Case: 10-55946 04/03/2013 ID: 8576455 DktEntry: 66 Page: 1 of 114 Docket No. 10-55946 In the United States Court of Appeals for the Ninth Circuit COLUMBIA PICTURES INDUSTRIES, INC., DISNEY ENTERPRISES, INC., PARAMOUNT PICTURES CORPORATION, TRISTAR PICTURES, INC., TWENTIETH CENTURY FOX FILM CORPORATION, UNIVERSAL CITY STUDIOS LLLP, UNIVERSAL CITY STUDIOS PRODUCTIONS, LLLP and WARNER BROS. ENTERTAINMENT, INC., Plaintiffs-Appellees, v. GARY FUNG and ISOHUNT WEB TECHNOLOGIES, INC., Defendants-Appellants. _______________________________________ Appeal from a Decision of the United States District Court for the Central District of California, No. 06-CV-05578 · Honorable Stephen V. Wilson PETITION FOR PANEL REHEARING AND REHEARING EN BANC BY APPELLANTS GARY FUNG AND ISOHUNT WEB TECHNOLOGIES, INC. IRA P. ROTHKEN, ESQ. ROBERT L. KOVSKY, ESQ. JARED R. SMITH, ESQ. ROTHKEN LAW FIRM 3 Hamilton Landing, Suite 280 Novato, California 94949 (415) 924-4250 Telephone (415) 924-2905 Facsimile Attorneys for Appellants, Gary Fung and isoHunt Web Technologies, Inc. COUNSEL PRESS · (800) 3-APPEAL PRINTED ON RECYCLED PAPER Case: 10-55946 04/03/2013 ID: 8576455 DktEntry: 66 Page: 2 of 114 TABLE OF CONTENTS page Index of Authorities ..….....….....….....….....….....….....….....….....…....…... ii I. The Panel Decision Applies Erroneous Legal Standards to Find ..…... 1 Fung Liable on Disputed Facts and to Deny Him a Trial by Jury II. The Panel Decision and the District Court Opinion Combine to ……... 5 Punish Speech that Should Be Protected by the First Amendment III. The Panel Decision Expands the Grokster Rule in Multiple Ways ….. 7 that Threaten the Future of Technological Innovation A. The “Technological Background” set forth in the Panel ………. 8 Decision ignores the “collective BitTorrent ecosystem” and erroneously identifies BitTorrent with systems in Grokster B. The Panel Decision erroneously expands the Grokster rule …... 10 from applying to a distributor of a device to applying as a matter of law to any provider of data or online services C. The Panel Decision erroneously adopts a “loose causation …… 11 theory” that defers actual findings of fact for later proceedings D. The Panel Decision’s procedure of selective matching ………... 13 between cases is narrow and arbitrary and improperly excludes personal testimony IV. Dismissal of DMCA Defenses through Device Definitions and ……... 14 Because of “Knowledge of a Broad Range of Infringing Activity” Clashes with Legal Standards Based on Trial by Jury Conclusion ………………………………………………...………………... 15 Certificate of Compliance …………………………………………………… 16 Exhibit A: Panel Decision (Columbia Pictures Industries, Inc. v. Fung), decided 3/21/2013 Exhibit B: District Court Opinion (Columbia Pictures Industries, Inc. v. Fung), decided 12/21/2009 Certificate of Service i Case: 10-55946 04/03/2013 ID: 8576455 DktEntry: 66 Page: 3 of 114 INDEX OF AUTHORITIES CASES Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) ..................................... 1, 3, 4 Boim v. Holy Land Fdn,, 549 F.3d 685 (7th Cir. 2008), cert. den. sub nom Boim v. Salah, 130 S.Ct. 458 (2009) ..................................................... 12 Desrosiers v. Flight Int'l, 156 F.3d 952 (1998) ....................................................... 11 Feltner v. Columbia Pictures Television, Inc., 523 U.S. 340 (1998) ........................ 5 Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001) ........................ 15 Holmes v. SIPC., 503 U.S. 258 (1992) .................................................................... 12 Humanitarian Law Project v. Mukasey, 552 F.3d 916 (9th Cir. Cal., 2009), aff’d & rev’d in parts sub. nom. Holder v. Humanitarian Law Project, 130 S. Ct. 2705 (2010). ............................................................................ 7 McCoy v. Stewart, 282 F.3d 626 (9th Cir. 2002) cert. den. 537 U.S. 993 (2002) ..... 6 MGM Studios, Inc. v. Grokster, 545 U.S. 913 (2005) ..................................... passim MGM v. Grokster, 380 F. 3d 1154 (9th Cir. 2004) ..................................................... 4 Oviatt v. Pearce, 954 F.2d 1470 (1992) .................................................................. 11 Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146 (9th Cir. 2007) ..................... 10 Perfect 10, Inc. v. CCBill, 488 F. 3d 1102 (9th Cir. 2007) ................................ 10, 14 Perfect 10, Inc. v. Visa Int’l Serv. Ass’n, 494 F.3d 788 (9th Cir. 2007) .................. 10 Provenz v. Miller, 102 F. 3d 1478 (9th Cir. 1996) ..................................................... 4 TW Elec. Serv. v. Pac. Elec. Contr’s Ass’n, 809 F. 2d 626 (9th Cir. 1987) ............... 2 UMG Recordings v. Shelter Capital Partners, (9th Cir. 3/14/2013) ................ 12, 15 Viacom Int’l, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012) ....................... 14-15 CONSTITUTION OF THE UNITED STATES First Amendment .................................................................................................... 5-7 Seventh Amendment .................................................................................................. 5 ii Case: 10-55946 04/03/2013 ID: 8576455 DktEntry: 66 Page: 4 of 114 STATUTES, COURT RULES AND APPROVED INSTRUCTIONS 17 U.S.C. § 512(a) ................................................................................................... 14 Digital Millennium Copyright Act (“DMCA”) ........................................... 1, 3-4, 14 FRAP Rule 35 ............................................................................................................ 1 FRAP Rule 40 ............................................................................................................ 1 Ninth Circuit Model Jury Instructions 17.20, 17.21 and 17.18 ............................... 15 iii Case: 10-55946 04/03/2013 ID: 8576455 DktEntry: 66 Page: 5 of 114 Pursuant to FRAP Rules 35 and 40, Defendants-Appellants Gary Fung and isoHunt Web Technologies ("Fung") petition for rehearing or rehearing en banc with respect to the Panel Decision (Ex. A) that was entered on March 21, 2013. This proceeding involves one or more questions of exceptional importance involving the new “Grokster rule” that imposes liability for “inducement of copyright infringement.” MGM Studios v. Grokster, 545 U.S. 913, 919 (2005). The Panel Decision defines technological categories on disputed facts and ignores evidence that entitles Fung to Trial by Jury. It bases liability on a miscellany of online “messages” that lack connections to actual infringements. Free Speech is chilled when sarcastic remarks are held to induce infringement. Expansions of Grokster liability threaten technological innovation, e.g., through creation of a “loose causation standard” that imposes liability without limit as a matter of law. Blanket dismissal of defenses under the Digital Millennium Copyright Act (“DMCA”) requires a novel procedure detached from actual infringements. I. The Panel Decision Applies Erroneous Legal Standards to Find Fung Liable on Disputed Facts and to Deny Him a Trial by Jury. In Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986), the Supreme Court stated that, in ruling on a defendant’s motion for summary judgment: the judge must ask himself not whether he thinks the evidence unmistakably favors one side or the other but whether a fair-minded jury could return a verdict for the plaintiff on the evidence presented. Here, in finding Fung liable under Grokster as a matter of law and in 1 Case: 10-55946 04/03/2013 ID: 8576455 DktEntry: 66 Page: 6 of 114 affirming summary judgment, the District Court and the Panel Decision hold that evidence unmistakably favors moving parties “Columbia.” Without stating a Legal Standard for affirming such a summary judgment, the Panel Decision concludes: Columbia would still have such overwhelming evidence that any reasonable jury would have to conclude that the vastly predominant use of Fung’s services has been to infringe copyrights. (Ex. A at 26.) Using these Grokster III evidentiary categories and cautions as templates, we conclude that there is more than enough unrebutted evidence in the summary judgment record to prove that Fung offered his services with the object of promoting their use to infringe copyrighted material. No reasonable jury could find otherwise. (Id. at 29.) In sum, we affirm the district court’s holding that Columbia has carried its burden of proving, on the basis of undisputed facts, Fung’s liability for inducing others to infringe Columbia’s copyrights. (Id. at 37.) The Panel Decision disregards the proper Legal Standard, stated, e.g., in TW Elec. Serv. v. Pac. Elec. Contr’s Ass’n, 809 F. 2d 626, 630-631 (9th Cir. 1987): … the judge must view the evidence in the light most favorable to the nonmoving party: if direct evidence produced by the moving party conflicts with direct evidence produced by the nonmoving party, the judge must assume the truth of the evidence set forth by the nonmoving party with respect to that fact. The Panel Decision fails to note Fung’s “direct evidence” that he wants to present to a jury. Similarly, the District Court stated that defendants “offer little of their own evidence that directly addressed Plaintiffs' factual assertions.” (Ex. B at *3.) Fung testified that he dropped out of college in 2003 to start isoHunt; that his 2 Case: 10-55946 04/03/2013 ID: 8576455 DktEntry: 66 Page: 7 of 114 only “business plan” is to succeed by his own efforts; that his systems compete in the “collective BitTorrent ecosystem,”