Millennium Funding, Inc. v. 1701 Mgmt.

• Decision Date: 25 March 2022
• Docket Number: 21-cv-20862-BLOOM/Otazo-Reyes
• Court: U.S. District Court — Southern District of Florida
• Parties: MILLENNIUM FUNDING, INC., a Nevada corporation, et al., Plaintiffs, v. 1701 MANAGEMENT LLC d/b/a LIQUIDVPN, a Puerto Rico limited liability company, et al., Defendants.

MILLENNIUM FUNDING, INC., a Nevada corporation, et al., Plaintiffs,
v.
1701 MANAGEMENT LLC d/b/a LIQUIDVPN, a Puerto Rico limited liability company, et al., Defendants.

No. 21-cv-20862-BLOOM/Otazo-Reyes

United States District Court, S.D. Florida

March 25, 2022

ORDER GRANTING PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT

BETH BLOOM, UNITED STATES DISTRICT JUDGE

THIS CAUSE is before the Court upon the Plaintiffs MILLENNIUM FUNDING, INC., VOLTAGE HOLDINGS, LLC, AMBI DISTRIBUTION CORP., AFTER PRODUCTIONS, LLC, AFTER II MOVIE, LLC, MORGAN CREEK PRODUCTIONS, INC., MILLENNIUM FUNDING, INC., BEDEVILED LLC, MILLENNIUM MEDIA, INC., COLOSSAL MOVIE PRODUCTIONS, LLC, YAR PRODUCTIONS, INC., FSMQ FILM, LLC, FW PRODUCTIONS, LLC, MILLENNIUM IP, INC., I AM WRATH PRODUCTION, INC., KILLING LINK DISTRIBUTION, LLC, BADHOUSE STUDIOS, LLC, LF2 PRODUCTIONS, INC., LHF PRODUCTIONS, INC., VENICE PI, LLC, RAMBO V PRODUCTIONS, INC., RUPTURE CAL, INC., MON, LLC, SF FILM, LLC, SPEED KILLS PRODUCTIONS, INC., MILLENNIUM IP, INC., NIKOLA PRODUCTIONS, INC., WONDER ONE, LLC, BODYGUARD PRODUCTIONS, INC., OUTPOST PRODUCTIONS, INC., GLACIER FILMS 1, LLC, DEFINITION DELAWARE LLC, HANNIBAL CLASSICS INC., JUSTICE EVERYWHERE PRODUCTIONS LLC, STATE OF THE UNION DISTRIBUTION AND COLLECTIONS, LLC,

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PARADOX STUDIOS, LLC, DALLAS BUYERS CLUB, LLC, HITMAN TWO PRODUCTIONS, INC., and SCREEN MEDIA VENTURES, LLC (collectively, “Copyright Plaintiffs”), and 42 VENTURES, LLC's (“42”) (collectively with Copyright Plaintiffs, “Plaintiffs”), Motion for Entry of Final Default Judgment against Defendants 1701 MANAGEMENT LLC d/b/a LIQUIDVPN (“1701”), AUH2O LLC (“AUH2O”), and CHARLES MUSZYNSKI a/k/a FREDERICK DOUGLAS (“Muszynski”) (collectively, “LiquidVPN Defendants” or “Defendants”), ECF No. [210] (“Motion”). A Clerk's Default was entered against Defendants on September 3, 2021, as Defendants failed to appear, answer, or otherwise plead to the Second Amended Complaint (“SAC”), ECF No. [96], despite having been served. See ECF No. [112]. The Court has carefully considered the Motion, the record in this case, the applicable law, and is otherwise fully advised. For the following reasons, Plaintiffs' Motion is granted in part and denied in part consistent with this Order.

I. FACTUAL BACKGROUND

Plaintiffs filed a Second Amended Complaint (“SAC”) seeking injunctive relief and damages against LiquidVPN Defendants, among others, for direct copyright infringement, contributory copyright infringement, vicarious infringement, Digital Millennium Copyright Act (“DMCA”) violations, trademark infringement, federal unfair competition, breach of contract, unjust enrichment, and breach of publicity rights. See ECF No. [96].^[1]

Copyright Plaintiffs are the owners to several copyrighted works, attached hereto as Exhibit 1. See also ECF No. [104-1] (“Works” or “Copyrighted Works”). The Works are currently available for sale in commerce. See, e.g., ECF No. [96-24] ¶¶ 3-10, 20. LiquidVPN Defendants

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operate a Virtual Private Network (“VPN”) service under the names “LiquidVPN” and “Popcorn Time VPN”. See ECF No. [96] ¶ 226.

A VPN is a type of Internet Service for transmitting, routing, and/or or providing connections for said transmitting and routing, through a network that provides access to the Internet. A conventional Internet Service Provider (“ISP”) will assign its subscriber an Internet Protocol (“IP”) address and log the subscriber's activities on the Internet while using the assigned IP address. In comparison, many VPN providers provide their subscribers “anonymous” usage by, for example, not logging subscriber access, assigning the subscriber IP addresses that are simultaneously shared among many users, or encrypting traffic. A VPN provider often receives IP addresses and colocation services from a larger data center such as Defendant QuadraNet, Inc. See ECF No. [96] ¶ 103.

LiquidVPN Defendants describe their VPN service as a tool to “Watch Popcorn Time without being detected by your ISP and P2P tracking software” and promote it as a tool that can be used to pirate copyright protected content “without the risk of getting caught by your ISP or anyone else.” See ECF No. [96] ¶¶ 225-226. Popcorn Time promoted by LiquidVPN Defendants is a piracy software application so notorious that the United States Trade Representative (“USTR”) placed it on a list of examples of Notorious Markets engaged in and facilitating substantial piracy. See Id. ¶ 141. Popcorn Time promoted by LiquidVPN Defendants has been referred to in the news media as the “Netflix for Pirates.” See The ‘Netflix for Pirates' Is Making a Triumphant Return, Fortune.com, http://fortune.com/2016/02/26/popcorn-time-netflix-pirates/ (last visited March 25, 2022). Even LiquidVPN Defendants describe Popcorn Time as “a very popular content streaming service that uses the BitTorrent protocol to provide a Netflix-like experience for free.” See ECF No. [96] ¶ 140.

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Popcorn Time offers its users nearly instantaneous access to huge quantities of infringing content. See ECF No. [96-17] ¶¶ 23-27. The following is a general overview. Once installed, Popcorn Time provides a user-friendly interface for searching and watching copyright protected content. A user can search through thumbnail images of over thousands of titles including Plaintiff Voltage Holdings, LLC's Work Ava.

(Image Omitted)

See Id. ¶ 25.

A user merely needs to enter "Hunter Killer" in the search bar to find the Plaintiff Millennium Funding, Inc.'s Work Hunter Killer. See Id. ¶ 26. By pressing the "DOWNLOAD" button, Popcorn Time connects the user to torrent sources to download a complete high-resolution copy of Works such as Hunter Killer, Shock and Awe, and Survivor. See Id. ¶¶ 28-29. These torrent sources are illegal sources of copyrighted content that enable Popcorn Time users to view

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unauthorized streams or download unauthorized copies of popular motion pictures and television shows, including Copyright Plaintiffs' Works.

Defendant Muszynski is the sole member of AUH2O and 1701, which he has described as his “shelf companies.” See ECF Nos. [96] ¶¶ 75, 97; [96-6] ¶12. Muszynski used one of his alter egos, 1701, to purchase the assets, and used another one of his alter egos, AUH2O, to sell bandwidth VPN service. While 1701 owns LiquidVPN, AUH2O receives funds from Orchid Labs, Inc. for selling bandwidth on the LiquidVPN network to the Orchid Network. See ECF No. [96] ¶ 85; see also ECF No. [96-9] ¶ 12.

Muszynski uses the fake name “Jamie Castro” on the website for LiquidVPN and as the registration name for the domain with registration domains. See ECF Nos. [96] ¶ 30, [96-9] ¶¶ 30-34 (the name Jamie Castro used to register various domains including LiquidVPN.com and legalshame.co). See also ECF Nos. [210-8]; [96-26] ¶¶ 25, 37. LiquidVPN Defendants advertise use of their Popcorn Time VPN to “Enjoy Popcorn Time . . . without the risk of getting caught by your ISP or anyone else.” ECF No. [25-1] ¶ 12. LiquidVPN Defendants further promote their VPN service by claiming that it “fully supports bittorrent and P2P . . . . We will never censor P2P or BitTorrent . . . . In fact, we have pulled out of locations because they did not like our policies on P2P and bit torrent . . . . ” Id. ¶ 15. LiquidVPN Defendants further promote their VPN service as a “DMCA Free Zone.” Id. ¶ 16.

Plaintiff 42 is the owner of a federal trademark registration, Reg. No. 5, 963, 253 for the mark Popcorn Time, which was issued on January 14, 2020, on the principal register of the United States Patent and Trademark Office. This registration for the standard character mark Popcorn Time covers CLASS 9: Downloadable computer software for downloading and streaming multimedia content images, videos, and audio. See ECF No. [96-2]. The registration is valid and

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subsisting and has never been cancelled. Plaintiff 42's U.S. trademark asserts a first date of use of November 29, 2019.

Plaintiff 42 distributes and streams licensed content under the Popcorn Time trademark throughout the U.S. on one or more websites on U.S. top level domains. See ECF No. [96-26] ¶ 4. For example, 42 streams in depth humorous movie reviews called “Reel Reviews™” and debates concerning motion pictures and pop culture called “Nerd Wars™” from the website http://popcorntime4u.com/ under the registered trademark “Popcorn Time” through an agreement with Andy Signore, the creator of the popular YouTube® channel Popcorned Planet and former executive producer of the Emmy nominated series Honest Trailers. See Id. Plaintiff 42 has invested substantial time, effort, and financial resources promoting its Popcorn Time trademark in connection with the marketing and sale of its website and apps in interstate commerce and engaging with content owners for licensed content. See Id. ¶¶ 4-7. Plaintiff 42's Popcorn Time trademark is inherently distinctive as applied to Plaintiff 42's goods and/or services that bear the mark. See ECF No. [96] ¶ 134.

LiquidVPN Defendants contracted with the Florida company Reliable.Net LLC (“Reliable”) to use Reliable's data center and dedicated servers in a facility in Miami, Florida. Reliable received IP addresses from Choopa and reassigned IP addresses in this facility to LiquidVPN Defendants. See Id. ¶¶ 121-122. Among the IP addresses LiquidVPN Defendants received from Reliable was IP address 108.61.128.241 hosted on a server in the Miami, Florida facility. See ECF Nos. [96-3], [96] ¶¶ 169-170. Copyright Plaintiffs engaged Maverickeye UG (haftungsbeschränkt) (“MEU”) to monitor P2P/BitTorrent networks to capture evidence of acts of distribution of their Works and to generate infringement notices to be sent to the ISPs assigned the IP addresses at which MEU confirmed instances of actual observed distribution. See ECF Nos. [96-20]; [96] ¶ 201.

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In May of 2019, Copyright Plaintiffs' agent sent over forty (40) notices to Choopa concerning confirmed...