Court May Toss Copyright Infringement Suit Over 2257 Violations

LOS ANGELES—Recent developments in a relatively routine end-user copyright infringement lawsuit could result in the dismissal of the case if it is determined that the plaintiff, Malibu Media, violated 18 USC 2257, the federal labeling and record keeping law, as has been alleged by the defendant's lawyer, Morgan Pietz. The lawsuit was filed May 16, 2014 in Illinois against a "John Doe." Such a ruling would come as a result of the successful pleading of a so-called "unclean hands" affirmative defense, the grounds for which were provisionally approved by U.S. District Court Judge Matthey F. Kennelly in his opinion/order issued last Monday, in which he declined to strike two of the defendant's 19 affirmative defense arguments. In a post published to the Pietz Law Firm blog on June 9, the same date as the order was handed down, the plaintiff's legal team explained its reasoning: "Mr. Pietz argued in his client’s opposition to the motion to strike that when it came to evaluating equitable defenses to copyright infringement, an unclean hands defense based on Section 2257 should be treated differently than a defense based on obscenity. The reason courts typically do not recognize an ‘obscenity’ defense to copyright infringement is that if state morality law controls what is or is not obscene, and thus copyrightable, the result would make for an impractical patchwork, where content that is legal and thus copyrightable in one place might be illegal and not copyrightable in different state.  Doe argued that the obscenity defense cases should be distinguished because Section 2257 is a uniform federal statute, which has survived spirited First Amendment challenges, so the same rationale does not apply." Setting aside for a moment that First Amendment arguments remain a significant part of the Free Speech Coalition's appeal to the Third Circuit Court of Appeals of Judge Michael Baylson's lower court ruling last June, Pietz's arguments in the copyright infringement case regarding using 2257 held sway with Judge Kennelly, who wrote in his order of the unclean hands affirmative defense, "Doe alleges that Malibu has violated federal statutory and regulatory recordkeeping requirements whose purpose is to enforce legal prohibitions against production of child pornography. Specifically, Doe cites 18 U.S.C. § 2257, which requires anyone who produces (among other things) films of a person engaged in 'sexually explicit conduct' to 'create and maintain individually identifiable records pertaining to every performer portrayed in such a visual depiction.'" He continued, "Doe contends that Malibu keeps incomplete, deficient, or fabricated records of the performers in its works. He suggests that at least some of the performers in Malibu's works are underage and that the copyrighted content at issue in the case constitutes child pornography as federal law defines that term. Doe also alleges that Malibu does not place at the start and end of its films section 2257 compliance notices that are required by regulation. Doe contends that '[i]f any of the sexually explicit films featuring young-looking girls at issue here . . . were feloniously produced in violation of the strict record-keeping requirements of 18 U.S.C. § 2257... then the Court should not enforce copyright monopolies for such films.'" Unlike with obscenity, added the judge, which the Seventh Circuit Court of Appeals indicated in Flava Works v Gunter was not a "bar to copyrightability" because, as the Supreme Court had stated, "obscenity is a community standard which may vary," child pornography and violation of the federal record-keeping and labeling statute are each prohibited by federal law as a "single, national standard," according to Judge Kennelly, who concluded, "The Court understands the considerations that counsel against imposing a non-statutory, equitable barrier to copyright enforcement... That said, the Court is not prepared to say that federal copyright law would permit one who has produced child pornography—which cannot be legally produced or distributed anywhere in the United States—or who has failed to comply with federally-mandated requirements aimed to deter production of child pornography to enforce a copyright relating to such material. The Court therefore declines to strike Doe's third unclean hands defense and leaves for another day the question of whether it is a legally viable defense. "The Court notes that assuming the defense is legally viable," he added, "it will require Doe to establish that Malibu has violated the law with respect to one or more of the particular films that are the subject of its copyright infringement claims," and cites case law indicating that the "unclean hands" doctrine requires that such allegations of misconduct are related to the cause of action before the court. The other affirmative defense argument accepted by the judge could also have further implications for copyright owners who seed their content to torrents. Calling it an "implied license" argument, Kennelly wrote, "Doe contends that an agent of Malibu, either IPP or an entity called Guardaley, 'seeded' Malibu's content onto BitTorrent and thereby invited others to download it. He alleges that this amounted to an implied license, precluding a claim of infringement. Malibu denies that any such seeding occurred, but the factual accuracy of Doe's allegation cannot be resolved on a motion to strike." Following an explication of his legal reasoning, he concluded, "At this stage of the proceedings, the Court is unprepared to rule out the possibility that Doe can establish an implied license defense based on 'seeding' by Malibu onto BitTorrent of the particular films upon which its claim against Doe is based." A telephone status hearing in the case was held today, resulting in the following dates set by the parties: "Telephone status hearing held on 6/19/2014 with attorneys for both sides. Rule 26(a)(1) disclosures are to be made by 7/21/2014. Telephone status hearing, to be initiated by the parties, is set for 7/29/2014 at 9:00 a.m. for the purpose of discussing the possibility of settlement. Deadline for amending pleadings and adding parties is 9/30/2014. Rule 26(a)(2) disclosures are due by 10/31/2014 for plaintiff and 12/1/2014 for defendant. All discovery ordered closed 3/27/2015. The deadline for filing dispositive motions is 4/27/2015. Deadline for filing a motion for protective order is 7/10/2014." AVN has reached out to industry attorneys for comment, but at press time, none were received. The opinion/order by Judge Kennelly is available here. In the spirit of full disclosure, the author is also a plaintiff in Free Speech Coalition v Holder, the 2257 lawsuit currently being appealed to the Third Circuit Court of Appeals.