ease of downloading and installing the Setvnow application, 2 explaining that “it only takes ten seconds, literally.”6 Another sponsored review 3 with over 64,000 video views exclaims to potential customers that Setvnow provides 4 “episode after episode of TV show after TV show and you can go and find the ones 5 that you want and of course the newer releases.”7 The review goes on to highlight 6 “the quality [and] the speed” of Setvnow, and explains that the service “work[s] 7 beautifully” because Setvnow “has their own servers which means they’re able to 8 put this out and do a good job with it.”8 9 44. Defendants release and promote software updates to the Setvnow 10 application as a means of ensuring the quality of streams through Setvnow. On their 11 Facebook page, Defendants explain that “Developers are currently doing a patch … 12 as we are trying to improve our service.”9 13 45. The commercial value of Defendants’ business depends on high- 14 volume use of unauthorized content through the Setvnow application. Defendants 15 promise their customers reliable and convenient access to all the content they can 16 stream; customers purchase Setvnow subscriptions based on Defendants’ success— 17 which Defendants tout and promote—in connecting their customers to infringing 18 content. Customers renew their monthly subscriptions because Setvnow connects 19 these customers to high-speed and high-quality streams of infringing content. 20 Defendants also solicit individuals to serve as authorized affiliates and re-sellers of 21 Setvnow through the “SET TV Re-Seller & Affiliate Program” by highlighting the 22 23 6 Id. at 3:00. 24 7 SET TV NOW Sales, 1 1 at 1:50 (Apr. 19, 2017) 25 https://www.youtube.com/watch?v=7CLTs08Uhfg 26 8 Id. 27 9 Setvnow (posted Dec. 9, 2017) 28 https://www.facebook.com/ordersetvnow/posts/268649086997443

-13- COMPLAINT 187 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ïë ±º îë Ð¿¹» ×Ü ýæïë

1 increasing popularity of Setvnow and the ease of making hundreds of dollars in 2 commissions.10 3 46. Defendants also encourage users to “Refer your friends and family to 4 SET TV to earn rewards and cash” in the Setvnow application. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 47. Defendants’ revenues grow based on increase in demand for Setvnow 19 and continued monthly subscriptions. The demand for Setvnow is directly driven by 20 Defendants’ promise of all-inclusive access to infringing content for only $20 per 21 month. These promises depend on and form an integral part of an ecosystem built 22 on the mass infringement of Plaintiffs’ Copyrighted Works. 23 24 25 26 27 10 Setvnow (posted Oct. 6, 2017) 28 https://www.facebook.com/ordersetvnow/posts/243834122812273

-14- COMPLAINT 188 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ïê ±º îë Ð¿¹» ×Ü ýæïê

1 FIRST CAUSE OF ACTION 2 (Intentionally Inducing the Infringement of Plaintiffs’ Copyrighted Works, 3 17 U.S.C. § 106) 4 48. Plaintiffs incorporate herein by reference each and every averment 5 contained in paragraphs 1 through 47 inclusive. 6 49. Defendants intentionally induce the infringement of Plaintiffs’ 7 exclusive rights under the Copyright Act, including infringement of Plaintiffs’ 8 exclusive right to publicly perform their Copyrighted Works. As intended and 9 encouraged by Defendants, Setvnow connects customers to unauthorized online 10 sources that stream Plaintiffs’ Copyrighted Works. The operators of these source 11 repositories directly infringe Plaintiffs’ public performance rights by providing 12 unauthorized streams of the works to the public, including to Setvnow customers. 13 These operators, or others operating in concert with them, control the facilities and 14 equipment used to store and stream the content, and they actively and directly cause 15 the content to be streamed when Setvnow customers click on a link for the content. 16 50. Defendants induce the aforementioned acts of infringement by 17 supplying the software application that facilitates, enables, and creates direct links 18 between Setvnow customers and the infringing operators of the streaming services, 19 and by actively inducing, encouraging and promoting the use of their software 20 application for blatant copyright infringement. 21 51. Defendants’ intentional inducement of the infringement of Plaintiffs’ 22 rights in each of their Copyrighted Works constitutes a separate and distinct act of 23 infringement. 24 52. Defendants’ inducement of the infringement of Plaintiffs’ Copyrighted 25 Works is willful, intentional, and purposeful, and in disregard of and with 26 indifference to the rights of Plaintiffs. 27 28

-15- COMPLAINT 189 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ïé ±º îë Ð¿¹» ×Ü ýæïé

1 53. As a direct and proximate result of the infringement that Defendants 2 intentionally induce, Plaintiffs are entitled to damages and Defendants’ profits in 3 amounts to be proven at trial. 4 54. Alternatively, at their election, Plaintiffs are entitled to statutory 5 damages, up to the maximum amount of $150,000 per work infringed by virtue of 6 Defendants’ willful inducement of infringement, or for such other amounts as may 7 be proper under 17 U.S.C. § 504. 8 55. Plaintiffs further are entitled to recover their attorneys’ fees and full 9 costs pursuant to 17 U.S.C. § 505. 10 56. As a direct and proximate result of the foregoing acts and conduct, 11 Plaintiffs have sustained and will continue to sustain substantial, immediate and 12 irreparable injury, for which there is no adequate remedy at law. Unless enjoined 13 and restrained by this Court, Defendants will continue to induce infringement of 14 Plaintiffs’ rights in their Copyrighted Works. Plaintiffs are entitled to injunctive 15 relief under 17 U.S.C. § 502. 16 SECOND CAUSE OF ACTION 17 (Contributory Copyright Infringement by Knowingly and Materially 18 Contributing to the Infringement of Plaintiffs’ Copyrighted Works, 19 17 U.S.C. § 106) 20 57. Plaintiffs incorporate herein by reference each and every averment 21 contained in paragraphs 1 through 56 inclusive. 22 58. Defendants have actual or constructive knowledge of third parties’ 23 infringement of Plaintiffs’ exclusive rights under the Copyright Act. Defendants 24 knowingly and materially contribute to such infringing activity. 25 59. Defendants knowingly and materially contribute to the infringement of 26 Plaintiffs’ exclusive rights under the Copyright Act, including infringement of 27 Plaintiffs’ exclusive right to publicly perform their works. Defendants design and 28 promote the use of the Setvnow software application to connect customers to

-16- COMPLAINT 190 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ïè ±º îë Ð¿¹» ×Ü ýæïè

1 unauthorized online sources that stream Plaintiffs’ Copyrighted Works. The 2 operators of these source repositories directly infringe Plaintiffs’ public performance 3 rights by providing unauthorized streams of the works to the public, including to 4 Setvnow customers. The operators, or others operating in concert with them, 5 control the facilities and equipment used to store and stream the content, and they 6 actively and directly cause the content to be streamed when Setvnow customers 7 click on a link for the content. 8 60. Defendants knowingly and materially contribute to the aforementioned 9 acts of infringement by supplying the software application that facilitates, 10 encourages, enables, and creates direct links between Setvnow customers and 11 infringing operators of the streaming services, and by actively encouraging, 12 promoting, and contributing to the use of their devices for blatant copyright 13 infringement. 14 61. Defendants’ knowing and material contribution to the infringement of 15 Plaintiffs’ rights in each of their Copyrighted Works constitutes a separate and 16 distinct act of infringement. 17 62. Defendants’ knowing and material contribution to the infringement of 18 Plaintiffs’ Copyrighted Works is willful, intentional, and purposeful, and in 19 disregard of and with indifference to the rights of Plaintiffs. 20 63. As a direct and proximate result of the infringement to which 21 Defendants knowingly and materially contribute, Plaintiffs are entitled to damages 22 and Defendants’ profits in amounts to be proven at trial. 23 64. Alternatively, at their election, Plaintiffs are entitled to statutory 24 damages, up to the maximum amount of $150,000 per work infringed by virtue of 25 Defendants’ willful, knowing, and material contribution to infringement, or for such 26 other amounts as may be proper under 17 U.S.C. § 504. 27 65. Plaintiffs further are entitled to recover their attorneys’ fees and full 28 costs pursuant to 17 U.S.C. § 505.

-17- COMPLAINT 191 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» ïç ±º îë Ð¿¹» ×Ü ýæïç

1 66. As a direct and proximate result of the foregoing acts and conduct, 2 Plaintiffs have sustained and will continue to sustain substantial, immediate and 3 irreparable injury, for which there is no adequate remedy at law. Unless enjoined 4 and restrained by this Court, Defendants will continue to knowingly and materially 5 contribute to the infringement of Plaintiffs’ rights in their Copyrighted Works. 6 Plaintiffs are entitled to injunctive relief under 17 U.S.C. § 502. 7 PRAYER FOR RELIEF 8 WHEREFORE, Plaintiffs pray for judgment against Defendants and for the 9 following relief: 10 1. For Plaintiffs’ damages and Defendants’ profits in such amount as may 11 be found; alternatively, at Plaintiffs’ election, for maximum statutory damages; or 12 for such other amounts as may be proper pursuant to 17 U.S.C. § 504(c). 13 2. For preliminary and permanent injunctions (a) enjoining Defendants 14 and their officers, agents, servants, employees, attorneys, and all persons acting in 15 active concert or participation with them, from publicly performing or otherwise 16 infringing in any manner (including without limitation by materially contributing to 17 or intentionally inducing the infringement of) any right under copyright in any of 18 Plaintiffs’ Copyrighted Works, including without limitation by publicly performing 19 those works, or by distributing any software or providing any service or device that 20 does or facilitates any of the foregoing acts; and (b) impounding all ST-110 devices 21 in Defendants’ possession, custody, or control, and any and all documents or other 22 records in Defendants’ possession, custody, or control relating to Defendants’ 23 contribution to and inducement of the infringement of Plaintiffs’ Copyrighted 24 Works. 25 3. For prejudgment interest according to law. 26 4. For Plaintiffs’ attorneys’ fees and full costs incurred in this action 27 pursuant to 17 U.S.C. § 505. 28

-18- COMPLAINT 192 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» îð ±º îë Ð¿¹» ×Ü ýæîð

1 5. For all such further and additional relief, in law or in equity, to which 2 Plaintiffs may be entitled or which the Court deems just and proper. 3 DEMAND FOR JURY TRIAL 4 Plaintiffs demand a trial by jury on all issues triable by jury. 5 DATED: April 20, 2018 MUNGER, TOLLES & OLSON LLP 6 7

8 By: /s/ Kelly M. Klaus 9 KELLY M. KLAUS Attorneys for Plaintiffs 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28

-19- COMPLAINT 193 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» îï ±º îë Ð¿¹» ×Ü ýæîï

EXHIBIT A

194 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» îî ±º îë Ð¿¹» ×Ü ýæîî

Amazon Content Services, LLC et al. v. Set Broadcast, LLC et al Representative List of Works

Registration Registration Title Copyright Registrant Number Date Amazon Content Last Flag Flying PA 000-206-5192 11/30/2017 Services, LLC Amazon Content The Wall PA 000-204-3666 5/15/2017 Services, LLC The Only Living Amazon Content PA 000-205-2210 9/7/2017 Boy in New York Services, LLC Amazon Content Wonderstruck PA 000-206-9723 11/22/2017 Services, LLC Jumanji: Welcome to Columbia Pictures PA 000-207-2805 1/25/2018 the Jungle Industries, Inc. Men In Black II Columbia Pictures PA 1-089-930 7/3/2002 Industries, Inc. After Earth Columbia Pictures PA 1-841-452 5/31/2013 Industries, Inc. Heaven is For Real Columbia Pictures PA 1-889-561 4/16/2014 Industries, Inc. The Finest Hour Disney Enterprises, Inc. PA 1-989-069 5/27/2016 Desperate Housewives, Season Disney Enterprises, Inc. PA 1-657-587 10/28/2009 6, Episode 3 Desperate Housewives, Season Disney Enterprises, Inc. PA 1-711-737 12/8/2010 7, Episode 8 Desperate Housewives, Season Disney Enterprises, Inc. PA 1-657-587 1/9/2012 8, Episode 5 Grey’s Anatomy, Season 1 Episode Disney Enterprises, Inc. PA 1-268-281 4/12/2005 Pilot Grey’s Anatomy, Season 2 Episode Disney Enterprises, Inc. PA 1-313-355 2/27/2006 214 Grey’s Anatomy, Disney Enterprises, Inc. PA 1-729-231 3/29/2011 Season 7, Episode 11 Exh A Page 1 195 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» îí ±º îë Ð¿¹» ×Ü ýæîí

Registration Registration Title Copyright Registrant Number Date Okja Netflix Studios, LLC PA 2-069-657 9/18/2017 PA 2-069-656 9/18/2017 Death Note Netflix Studios, LLC The OA, Season 1 PA 2-029-045 1/18/2017 Episode 1 Netflix Studios, LLC

The OA, Season 1, 1/18/2017 Netflix Studios, LLC PA 2-029-047 Episode 4 Stranger Things, PA 2-009-919 9/26/2016 Season 2, Episode 5 Netflix Studios, LLC

Stranger Things, PA 2-009-943 9/26/2016 Season 2, Episode 7 Netflix Studios, LLC

Paramount Pictures 10 Cloverfield Lane PA 1-978-288 3/14/2016 Corporation

Paramount Pictures Truman Show PA 799-052 7/20/1998 Corporation

Paramount Pictures Star Trek Beyond PA 1-994-401 7/21/2016 Corporation

Paramount Pictures Downsizing PA 2-068-615 12/22/2017 Corporation

Sony Pictures Breaking Bad, Television Inc. PA 1-603-371 4/15/2008 Season 1, Episode 5 Sony Pictures Breaking Bad, Television Inc. PA 1-603-380 4/15/2008 Season 1, Episode 6 Sony Pictures Breaking Bad, Television Inc. PA 1-686-571 7/9/2010 Season 3, Episode 1

Exh A Page 2 196 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» îì ±º îë Ð¿¹» ×Ü ýæîì

Registration Registration Title Copyright Registrant Number Date Sony Pictures Breaking Bad, Television Inc. PA 1-758-566 11/1/2011 Season 4, Episode 3 Modern Family, Twentieth Century Fox Season 1, Episode 22 Film Corporation PA 1-681-553 5/28/2010

Twentieth Century Fox Modern Family, Film Corporation PA 1-735-792 4/21/2011 Season 2, Episode 18 Twentieth Century Fox Modern Family, Film Corporation PA 1-745-994 7/14/2011 Season 2, Episode 24 American Horror Twentieth Century Fox Story, Season 4, Film Corporation PA 1-941-865 1/26/2015 Episode 10 American Horror Twentieth Century Fox Story, Season 5, Film Corporation PA 1-973-824 12/28/2015 Episode 6 Twentieth Century Fox Aliens vs. Predator - Film Corporation PA 1-590-415 12/19/2007 Requiem Universal City Studios The Purge Election Productions LLLP PA 1-995-003 7/11/2016 Year Universal City Studios Jason Bourne - Productions LLLP PA 2-002-679 8/8/2016 Action Law & Order: Special Victims Universal Cable PA 1-967-998 10/19/2015 Unit, Season 17, Productions LLC Episode 2 Law & Order: Special Victims Universal Cable PA 1-975-581 2/2/2016 Unit, Season 17, Productions LLC Episode 12

Exh A Page 3 197 Ý¿•» îæïèó½ªóðííîë Ü±½«³»²¬ ï Ú·´»¼ ðìñîðñïè Ð¿¹» îë ±º îë Ð¿¹» ×Ü ýæîë

Registration Registration Title Copyright Registrant Number Date Law & Order: Special Victims Universal Television PA 2-041-019 4/25/2017 Unit, Season 18, LLC Episode 15 Law & Order: Special Victims Universal Television PA 2-080-666 11/2/2017 Unit, Season 19, LLC Episode 5 Mr. Robot, Season 1, Universal Network PA 1-961-149 7/14/2015 Episode 1 Television LLC Mr. Robot, Season 1, Universal Network PA 1-961-144 7/14/2015 Episode 3 Television LLC Mr. Robot, Season 2, Universal Cable PA 2-003-757 8/17/2016 Episode 5 Productions LLC Mr. Robot, Season 2, Universal Cable PA 2-005-193 9/8/2016 Episode 7 Productions LLC Famous in Love, Warner Bros. Season 1, Episode 1 Entertainment Inc. PA 2-031-323 5/4/2017

Warner Bros. Famous in Love, Entertainment Inc. PA 2-034-633 5/26/2017 Season 1, Episode 4 Fuller House, Season Warner Bros. 1 Episode 1 Entertainment Inc. PA 1-985-460 4/26/2016

Fuller House, Season Warner Bros. 1 Episode 5 Entertainment Inc. PA 1-985-462 4/26/2016

Supergirl, Season 1, Warner Bros. Episode 1 Entertainment Inc. PA 1-972-266 12/22/2015

Supergirl, Season 2, Warner Bros. Episode 8 Entertainment Inc. PA 2-012-798 12/13/2016

Exh A Page 4 198 Case: 17-12466 Date Filed: 04/11/2018 Page: 1 of 8

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT ______

No. 17-12466 Non-Argument Calendar ______

D.C. Docket No. 9:16-cr-80090-DTKH-2

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

CLIFFORD ERIC LUNDGREN,

Defendant-Appellant.

______

Appeal from the United States District Court for the Southern District of Florida ______

(April 11, 2018)

Before WILLIAM PRYOR, MARTIN, and ANDERSON, Circuit Judges.

PER CURIAM:

199 Case: 17-12466 Date Filed: 04/11/2018 Page: 2 of 8

Clifford Lundgren pled guilty to conspiring to traffic in counterfeit goods, in violation of 18 U.S.C. § 2320(a)(1), and criminal copyright infringement, in violation of 17 U.S.C. § 506(a)(1)(A) and 18 U.S.C. § 2319(a) and (b)(1).

Lundgren’s plea related to his role in a scheme in which he created and intended to sell about 28,000 copies of Dell reinstallation discs for Microsoft Windows, without permission from Microsoft. Lundgren appeals his sentence of 15-months imprisonment. He argues the district court erred in calculating the value of the infringed item, which drove his guideline range, and that his sentence is substantively unreasonable as a result. After careful review, we affirm.

Robert Wolff, a codefendant, contacted Lundgren to inquire about creating unauthorized copies of Dell reinstallation CDs for Microsoft Windows that could be sold to refurbishers of Dell computers. Wolff provided Lundgren an authorized retail copy of a disc he had purchased, and Lundgren arranged for the disc to be copied by a Chinese manufacturer. The copied discs had labels on them that falsely said the discs contained authorized copies of copyrighted software.

In 2012, U.S. Customs and Border Protection officers detained several shipments of discs that Lundgren had shipped to Wolff from China. In 2016,

Lundgren and Wolff were charged by indictment with conspiracy to traffic in counterfeit goods, trafficking in counterfeit goods, criminal copyright

200 Case: 17-12466 Date Filed: 04/11/2018 Page: 3 of 8 infringement, trafficking in illicit labels, wire fraud, and mail fraud. Lundgren entered into a plea agreement in which he pled guilty to conspiracy to traffic in counterfeit goods and criminal copyright infringement. The government dropped the remaining charges. Lundgren admitted he shipped approximately 28,000 counterfeit discs to Wolff, and that on one occasion, Wolff paid Lundgren $3,400 in exchange for discs.

A probation officer prepared a Presentence Investigation Report (“PSR”), which calculated Lundgren’s guideline sentencing range to be 37 to 46 months imprisonment. This range was largely based on a calculation that valued the infringed goods at $700,000. To arrive at this amount, the PSR relied on evidence put forward by the government that “Microsoft had a certified computer refurbisher program that made genuine authorized reinstallation discs available to computer refurbishers for about $25,” and multiplying that amount by the 28,000 discs produced.

Lundgren objected to the PSR infringement amount. He argued that the

Sentencing Guidelines required the court to use an infringement amount of about

$4 per disk, which was the price for which Lundgren and Wolff were selling their copies. Lundgren also argued that the $25 retail price was inappropriate because the copied disks were not exact reproductions of the original.

201 Case: 17-12466 Date Filed: 04/11/2018 Page: 4 of 8

At sentencing, the court heard expert testimony on the appropriate value to use for the infringement amount. The government presented evidence that

Original Equipment Manufacturers (“OEM”) like Dell enter into licensing agreements with Microsoft such that each Dell device has a Microsoft operating system license that travels with the device in perpetuity. As part of that agreement,

OEMs provide reinstallation discs so that users can reinstall the software if for some reason it is deleted from their devices.

Refurbishers often purchase computers that have been wiped clean from businesses. If those computers came from an OEM like Dell, they would have been set up with a perpetual license to a Microsoft operating system. However, because the devices are typically wiped clean and usually do not come with their original reinstallation discs, the device would not have a copy of the Microsoft operating system software. Microsoft offers discounted software to licensed refurbishers who find themselves in this situation. The government introduced evidence that while a person could have purchased Windows XP Pro from a retail store for $299, small registered refurbishers could have purchased the software for

$25. The government’s expert also testified that even if a user did not have a legitimate license, a reinstallation disc could allow a user to access Microsoft operating system software with near-full functionality.

202 Case: 17-12466 Date Filed: 04/11/2018 Page: 5 of 8

Lundgren presented testimony that disputed the value of the reinstallation discs. Lundgren’s expert testified that reinstallation discs were fundamentally different than the discs sold by Microsoft to small registered refurbishers because the discs sold by Microsoft came with a license, and a reinstallation disc required the user to obtain a license from somewhere else. The defense expert testified that the value of the discs without a license was “[z]ero or near zero.”

The sentencing judge determined that the appropriate infringement value was the value of the infringed discs to small registered refurbishers: $25. The court found credible the government expert’s testimony that he was able to use the infringing discs to install functioning Microsoft software. In contrast, the court found the defense expert’s testimony that the discs were worth nothing without the license to be not credible. In particular, the court noted that it did not find it reasonable to believe that Lundgren and his codefendant had spent at least around

$80,000 to create discs that had no value. Using the $25 infringement amount,

Lundgren’s guideline range was 37 to 46 months imprisonment. The court sentenced Lundgren to 15-months imprisonment. This appeal followed.

II.

“We review the district court’s factual findings for clear error and the application of the Sentencing Guidelines de novo.” United States v. Lozano, 490

F.3d 1317, 1321 (11th Cir. 2007). In particular, we review for clear error a district

203 Case: 17-12466 Date Filed: 04/11/2018 Page: 6 of 8 court’s calculation of the relevant infringement amount. Id. at 1322. We afford substantial deference to a district court’s credibility determinations at sentencing.

United States v. Pham, 463 F.3d 1239, 1244 (11th Cir. 2006) (per curiam). “We review the reasonableness of a sentence for an abuse of discretion.” United States v. Victor, 719 F.3d 1288, 1291 (11th Cir. 2013).

III.

A defendant convicted of conspiracy to traffic in counterfeit goods is sentenced based in part on his “infringement amount.” USSG § 2B5.3(b)(1). If the case involves an infringing item that “is, or appears to a reasonably informed purchaser to be, identical or substantially equivalent to an infringed item,” courts are instructed to calculate the infringement amount by taking “the retail value of the infringed item, multiplied by the number of infringing items.” Id. § 2B5.3 cmt. n.2(A)(i) (emphasis added). As relevant here, if the infringing item is not substantially equivalent to the infringed item, the infringement amount is instead based on “the retail value of the infringing item.” Id. § 2B5.3 cmt. n.2(B)

(emphasis added).

Lundgren argues that the district court erred in calculating the infringement value because the amount offered by the government was not for a substantially identical item. Specifically, Lundgren says the $25 amount offered by the

204 Case: 17-12466 Date Filed: 04/11/2018 Page: 7 of 8 government was for Microsoft software with a license, while the discs he caused to be created contained Microsoft software without a license.

The district court did not err in concluding the “infringement amount” in this case was $700,000. First, the district court did not clearly err in concluding that the discs Lundgren created were, or appeared to a reasonably informed purchaser to be, substantially equivalent to legitimate discs containing Microsoft OS software. See Lozano, 490 F.3d at 1322. That conclusion was supported by the sentencing hearing testimony, in which the government’s expert witness testified that the software on the disks created by Lundgren performed in a manner largely indistinguishable from the genuine versions created by Microsoft. While experts on both sides may have identified differences in functionality in the discs, the district court did not clearly err in finding them substantially equivalent.

Second, the district court reasonably concluded that the proper value of the infringed item was $25 per disc. The government’s expert testified that the lowest amount Microsoft charges buyers in the relevant market—the small registered computer refurbisher market—was $25 per disc. Although the defense expert testified that discs containing the relevant Microsoft OS software had little or no value when unaccompanied by a product key or license, the district court explicitly stated that it did not find that testimony to be credible. We afford deference to a district court’s credibility determinations, and here, no evidence suggests that the

205 Case: 17-12466 Date Filed: 04/11/2018 Page: 8 of 8 district court erred in concluding that the defense expert’s valuation was not worthy of credence. Pham, 463 F.3d at 1244. To the contrary, as the district court noted, it is difficult to square the defense’s valuation with the fact that Lundgren and his codefendant spent about $80,000 to fund a copyright-infringement scheme that they expected to profit from.

In sum, the district court did not clearly err in valuing the infringed item at

$25 per unit and concluding that the total infringement amount was $700,000. As a result, the district court correctly determined that Lundgren’s base offense was subject to a 14-level increase under § 2B5.3(b)(1) and § 2B1.1(b)(1)(H), and correctly calculated Lundgren’s guideline range. Because Lundgren’s only argument that his sentence was unreasonable is rooted in this purported miscalculation, we also conclude that his below-guideline sentence was procedurally and substantively reasonable. See Gall v. United States, 552 U.S. 38,

51, 128 S. Ct. 586, 597 (2007). We therefore affirm his total sentence.

AFFIRMED.

206