Veoh Networks, Inc. v. Umg Recordings, Inc.

• Decision Date: 14 November 2007
• Docket Number: No. 07-CV-1568 W(BLM).,07-CV-1568 W(BLM).
• Citation: 522 F.Supp.2d 1265
• Court: U.S. District Court — Southern District of California
• Parties: VEOH NETWORKS, INC., a California corporation, Plaintiff, v. UMG RECORDINGS, INC., et. al., Defendants.

522 F.Supp.2d 1265

VEOH NETWORKS, INC., a California corporation, Plaintiff, v. UMG RECORDINGS, INC., et. al., Defendants.

No. 07-CV-1568 W(BLM).

United States District Court, S.D. California.

November 14, 2007.

COPYRIGHT MATERIAL OMITTED

Rebecca. Lawlor Calkins, Winston and Strawn. LLP, Los Angeles, CA, Michael S. Elkin, Thomas Lane, Winston and Strawn, New York City, for Plaintiff.

Benjamin Glatstein, Irell & Manella, Los Angeles, CA, for Defendants.

ORDER GRANTING DEFENDANT'S MOTION TO DISMISS OR TO TRANSFER [Doc. No. 13]

THOMAS J. WHELAN, District Judge.

On August 9, 2007 Plaintiff Veoh Networks, Inc. ("Plaintiff') commenced this declaratory judgment action against Defendants UMG Recordings and other UMG-affiliated companies (collectively, "Defendant") seeking a declaration of noninfringement of Defendant's copyrights, primarily under Section 512(c) of the Digital Millennium Copyright Act ("DMCA"). 17 U.S.C. § 512(c). Defendant now moves to dismiss Plaintiff's claims for lack of a "case or controversy," lack of subject matter jurisdiction, and abuse of the Declaratory Judgment Act. In the alternative, Defendant moves to have this suit transferred to the Central District of California. The Court decides the matter on the papers submitted and without oral argument." See Civil Local Rule 7.1(d.1). For the reasons outlined below, the Court GRANTS Defendant's motion and dismisses Plaintiff's Complaint WITHOUT PREJUDICE.

I. BACKGROUND

Plaintiff operates Veoh.com, a video hosting service which allows third parties to post, share, and view video on the Internet. (Compl. ¶¶ 11-12.) Veoh alleges that users of the free Veoh service submit all video content found therein; that is, Veoh does not independently produce or control any content found on the Veoh website.¹ (Id. ¶¶ 23-25.)

Defendant is a large record and music publishing company that presumably owns thousands, if not millions, of copyrights. (Def's Mot. to Dismiss 1-2.) Defendant has a long history of taking legal action to protect its rights from piracy, and in particular has had past success in obtaining injunctive and monetary relief against "peer to peer" file-sharing services. (Id. 2.)

At some time in late July 2007, Defendant allegedly accused Plaintiff's service of massively infringing Defendant's copyrights. (Compl. 62.) According to Plaintiff, Defendant threatened litigation at an unspecified future time. (Id. 61.) However, Defendant allegedly refused to provide Plaintiff with information on which specific copyrights were being infringed. (Id. 65.)

On August 8, 2007 Plaintiff filed a complaint seeking declaratory relief that their video hosting service falls within the DMCA Section 512(c) safe harbor. (Compl. ¶ 87(a).) On September 4, 2007 Defendant filed a Motion to Dismiss or to Transfer. (Doc. No. 14.) Also on September 4, 2007 Defendant filed a complaint alleging copyright infringement against Plaintiff in the Central District of California, where Defendant was already pursuing relief against other Internet hosting companies. (Compl. Ex. K; Ex. A—J.) On September 26, 2007 Plaintiff timely opposed Defendant's Motion to Dismiss or to Transfer. (Doc. No. 19.) On October 3, 2007 Defendant submitted a reply brief, and on October 11 Plaintiff filed a surreply.² (Doc. Nos.21, 24.)

II LEGAL STANDARD

The Declaratory Judgment Act enlarged the range of remedies available in federal court, but did not extend federal jurisdiction. 28 U.S.C. § 2201 (2006); Skelly Oil Co. v. Phillips Petroleum Co., 339 U.S. 667, 671, 70 S.Ct. 876, 94 L.Ed. 1194 (1950). Thus, as a threshold requirement, a declaratory relief action must involve an actual "Case or controversy" so the court does not render an impermissible advisory opinion. See Flast v. Cohen, 392 U.S. 83, 95-96, 88 S.Ct. 1942, 20 L.Ed.2d 947 (1968); Coalition for a Healthy Cal. v. F.C.C., 87 F.3d 383, 386 (9th Cir.1996) (recognizing that "federal courts have never been empowered to render advisory opinions"). Additionally, declaratory relief is only appropriate when the matter is properly within federal court subject matter jurisdiction. 28 U.S.C. § 2201; Skelly Oil Co., 339 U.S. at 671, 70 S.Ct. 876.

Rule 12(b)(1) provides that a court may dismiss a claim for "lack of jurisdiction over the subject matter[.]" FED. R. CIV. P. 12(b)(1). Although the defendant is the moving party in a motion to dismiss, the plaintiff is the party that invoked the court's jurisdiction. Therefore, the plaintiff bears the burden of proof on the necessary jurisdictional facts. McCauley v. Ford Motor Co., 264 F.3d 952, 957 (9th Cir.2001). Whether subject matter jurisdiction exists presents a question of law. See Nike Inc. v. Comercial Iberica de Exclusivas Deportivas, 20 F.3d 987, 990 (9th Cir.1994).

III. DISCUSSION

A. PLAINTIFF'S COMPLAINT FAILS TO ALLEGE AN ARTICLE III "CAM' OR CONTROVERSY"

Defendant first argues that the dispute underlying Plaintiffs request for declaratory relief is too vague to satisfy the United States Constitution's Article III "case or controversy" requirement. (Def's Mot. to Dismiss 9-12.) Specifically, Defendant argues that the wide-ranging declaratory relief Plaintiff seeks cannot be awarded given the abstraction of Plaintiffs complaint. (Id.)

Plaintiff contends that they are faced with a "very real controversy" and that any vagueness in their complaint is due solely to Defendant's refusal to provide copyright information in preliminary discussions. (Opp'n 5-6.) Regardless, Plaintiff argues, not knowing which copyrights are being infringed is essential to claiming the Section 512(c) safe harbor. (Id.)

The Court disagrees.

The complaint in a declaratory relief action must allege facts sufficient to establish an actual controversy. Int'l Harvester Co. v. Deere & Co., 623 F.2d 1207, 1210 (7th Cir.1980). The disagreement must not be nebulous or contingent, but must have taken on a fixed and final shape so that a court can see what legal issues it is deciding and what effects its decision will have on the adversaries. Pub. Sera Com. v. Wycoff Co., 344 U.S. 237, 244, 73 S.Ct. 236, 97 L.Ed. 291 (1952); United States v. Arnold, 678 F.Supp. 1463, 1465-66 (S.D.Cal.1988). The controversy must be real, substantial, and capable of specific relief through a decree of conclusive character. Display Research Labs. v. Telegen Corp., 133 F.Supp.2d 1170, 1174 (N.D.Cal. 2001), citing Aetna Life Ins. Co. v. Haworth, 300 U.S. 227, 240-41, 57 S.Ct. 461, 81 L.Ed. 617 (1937). Basically, the question in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. Medlmmune, Inc. v. Genentech, Inc., ___ U.S. ___, ___, 127 S.Ct. 764, 771, 166 L.Ed.2d 604 (2007).

Although Plaintiffs Complaint suggests disagreement between the parties, the nature and extent of the controversy has not been adequately defined to support federal jurisdiction. Plaintiffs Complaint generally discusses their video hosting operation, that Defendant owns unspecified copyrights, and that Defendant has made unspecified threats of copyright infringement litigation. (Compl. ¶¶ 1-2, 10-27.) From these general allegations, Plaintiff seeks a far-reaching declaratory judgment that it is not liable for infringing any of Defendant's rights and is entitled to the Section 512(c) safe harbor. See 17 U.S.C. § 512(c);. (Compl. ¶ 87(a)-(d).)

However, because Plaintiff does not reference any specific copyright, even by way of example, the relief requested would necessarily take the form of an advisory opinion. Succinctly, the Court cannot determine whether a safe harbor for copyright infringement exists without knowing which rights are at stake. Rather than "specific relief through a decree of conclusive character," Plaintiff seeks a blanket validation of the ongoing legality of their business model. Divorced from a particular dispute over specific rights, Plaintiff's Prayer for Relief would have the Court declare a safe harbor as equally applicable against Defendant as to any other copyright holder. Such a declaration's effect on each one of Defendant UMG's copyrights would be uncertain enough; the effect on all other copyright holders not before the Court would be even more nebulous.³

Plaintiff argues that not knowing which copyrights are being infringed is essential to a declaration that their business meets the Section 512(c) safe harbor requirements. That is, acknowledging any infringement would be fatal to their complaint for declaratory relief. (Opp'n 5-6.) However, where ignorance of infringement may help establish the defense, actual knowledge is not fatal to the Section 512(c) safe harbor. See 17 U.S.C. §§ 512(c)(1)(A) 512(c)(1)(C); Perfect 10, Inc. v. CCBill LLC, 481 F.3d 751, 760 (9th Cir.2007) (explaining that a service provider may qualify for the DMCA safe harbor if it acts "expeditiously to remove, or disable access to, the material[,]" even if it has actual knowledge). By pleading narrowly, Plaintiff cannot use the Section 512(c) safe harbor to bootstrap into federal court, abrogating the "case or controversy" requirement. Rather, there must first be a real, substantial controversy before the Court can even consider whether a litigant is entitled to the Section 512(c) defense.⁴ Plaintiff cannot have it both ways.

Because under all the circumstances Plaintiff fails to allege an Article III "case or controversy," the Court GRANTS Defendant's motion and DISMISSES Plaintiff's Complaint WITHOUT PREJUDICE⁵

B. EVEN IF THE COURT HAS PROPER JURISDICTION, PLAINTIFF'S CLAIM IS DISMISSED UNDER THE COURT'S DISCRETIONARY POWERS.

Defendant argues that even if Plaintiff s pleadings are sufficient to satisfy federal jurisdiction, the Court should use its discretionary power to dismiss the declaratory relief claim as an abuse of the Declaratory Judgment Act. (Def's ...