Glacier Films (USA), Inc. v. Turchin

• Decision Date: 24 July 2018
• Docket Number: No. 16-35688,16-35688
• Citation: 896 F.3d 1033
• Parties: GLACIER FILMS (USA), INC.; Glacier Films 1, LLC, Plaintiffs-Appellants, v. Andrey TURCHIN, fka Doe-73.164.151.227, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

896 F.3d 1033

GLACIER FILMS (USA), INC.; Glacier Films 1, LLC, Plaintiffs-Appellants,

v.Andrey TURCHIN, fka Doe-73.164.151.227, Defendant-Appellee.

No. 16-35688

United States Court of Appeals, Ninth Circuit.

Argued and Submitted May 15, 2018, Portland, Oregon

Filed July 24, 2018

John Mansfield (argued), Harris Bricken, Portland, Oregon; Carl D. Crowell, Crowell Law, Salem, Oregon; for Plaintiffs-Appellants.

Klaus H. Hamm (argued), Klarquist Sparkman LLP, Portland, Oregon; David H. Madden, Mersenne Law, Tigard, Oregon; for Defendant-Appellee.

Before: M. Margaret McKeown and Richard A. Paez, Circuit Judges, and Cynthia A. Bashant,^* District Judge.

McKEOWN, Circuit Judge:

This appeal stems from one of the many copyright infringement lawsuits filed against individuals who unlawfully download and distribute movies online. As digital pirates increasingly use BitTorrent and other peer-to-peer networks to share media, copyright holders have pressed the courts for recourse. These suits are not without controversy: many involve "copyright trolls" who buy up copyrights to adult films and then sue masses of unknown BitTorrent users for illegally downloading pornography.¹ This one is different: a film production company sued a single user who illegally downloaded and distributed repeatedly American Heist, a Hollywood action movie.

An important remedy under the Copyright Act provides that courts "may" award attorney’s fees to a prevailing party in an infringement action. In Fogerty v. Fantasy, Inc. , 510 U.S. 517, 114 S.Ct. 1023, 127 L.Ed.2d 455 (1994), the Supreme Court laid out factors to guide discretion in whether to award fees. Because the district court did not faithfully apply the " Fogerty factors" in this meritorious BitTorrent action, we reverse and remand for consideration of an award of reasonable attorney’s fees.² The court’s denial of fees under the present circumstances—based on a one-size-fits-all disapproval of other BitTorrent suits—requires a remand.

BACKGROUND

For context, we discuss the proliferation of peer-to-peer Internet piracy suits before clicking through to the specifics of this case.

PEER-TO-PEER INTERNET PIRACY SUITS

Peer-to-peer networking involves a "decentralized infrastructure whereby each participant in the network ... acts as both a supplier and consumer of information resources." Columbia Pictures Indus., Inc. v. Fung , 710 F.3d 1020, 1024 (9th Cir. 2013). In other words, "peers" download content from fellow peers, while leaving their own folders of digital content available for others to download. One type of peer-to-peer networking involves the BitTorrent protocol, in which a file is broken up into smaller pieces from various peers and then reassembled upon completion of a download. See AF Holdings, 752 F.3d at 998. With BitTorrent, "each user is both downloading and uploading several different pieces of a file from and to multiple other users." Fung , 710 F.3d at 1027. Peer-to-peer networks like BitTorrent are "ideally suited for sharing large files, a feature that has led to their adoption by, among others, those wanting access to pirated media, including music, movies, and television shows." Id. at 1025 ; see also Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd. , 545 U.S. 913, 919–20, 125 S.Ct. 2764, 162 L.Ed.2d 781 (2005).

Digital piracy of copyrighted materials on peer-to-peer networks can have severe financial consequences for copyright holders. As one member of Congress put it:

Under U.S. law, stealing intellectual property is just that—stealing. It hurts artists, the music industry, the movie industry, and others involved in creative work. And it is unfortunate that the software being used—called "file sharing," as if it were simply enabling friends to share recipes, is helping create a generation of Americans who don’t see the harm.

Privacy and Piracy: the Paradox of Illegal File Sharing on Peer-To-Peer Networks and the Impact of Technology on the Entertainment Industry: Hearing Before the S. Comm. on Governmental Affairs , 108th Cong. 10–14 (2003) (statement of Sen. Levin); see also id. at 1–2 (statement of Sen. Boxer) (asserting that "downloading copyrighted works is theft" and "is a real problem").

To combat losses from peer-to-peer file sharing, copyright holders have filed a spate of lawsuits against infringers in federal courts across the country. See, e.g. , BMG Rights Mgmt. (US) LLC v. Cox Commc’ns, Inc. , 881 F.3d 293, 298–99 (4th Cir. 2018) ; Killer Joe Nevada, LLC v. Does 1–20 , 807 F.3d 908, 910 (8th Cir. 2015) ; Dallas Buyers Club, LLC v. Madsen , No. C14-1153RAJ, 2015 WL 6680260, at *1 (W.D. Wash. Nov. 2, 2015) (noting that the action is "one of 13 practically identical cases filed" alleging BitTorrent users’ infringement of the movie Dallas Buyers Club ).

Facing a "large number of similar peer-to-peer copyright infringement cases," in March 2016 the United States District Court for the District of Oregon sought a practical solution and established special procedural rules in a "Case Management Order." See U.S. District Court for the District of Oregon, Standing Order 2016-8, available at https://www.ord.uscourts.gov/index.php/rules-orders-andnotices/standing-orders/active-standing-orders#civil-matters (last accessed July 11, 2018). Among other things, the Order allows copyright holders to seek limited discovery from an Internet Service Provider to establish a potential infringer’s identity, directs that holders must alert potential defendants of the availability of pro bono counsel to defend against infringement claims, and limits holders to suing one alleged BitTorrent infringer at a time.

GLACIER’S LAWSUIT IN OREGON ³

Glacier Films (USA), Inc. and Glacier Films 1, LLC (collectively, "Glacier") hold valid and enforceable copyrights in the film American Heist .⁴ Scheduled for widespread theatrical release in January 2015, Heist instead leaked prematurely on BitTorrent, where it became a top downloaded (i.e., pirated) movie. According to Glacier, over 100,000 Internet Protocol ("IP") addresses illegally downloaded and exchanged the copyrighted film on BitTorrent.

Tracking one such infringing IP address to Oregon, Glacier brought suit in district court against the John Doe owner and subpoenaed records from Comcast to ascertain the Doe’s identity. Glacier selected that particular IP address because the user distributed the film 80 times and was associated with over 700 other titles. When records revealed Andrey Turchin as the owner of the IP address, Glacier sent two letters seeking his participation in determining who downloaded the movie. After Turchin proved non-responsive, Glacier obtained leave to depose him. At his deposition, Turchin admitted to downloading copyrighted content with that IP address, right up until the day before his deposition.

Glacier amended its complaint to name the avid BitTorrent user as the single defendant and sent Turchin a letter advising him of the district court’s pro bono program so that he could obtain assistance in filing a responsive pleading. After nearly three months of attempting to contact Turchin, Glacier filed a motion for default. The court appointed pro bono counsel, who filed an answer raising various affirmative defenses, denying liability, and seeking costs and attorney’s fees. On that same day, Turchin provided Glacier with a Rule 68 Offer of Judgment in which Turchin offered to pay $2,501 to Glacier in exchange for Glacier’s agreement that the sum would satisfy all debts and obligations related to the suit, including any claim for damages, costs and attorney’s fees. A few days later, Turchin filed an amended answer removing five of the seven affirmative defenses, but continuing to deny liability and maintaining his own request for costs and fees.

After conferring, the parties reached a stipulated consent judgment. Per the agreement, Turchin stipulated to the "allegations that give rise to liability for the infringement of [Glacier’s] rights" and to $750 in statutory damages. The court permanently enjoined Turchin from using the Internet to reproduce, copy or publish American Heist , and ordered him to immediately delete any unlicensed copies of the movie in his possession. The parties agreed that "any award of reasonable attorneys fees shall be determined by the [c]ourt in accordance with 17 U.S.C. § 505 and pursuant to [Federal Rule of Civil Procedure] 54." Glacier moved for costs of $791.70 and attorney’s fees totaling $4,833.35. The court awarded costs to Glacier but denied any attorney’s fees.

ANALYSIS

The Copyright Act, coupled with extensive precedent from both the Supreme Court and our court, lay the foundation for our analysis. The statute states simply that the district court "may ... award a reasonable attorney’s fee to the prevailing party as part of the costs." 17 U.S.C. § 505. Although the court enjoys "wide latitude to award attorney’s fees based on the totality of circumstances in a case," its discretion must remain tethered to judicial guideposts. Kirtsaeng v. John Wiley & Sons, Inc. , ––– U.S. ––––, 136 S.Ct. 1979, 1985, 195 L.Ed.2d 368 (2016).

The Supreme Court in Fogerty provided a nonexclusive list of factors for courts to consider in making a fee determination: "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." 510 U.S. at 534 n.19, 114 S.Ct. 1023 ; see also Kirtsaeng , 136 S.Ct. at 1985. We have added factors that "may be considered" and "need not all be met": the degree of success obtained in the litigation, the purposes of the Copyright Act, and "whether the chilling effect of attorney’s fees may be too great or impose an inequitable burden on an impecunious [litigant]." Perfect 10, Inc. v. Giganews, Inc. , 847 F.3d 657, 675 (9th Cir. 2017). We recently re-affirmed our commitment to these factors, but emphasized that district...