Source: https://es.scribd.com/document/133451611/Redigi-Capitol
Timestamp: 2019-04-19 07:26:06+00:00

Document:
admissible evidence to refute that fact, or merely objects to inferences drawn from that fact.
responded on August 14, 2012 and replied on August 24, 2012. (Doc. Nos. 76, 79, 87, 90.) The Court heard oral argument on October 5, 2012. II. LEGAL STANDARD Pursuant to Federal Rule of Civil Procedure 56(a), a court may not grant a motion for summary judgment unless the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 32223 (1986). The moving party bears the burden of showing that it is entitled to summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). The court is not to weigh evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments. Amnesty Am. v. Town of W. Hartford, 361 F.3d 113, 122 (2d Cir. 2004) (internal quotation marks omitted); accord Anderson, 477 U.S. at 249. As such, if there is any evidence in the record from any source from which a reasonable inference in the [nonmoving partys] favor may be drawn, the moving party simply cannot obtain a summary judgment. Binder & Binder PC v. Barnhart, 481 F.3d 141, 148 (2d Cir. 2007) (internal quotation marks omitted). Inferences and burdens of proof on crossmotions for summary judgment are the same as those for a unilateral motion. See Straube v. Fla. Union Free Sch. Dist., 801 F. Supp.
9-14.) ReDigi has also abandoned its argument that the Digital Millenium Copyright Act, 17 U.S.C. 512, bars Capitols claim. (Id. at 22.) As such, the Court will consider only those arguments made in the instant motions.
Copyright 8.02 (stating that in order to infringe the reproduction right, the defendant must embody the plaintiffs work in a material object). Courts that have dealt with infringement on peer-to-peer (P2P) file-sharing systems provide valuable guidance on the application of this right in the digital domain. For instance, in London-Sire Records, Inc. v. John Doe 1, the court addressed whether users of P2P software violated copyright owners distribution rights. 542 F. Supp. 2d 153, 166 & n.16 (D. Mass. 2008). Citing the material object requirement, the court expressly differentiated between the copyrighted work or digital music file and the phonorecord or appropriate segment of the hard disk that the file would be embodied in following its transfer. Id. at 171. Specifically, [w]hen a user on a [P2P] network downloads a song from another user, he receives into his computer a digital sequence representing the sound recording. That sequence is magnetically encoded on a segment of his hard disk (or likewise written on other media). With the right hardware and software, the downloader can use the magnetic sequence to reproduce the sound recording. The electronic file (or, perhaps more accurately, the appropriate segment of the hard disk) is therefore a phonorecord within the meaning of the statute. Id. (emphasis added). Accordingly, when a user downloads a digital music file or digital sequence to his hard disk, the file is reproduce[d] on a new phonorecord within the meaning of the Copyright Act. Id.
It bears noting that ReDigi made numerous admissions to the contrary at the preliminary injunction stage. For instance, in its opposition to Capitols motion, ReDigi stated that, The only copying which takes place in the ReDigi service occurs when a user uploads music files to the ReDigi Cloud, . . . or downloads music files from the users Cloud Locker. (See ReDigi Oppn to PI at 9 (emphasis added).) ReDigi also stated that, after a digital music file was uploaded to the Cloud Locker, the copy from which it was made was actually deleted from the users machine. (Id. at 14 (emphasis added).) ReDigis officers made similar statements in their depositions, and ReDigis patent application for its upload technology states that to be offered for sale, [a music file] is first copied to the remote server and stored on the disc. (See Capitol Mem. of Law, dated July 20, 2012, Doc. No. 49 (Cap. Mem.), at 8-9, n.6 (emphasis added).) But, as earlier stated, these semantic distinctions are immaterial as even ReDigis most recent description of its service runs afoul of the Copyright Act.
because should defendant desire to make one hundred ceramic plaques . . . , defendant would be required to purchase one hundred separate . . . prints. C.M. Paula, 355 F. Supp. at 191. ReDigi argues that, like the defendant in C.M. Paula, its users must purchase a song on iTunes in order to sell a song on ReDigi. (ReDigi Mem. 13.) Therefore, no duplication occurs. See C.M. Paula, 355 F. Supp. at 191 (internal quotation marks omitted). ReDigis argument is unavailing. Ignoring the questionable merits of the courts holding in C.M. Paula, ReDigis service is distinguishable from the process in that case. There, the copyrighted print, or material object, was lifted from the greeting card and transferred in toto to the ceramic tile; no new material object was created. By contrast, ReDigis service by necessity creates a new material object when a digital music file is either uploaded to or downloaded from the Cloud Locker. ReDigi also argues that the Courts conclusion would lead to irrational outcomes, as it would render illegal any movement of copyrighted files on a hard drive, including relocating files between directories and defragmenting. (ReDigi Oppn, dated Aug. 14, 2012, Doc. No. 79 (ReDigi Oppn), at 8.) However, this argument is nothing more than a red herring. As Capitol has conceded, such reproduction is almost certainly protected under other doctrines or defenses, and is not relevant to the instant motion. (Cap. Reply, dated Aug. 24, 2012, Doc. No. 87 (Cap. Reply), at 5 n.1.) Accordingly, the Court finds that, absent the existence of an affirmative defense, the sale of digital music files on ReDigis website infringes Capitols exclusive right of reproduction.
Capitol argues that ReDigi also violated its distribution rights simply by making Capitols recordings available for sale to the public, regardless of whether a sale occurred. (See Cap. Mem. 11 n.8 (citing Hotaling v. Church of Jesus Christ of LatterDay Saints, 118 F.3d 199, 201 (4th Cir. 1997)). However, a number of courts, including one in this district, have cast significant doubt on this make available theory of distribution. See, e.g., Elektra Entmt Grp., Inc. v. Barker, 551 F. Supp. 2d 234, 243 (S.D.N.Y. 2008) ([T]he support in the case law for the make available theory of liability is quite limited.); London-Sire, 542 F. Supp. 2d at 169 ([T]he defendants cannot be liable for violating the plaintiffs distribution right unless a distribution actually occurred.). In any event, because the Court concludes that actual sales on ReDigis website infringed Capitols distribution right, it does not reach this additional theory of liability.
Capitol also asserts a claim for common law copyright infringement arising from sales of its pre1972 recordings on ReDigis website. (Compl. 82-88.) Capitol correctly argues in its memorandum that the elements for a direct infringement claim under federal law mirror those for infringement of common law copyright under state law. See Capitol Records, Inc. v. Naxos of Am., Inc., 4 N.Y.3d 540, 563 (2005); (Cap. Mem. 4.) Accordingly, the Court also Court grants Capitols motion for summary judgment with respect to ReDigis direct infringement of Capitols distribution and reproduction rights in its pre-1972 recordings. However, because neither Capitol nor ReDigi addressed the question of secondary infringement of common law copyrights, the Court does not reach that claim.
at 1022; see, e.g., Usenet.com, 633 F. Supp. 2d at 155. The Court has little difficulty concluding that ReDigi knew or should have known that its service would encourage infringement. Despite the fact that ReDigi boasted on its website that it was The Legal Alternative and insisted YES, ReDigi is LEGAL, ReDigi warned investors in its subscription agreements that the law cannot be said to be well-settled in this area and that it could not guarantee ReDigi would prevail on its copyright defenses. (Cap. 56.1 65-66.) The Recording Industry Association of America (RIAA) sent ReDigi a cease-anddesist letter in November 2011, advising ReDigi that its website violated Capitols and other RIAA members copyrights. (Compl. 41.) Further, ReDigi was ensnared in a licensing dispute over song clips and cover art shortly after its launch, plainly indicating that infringement could be afoot. (RD 56.1 74-75, 77.) ReDigi was also, of course, aware that copyright protected content was being sold on its website a fact central to its business model and promotional campaigns. (Cap. 56.1 70-73). Finally, ReDigis officers claim to have researched copyright law [and] consulted with attorneys concerning their service, and also to have met with record companies to get input, get marketing support[,] and enter into deals with the labels. (RD Rep. 56.1 2 5, 5 20.) By educating themselves, the officers presumably understood the likelihood that use of ReDigis service would result in infringement. Indeed, though ReDigi attempts to use its consultations with counsel as a shield, it is telling that ReDigi declined to reveal any of the advice it received on the subject. (See Cap. Reply 9). ReDigis lone rebuttal to this surfeit of evidence could only be that it sincerely believed in the legality of its service.
As noted above, Capitol has alleged a separate cause of action for inducement of infringement. (Compl. 51-60.) Disagreement exists over whether inducement of infringement is a separate theory of liability for copyright infringement or merely a subset of contributory liability. Compare Flava Works, Inc. v. Gunter, 689 F.3d 754, 758 (7th Cir. 2012) (describing inducement as a form of contributory infringement), with Lime Grp., 784 F. Supp. 2d at 424 (In Grokster, the Supreme Court confirmed that inducement of copyright infringement constitutes a distinct cause of action.). Regardless, because the Court concludes that ReDigi is liable for contributing to its users direct infringement of Capitols copyrights, it does not reach Capitols inducement claim.
443 F.2d at I 162; see Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d 259, 262-63 (9th Cir. 1996). Clearly, ReDigi vicariously infringed Capitol's copyrights. As discussed, ReDigi exercised complete control over its website's content, user access, and sales. Indeed, ReDigi admits that it "is intimately involved in . . . supervising the steps involved in making the music available for sale and selling it" on the website. (Cap. 56.1 35; RD Rep. 56.1 '135); see, e.g., Lime Grp., 784 F. Supp. 2d at 435 (finding right to supervise where P2P file sharing system could filter content and regulate users). In addition, ReDigi financially benefitted from every infringing sale when it collected 60% of each transaction fee. See, e.g., Shapiro, Bernstein & Co. v. Ii L. Green Co., 316 F.2d 304, 308 (2d Cir. 1963) (finding a direct financial benefit where the defendant received a share of the gross receipts on every infringing sale). Notably, ReDigi failed to address any of these arguments in its opposition brief, instead insisting that it was not vicariously liable for infringement that occurred outside the ReDigi service, for instance, when a user impermissibly retained files on his computer. (See ReDigi Opp'n 22-23.) However, this argument is inapposite to the instant motions. Accordingly, the Court grants Capitol's motion for summary judgment on its claim for ReDigi's vicarious infringement of its distribution and reproduction rights.
market for copyrighted materials. C ngress has the constitutional authority an the institutional ability to accommodate fu ly the varied permutations of competing in erests that are inevitably implicated by su 'h new technology." Sony, 464 U.S. at 431. Such deference often counsels for a Ii ited interpretation of copyright pr tection. However, here, the Court cannot of its own accord condone the wholesale ap lication of the first sale defense to the di ital sphere, particularly when Congress its If has declined to take that step. A cordingly, and for the reasons stated ab ve, the Court GRANTS Capitol's motion fo summary judgment on its claims for Re igi's direct, contributory, and vicarious ingement of its distribution and roduction rights. The Court also NIES ReDigi's motion in its entirety. Because issues remain with respect to Ca ito1's performance and display rights, an ReDigi's secondary infringement of Capitol's common law copyrights, as well as injunctive relief, and attorney's fees. IT IS HEREBY ORDERED THAT the I' pal'ies shall submit a joint letter to the Court no later than April 12,2013 concerning the ne t contemplated steps in this case. The Clerk of Court is respectfully dir cted to terminate the motions pending at Do . Nos. 48 and 54.
Plaintiff is represented by Richard Stephen Mandel, Jonathan Zachary King, and Robert William Clarida of Cowan, Liebowitz & Latman, P.c., 1133 Avenue of the Americas, New York, New York 10036. Defendant is represented by Gary Philip Adelman of Davis Shapiro Lewit & Hayes LLP, 689 Fifth Avenue, Fifth Floor, New York, New York 10022.
Proof Steve Shapiro and Peter Lewit are liars.

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