Nathan Fan is a JD candidate at Osgoode Hall Law School.

U.S. District Court Judge Stephen Wilson released a summary judgment on December 21, 2009, finding Gary Fung and his peer-to-peer torrent websites liable for inducing copyright infringement in the U.S. Proceedings against Gary Fung began in 2006, when MPAA members sued Gary Fung and his websites for  inducing and facilitating infringement by enabling users to find pirated material.

This ruling comes as the latest string of defeats for peer-to-peer service companies since the courts effectively shut down Napster in 2001. Napster has been followed by the shutdown of other major players like Grokster and Morpheus in 2005 and TorrentSpy in 2008.

Based in Richmond, BC, Gary Fung is the founder and operator of major torrent-search websites, including IsoHunt, TorrentBox, Podtropolis, and ed2k-it. Most notable of these is IsoHunt, performing over 40 million unique searches per month and becoming one of today’s most popular BitTorrent search engines. According to IsoHunt, over 10.01 petabytes have been shared via Isohunt as of November 22, 2009.

IsoHunt’s peer-to-peer websites are known as “BitTorrent” or “Torrent” sites that allow users to download content directly from the computers of other users and not directly from the servers of the websites. However, the BitTorrent networks are different from previous peer-to-peer systems such as Napster and Grokster. Instead of downloading from an individual user, the bit-torrent network will allow a user to download a single file simultaneously from a number of host computers that possess the file.

Initially, the user must download and install BitTorrent client software, available and freely distributed by other third parties. Users then rely on websites such as Isohunt to find “dot-torrent” files containing data “maps” of content that the user wishes to download. While these dot-torrent files do not actually contain the content of the item searched for, they contain information used by the BitTorrent client to retrieve content through the peer-to-peer transfers. These torrent sites maintain indexes of available dot-torrent files for download that users may search for or alternatively upload torrent files to share with others.

In defence, Fung argued that the IsoHunt service was akin to conventional search engines such as Google. IsoHunt cannot be liable for the copyright infringement engaged by its users as the site does not itself host any content, but merely enables users to find both legal and illegal content. Fung’s defence depended on the safe harbour provisions for service intermediaries found in the Digital Millennium Copyright Act (DMCA). However, after reviewing all the evidence provided by the plaintiffs, Judge Wilson found that Fung’s intent to induce infringement was “overwhelming and beyond reasonable dispute” and sufficient for finding liability for copyright infringement.

Wilson’s ruling was based on evidence that Fung had actively solicited the infringement of copyrighted content via his torrent services. For example, IsoHunt regularly updated lists for “Top Searches”, “Top 20 U.S. Current Movies”, etc. and offered links to pages that allowed users access to the torrent files or invited users to upload torrent files onto the servers. Fung’s other websites also offered similar lists with links to torrent content.

Fung also actively encouraged the downloading of copyrighted material in various statements released in forums, interviews and on his website. Statements made on discussion forums and other websites encouraged and/or made available the downloading of illegal content. Fung also actively provided technical assistance to individuals in downloading popular movie titles and had also directed users to links where they could download the movies through torrent sites. In one interview, Fung stated that: “Morally, I’m a Christian. ‘Thou shalt not steal’. But to me, even copyright infringement when it occurs may not necessarily be stealing”.

In response to Fung’s reliance on the safe harbour provisions of the DMCA, Judge Wilson held that Fung’s actions clearly show that he was aware of the copyright infringement and his active inducement of infringement precluded his ability to rely on the safe harbour immunity as an intermediary. Given the global nature of the web, it would have been obvious to Fung that U.S.-based users could access the same infringing material and engage in infringing acts as the rest of the world. The plaintiffs provided strong evidence that over 2.5 million U.S. citizens visited Fung’s sites each month, and at times the websites were visited more than 50 million times in a single month. Further, between 90-95% of the content available via their websites was copyrighted content.

Judge Wilson commented that the only way that Fung could have avoided knowing about their users’ infringement was by an “ostrich-like refusal to discover the extent to which its system was being used to infringe copyright”. In light of the evidence showing the active encouragement of ongoing infringement by Fung and his websites (e.g. the lists with links to download/upload), the court did not accept Fung’s subjective belief that the websites’ users had not engaged in copyright infringement.

Another major point of the ruling was that the court found that Fung was liable for infringement despite the fact that none of his actions took place in the U.S. (IsoHunt is hosted in Canada). Judge Wilson rejected the requirement that both acts of uploading or downloading a file must have occurred within the U.S., stating:

“Uploading a copyright content file to other users (regardless of where those users are located) violates the copyright holder’s distribution right. Downloading a copyrighted content file from other users (regardless of where those users are located) violates the copyright holder’s reproduction right. The plaintiff only needs to show that the U.S. users either uploaded or downloaded copyrighted works.”

Fung plans to appeal the U.S. decision.

While this is a positive development for copyright holders in U.S. courts, it still remains to be seen whether Canadian courts will follow suit. However, the day of judgement on the Canadian front may soon be coming as IsoHunt has pre-emptively launched action against the CRIA in the BC Supreme Court after receiving cease and desist letters and failing to negotiate a settlement. In the statement of claim, IsoHunt provides a similar defence to the CRIA’s claims, stating that IsoHunt is merely a neutral intermediary and does not host any content or actively engage in copyright infringement.

Posted in Copyright, IP, Infringement, Internet, Internet Sharing, Movies, Music Industry, Music Industry, Technology