Source: https://www.scribd.com/doc/63913209/United-States-v-Rojadirecta-org-and-Rojadirecta-com-Reply-to-Government-s-Memorandum-of-Law-in-Opposition-to-Motion-to-Dismiss
Timestamp: 2017-09-19 15:28:17
Document Index: 362853958

Matched Legal Cases: ['§ 101', '§ 401', '§ 504', '§ 506', '§ 2323', '§ 2323', '§ 506', '§ 401', '§ 506', '§ 101', '§ 2323', '§ 2323']

United States v. Rojadirecta.org and Rojadirecta.com - Reply to Government's Memorandum of Law in Opposition to Motion to Dismiss | Copyright Infringement | Asset Forfeiture
United States v. Rojadirecta.org and Rojadirecta.com - Reply to Government's Memorandum of Law in Opposition to Motion to Dismiss
UNITED STATES OF AMERICA, Plaintiff, v. THE FOLLOWING DOMAIN NAMES: ROJADIRECTA.ORG, and ROJADIRECTA.COM, Defendants in rem. CLAIMANT PUERTO 80 PROJECTS, S.L.U.’S REPLY TO GOVERNMENT’S MEMORANDUM OF LAW IN OPPOSITION TO THE MOTION TO DISMISS THE VERIFIED COMPLAINT Civil Action No. 1:11-cv-04139-PAC
The Government Has Failed to Alleged Facilitation or a “Substantial Connection” Between the Domain Names And Any Illegal Acts. ....................... 6 If the Statute Is Interpreted As Broadly as the Government Now Claims, It Is Unconstitutional ................................................................................................ 7 The Government Has Not Shown That U.S. Copyright Law Can Apply to Rojadirecta’s Alleged “Facilitation” of Copyright Infringement ......................... 9 The Government Should Not Be Granted Leave to Amend ............................... 10
TABLE OF AUTHORITIES Page(s) Cases Alexander v. United States, 509 U.S. 544 (1993) .................................................................................................................. 8 Arista Records, Inc. v. MP3Board, Inc., No. 00-cv-4660, 2002 WL 1997918 (S.D.N.Y. Aug. 29, 2002)............................................... 6 Ashcroft v. Iqbal, 127 S.Ct. 1937 (2009) ............................................................................................................... 5 Austin v. United States, 509 U.S. 602 (1993) .................................................................................................................. 6 Bantam Books, Inc. v. Sullivan, 372 U.S. 58 (1963) .................................................................................................................... 8 Danjaq LLC v. Sony Corp., 263 F.3d 942 (9th Cir. 2001) .................................................................................................... 5 Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Const. Trades Council, 485 U.S. 568 (1988) .................................................................................................................. 8 Fort Wayne Books, Inc. v. Indiana, 489 U.S. 46 (1989) .................................................................................................................... 8 Freedman v. Maryland, 380 U.S. 51 (1965) .................................................................................................................... 8 Heller v. New York, 413 U.S. 483 (1973) .................................................................................................................. 8 Kaplan v. Jazeera, No. 10-cv-5298, 2011 WL 2314783 (S.D.N.Y. June 7, 2011) ................................................. 4 Lowry’s Reports, Inc. v. Legg Mason, Inc., 271 F.Supp. 2d 737 (D. Md. 2003) ........................................................................................... 4 Marcus v. Search Warrants of Property, 367 U.S. 717 (1961) .................................................................................................................. 8 Marine Midland Bank, N.A. v. United States, No. 93-cv-0307/0357, 1993 WL 158542 (S.D.N.Y. May 11, 1993) ........................................ 7 New York Times Co. v. United States, 403 U.S. 713 (1971) .............................................................................................................. 1, 8 Palmer v. Braun, 376 F.3d 1254 (11th Cir. 2004) ................................................................................................ 9
Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701 (9th Cir. 2007) .................................................................................................... 9 Puerto 80 v. United States, No. 11-cv-3983 (S.D.N.Y July 11, 2011) ................................................................................. 3 Se. Promotions, Ltd. v. Conrad, 420 U.S. 546 (1975) .................................................................................................................. 8 United States v. $1,399,313.74 in U.S. Currency, 591 F. Supp. 2d 365 (S.D.N.Y. 2008)................................................................................... 2, 5 United States v. 3234 Washington Ave., 480 F.3d 841 (8th Cir. 2007) .................................................................................................... 6 Statutes 17 U.S.C. § 101 ............................................................................................................................... 6 17 U.S.C. § 401 ............................................................................................................................... 4 17 U.S.C. § 504 ............................................................................................................................... 4 17 U.S.C. § 506 ........................................................................................................................... 4, 5 18 U.S.C. § 2323 ......................................................................................................................... 3, 7
INTRODUCTION AND SUMMARY OF ARGUMENT The government’s view of its powers under the civil forfeiture law, articulated for the
first time in its opposition to Puerto 80’s motion to dismiss, is breathtaking. In the government’s view, it doesn’t need to allege that Puerto 80 violated any law, or even engaged in any civil wrong, in order to seize and shut down its Internet domain name. As long as the government thinks that someone, somewhere in the world, is engaged in copyright infringement, it believes it is entitled to seize any asset that might be connected to that infringement, whether or not the owner engaged in any wrongdoing, and whether or not that asset in fact “facilitated” the commission of any crime. And it further believes it is entitled to seize Internet domain names and shut down protected speech without ever having to prove that the speech was, in fact, unlawful, much less that the owner of the asset was responsible for any crime. On the government’s view of its powers, it is entitled to seize the Google, Bing, or Yahoo web site, because someone, somewhere, has used those sites’ search engines to find infringing content. It is entitled to seize Verizon’s telephone network for the same reason. It is entitled to seize the power company, since numerous crimes are “facilitated” by the use of electricity. And the only reason the government lost the Pentagon Papers case, New York Times Co. v. United States, 403 U.S. 713 (1971), is that it asserted the wrong statute. Had the government simply seized the New York Times’ printing presses, pointing out that they were being used to “facilitate” the disclosure of government secrets, it would have been able to block the disclosure of Daniel Ellsberg’s secrets. This cannot be the law. The government’s effort to disaggregate seizure from any allegation of wrongdoing on the part of the property owner flies in the face of the purpose and history of the civil forfeiture statute. It is inconsistent with the way the statute itself is drafted. And it is unconstitutional. Despite its protestations to the contrary, and perhaps implicitly recognizing the radical nature of its position, the government also makes a half-hearted attempt to show that Puerto 80 is in fact guilty of criminal copyright infringement. That effort fails. The government cannot show
that Puerto 80’s conduct is the sort that could constitute criminal copyright infringement. Nor can it allege willful infringement on the basis of no fact other than the claim that some of the works to which third parties have linked from the Rojadirecta web sites have copyright notices on them (a fact not even alleged in the Complaint). The government’s failures are not failures to describe in detail the evidence it hopes to be able to prove. They are fundamental holes in the legal theory of its case. No amount of pleading can remedy those holes, so there is no reason to grant the government leave to amend. II. ARGUMENT A. The Government is Attempting to Create a Factual Issue Where None Exists.
After arguing in its response to Puerto 80’s 983(f) petition that the issues raised therein were “more properly raised . . . in a motion to dismiss the Government’s Verified Complaint,” the government now accuses Puerto 80 of “fundamental[ly] misunderstanding” forfeiture law by attempting to force the government to prove its case. Not so. Puerto 80 is simply arguing that the government has, at this juncture, failed to “‘assert specific facts supporting an inference that the property is in fact subject to forfeiture.’” United States v. $1,399,313.74 in U.S. Currency, 591 F. Supp. 2d 365 (S.D.N.Y. 2008) (citation omitted). The fact that the government does not need to meet its ultimate burden of proof at this point does not excuse it from pleading sufficient facts, with a Rule 11 basis to do so, to pass muster under Iqbal and the Supplemental Rules for Admiralty or Maritime Claims and Asset Forfeiture Actions. B. The Government Has Not Alleged the Elements of Criminal Copyright Infringement by Puerto 80 or Anyone Else.
The government’s shifting position in these proceedings is a classic example of moving the goalposts. In its response to Puerto 80’s 983(f) Petition, the government made clear that it was proceeding under the theory that Puerto 80 itself was committing criminal copyright infringement. Indeed, the government conceded that the warrant was obtained under this theory: The Rojadirecta Domain Names were seized pursuant to a warrant obtained in the Southern District of New York and issued by the Honorable Frank Maas, United States Magistrate Judge, who found
probable cause to believe that Puerto 80, through the Rojadirecta Domain Names, was engaged in criminal copyright infringement. The Government has no reason to believe that Puerto 80 would not continue to engage in the very illegal acts in which it engaged prior to the seizure. See Response at 16-17 (emphasis added), Puerto 80 v. United States, No. 11-cv-3983 (S.D.N.Y July 11, 2011), ECF No. 18. See also id. at 3 (“Returning the Rojadirecta Domain Names at this time would provide Puerto 80 with the very tools it used to commit the crimes the Government has alleged it engaged in prior to the seizure.”); 17 (“[I]n operating the Rojadirecta website, Puerto 80 has engaged in (and aided and abetted) flagrant criminal copyright infringement.”); 1718 (“The government believes that Puerto 80 . . . has engaged in criminal copyright infringement.”). In setting forth its theory of infringement under the Copyright Act, the government explained that “even if Puerto 80 has not engaged in direct copyright infringement through the Rojadirecta website, it certainly has engaged in contributory infringement, and has aided and abetted the infringement by others.” Id. at 19-20. See also id. at 20 (“Thus, Puerto 80 has repeatedly engaged in acts that infringe the valid copyrights owned by the Leagues through the use of the Rojadirecta Domain Names.”). And the Complaint itself alleges that the unauthorized “distribution” was done by “Rojadirecta.org” and “Rojadirecta.com,” not by a third party. Compl. ¶¶ 16, 18. Now that it is clear that the government cannot show that Puerto 80 itself engaged in criminal copyright infringement, its theory has shifted. The government’s opposition disavows any intent to establish that Puerto 80 used the Rojadirecta site to commit copyright infringement, stating that it is “simply of no import” that 18 U.S.C. § 2323 doesn’t authorize forfeiture based on allegations of conspiracy or aiding and abetting. Opp’n at 17. Now, the government argues that Puerto 80 is “facilitating” criminal copyright infringement committed by unnamed third parties. See, e.g., Opp’n at 13-14 (describing how ICE agents accessed content made available by third parties, and alleging that “those acts of distribution—acts the Rojadirecta Domain Names facilitated—constituted infringement of valid copyrights”). But in attempting to argue its new “facilitation” theory, the government cites to different acts by different actors (Puerto 80,
other websites that are streaming content, and unidentified users who follow links to the content) for different elements of the alleged offense. Not only does this approach render the government’s opposition brief incoherent; it does nothing to change the fact that the Complaint fails to plead the elements of criminal copyright infringement by Puerto 80 or any other actor. 1. The Government Has Not Alleged Willful Infringement.
If, as the government argues in its opposition, it is not accusing Puerto 80 of using the Rojadirecta site to commit copyright infringement, Puerto 80’s intent should be irrelevant to the question whether any infringement was done willfully. Yet the only entity to which the government attempts to ascribe any intent is Puerto 80. The Complaint itself alleges no facts from which willfulness could be inferred on the part of Puerto 80 or any other unnamed third party that allegedly displayed the sportscasts viewed by ICE agents. As Puerto 80 explained in its Motion to Dismiss, legal conclusions of intent are insufficient; the government is required to set forth “sufficient factual matter” in order to survive a motion to dismiss. Kaplan v. Jazeera, No. 10-cv-5298, 2011 WL 2314783, *3 (S.D.N.Y. June 7, 2011). At best, the Complaint alleges facts suggesting that purportedly copyrighted works were displayed by an unnamed third party. But the criminal copyright statute is clear that “evidence of reproduction or distribution of a copyrighted work, by itself, shall not be sufficient to establish willful infringement of a copyright.” 17 U.S.C. § 506(a)(2). Willfulness in this context is not mere knowledge that something is copyrighted; it is the known violation of a legal
In its opposition, the government argues that an inference of willfulness can be made because the works had copyright notices on them. But the Complaint does not allege that the telecasts bore copyright notices, and even if that fact were pled, it would not support an inference of willfulness. The copyright statute distinguishes between three types of infringement: innocent infringement (where there is no copyright notice), regular infringement, and willful infringement. 17 U.S.C. §§ 401(d), 504. Affixing notice to a work only precludes the defense of “innocent” infringement; it does not prove willfulness. See Lowry’s Reports, Inc. v. Legg Mason, Inc., 271 F.Supp. 2d 737, 753 (D. Md. 2003) (rejecting inference of willfulness from presence of copyright notice). On the government’s reading that copyright notice is sufficient to support willfulness, there would be no middle category of regular infringement at all—infringement would either be innocent (when the work infringed lacks a copyright notice) or willful (when the work bears a copyright notice).
right—in other words, a violation of the criminal copyright statute. See Mot. at 13 (describing standard for willfulness and collecting cases). See also Danjaq LLC v. Sony Corp., 263 F.3d 942, 959 (9th Cir. 2001) (even in the civil context, willfulness does not exist “merely because [plaintiff] had laid claim to certain rights”). Because the Complaint alleges facts which are, by statute, insufficient, the government has not alleged willful infringement, as is required. 2. The Government Has Not Alleged Financial Gain.
The government devotes its discussion on “financial gain” to attempting to show that it can be inferred from the Complaint that Puerto 80 “benefit[ted] financially from making copyright protected works available on the Internet.” Opp’n. at 16. But under the government’s shifted theory, any financial gain realized by Puerto 80—which has not itself copied or distributed anything—is irrelevant. Rather, if the predicate act of criminal infringement is committed by those who copied and reproduced the content “elsewhere on the Internet,” Opp’n at 18, then the government must allege that those unnamed third parties undertook the infringement for financial benefit. It has not even identified the third-party websites on which the content can allegedly be found, let alone alleged that those third parties acted for financial gain. Its vague reference to advertisements which were “separate and distinct from any commercials that may have been aired during the stream of the sporting event broadcast” does not permit one to infer “more than the mere possibility of misconduct,” Ashcroft v. Iqbal, 127 S.Ct. 1937, 1950 (2009), and certainly does not constitute “enough facts for [Puerto 80] to understand the theory of forfeiture, to file a responsive pleading, and to undertake an adequate investigation.” United States v. $1,399,313.74 in U.S. Currency, 591 F. Supp. 2d 365, 369 (S.D.N.Y. 2008). The Complaint also does not plead that anyone reproduced or distributed, “during any 180-day period, of 1 or more copies or phonorecords of 1 or more copyrighted works, which have a total retail value of more than $1,000.” 17 U.S.C. § 506(a)(1)(B). Nor does it even set forth facts from which one might infer the foregoing. This provision applies only to works that are “reproduced or distributed,” and the government has not alleged that either took place.
Rather, what the government has alleged is that certain sports broadcasts were “displayed” (e.g. Compl. ¶ 14.c)—an act distinct from distribution, which requires “an actual dissemination of either copies or phonorecords.” Arista Records, Inc. v. MP3Board, Inc., No. 00-cv-4660, 2002 WL 1997918, at *4 (S.D.N.Y. Aug. 29, 2002). See also 17 U.S.C. § 101 (“‘Copies’ are material objects . . . .”). Moreover, the Complaint does not allege any retail value for the broadcasts, which would be required under this theory. C. The Government Has Failed to Alleged Facilitation or a “Substantial Connection” Between the Domain Names And Any Illegal Acts.
The government’s newly articulated “facilitation” theory is not supported by the allegations in the Complaint. “The term ‘facilitate’ encompasses ‘activity making the prohibited conduct less difficult’ or ‘more or less free from obstruction or hindrance.’” United States v. 3234 Washington Ave., 480 F.3d 841 (8th Cir. 2007). As explained above, the government has failed to allege a predicate criminal act of willful copyright infringement by anyone. But even if it had, Puerto 80’s “activity”—hosting links to allegedly infringing material hosted elsewhere on the Internet—does not make the alleged infringement by third-party sites “more or less free from obstruction or hindrance.” The Rojadirecta site merely links to material already available on the Internet; thus any act of infringement by a third party has already occurred by the time Rojadirecta is involved. Accordingly, the Complaint fails on its face to allege facilitation. Reading the term “facilitate” to encompass uses that are not themselves criminal or even civil wrongs would permit the government to seize a printing press, a search engine, the phone company, Microsoft Windows, and any web browser application—all of which equally “facilitate” the criminal copyright infringement that the government argues it has adequately alleged. Case law and the legislative history of CAFRA show that the forfeiture statute cannot be used in this manner. “[F]orfeiture generally and statutory in rem forfeiture in particular historically have been understood, at least in part, as punishment.” Austin v. United States, 509 U.S. 602, 618 (1993). Congress has chosen not to allow forfeiture on the ground that the property was used in aiding
and abetting or as part of a conspiracy to commit criminal copyright infringement. See Mot. at 11-12. To permit forfeiture on the ground of mere facilitation of an act by a third party—a lower bar than aiding and abetting or conspiracy—would upset the deliberate choices Congress made in not punishing those activities or subjecting them to civil forfeiture. While we are not aware of any cases interpreting the “facilitation” element of 18 U.S.C. § 2323, this Court has rejected similar attempts by the government to obtain forfeiture of funds and property on the theory that they “facilitated” money laundering. In Marine Midland Bank, N.A. v. United States, No. 93-cv-0307/0357, 1993 WL 158542 (S.D.N.Y. May 11, 1993), the government seized a bank account pursuant to a finding that probable cause existed to believe that money orders transferred into the account “were ‘involved in’ or ‘traceable to’” money laundering and related violations. Id. at * 6. The government sought to justify its seizure of the entire contents of the account—including “funds with no previous connection to illegal activity”—by arguing that the account “facilitated” the offense by “providing a cover for tainted funds.” Id. The Court rejected this argument and distinguished cases in which the account holders were themselves involved in the underlying trafficking. Id. at *7. By contrast, in the case before it, “the Government [sought] forfeiture of the contents of an interbank account and ma[de] no allegations that such account [was] controlled, nominally or effectively, by anyone with even a partially illegal purpose.” Id. In sum, the government has failed to allege that the Rojadirecta sites “facilitate” criminal copyright infringement (which, as explained above, has not been alleged) within the meaning of 18 U.S.C. § 2323, as they must to survive a motion to dismiss. D. If the Statute Is Interpreted as Broadly as the Government Now Claims, It Is Unconstitutional.
Under the government’s newly-raised construction of the statute, the government may use the forfeiture statute to make an end-run around the First Amendment by seizing a lawful channel of communication. Such a seizure prevents lawful speech, and constitutes a prior restraint on that lawful speech. The government’s suggested construction of the forfeiture statute
would render it unconstitutional, and should therefore be rejected. Edward J. DeBartolo Corp. v. Florida Gulf Coast Bldg. & Const. Trades Council, 485 U.S. 568, 575 (1988) (“[W]here an otherwise acceptable construction of a statute would raise serious constitutional problems, the Court will construe the statute to avoid such problems unless such construction is plainly contrary to the intent of Congress.”). It is fundamental First Amendment law that any prior restraint of speech must “take[] place under procedural safeguards designed to obviate the dangers of a censorship system.” Se. Promotions, Ltd. v. Conrad, 420 U.S. 546, 559 (1975) (quoting Freedman v. Maryland, 380 U.S. 51, 58 (1965)). Indeed, there is a “heavy presumption against [the] constitutional validity” of any prior restraint of speech. Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 70 (1963) (emphasis added); see also Se. Promotions, Ltd., 420 U.S. at 559-60 (“The presumption against prior restraints is heavier — and the degree of protection broader — than that against limits on expression imposed by criminal penalties.”). A “publication may not be taken out of circulation completely until there has been a determination of [illegality] after an adversary hearing.” Fort Wayne Books, Inc. v. Indiana, 489 U.S. 46, 63 (1989); see also Heller v. New York, 413 U.S. 483, 492-93 (1973); Marcus v. Search Warrants of Property, 367 U.S. 717, 735 (1961). If the government’s theory of “facilitation” were adopted, the government would be permitted to shut down a search engine, website, newspaper, and printing press not just prior to a determination of the illegality of the content, but without ever having to show that it was operating unlawfully. It would permit, for instance, the government to shut down an entire printing press and newspaper for running an advertisement that contained allegedly infringing content. Or it would permit the seizure of a search engine because of its indexing allegedly infringing material. Such actions are plainly unconstitutional. See, e.g., New York Times Co. v.United States, 403 U.S. 713 (1971) (“Unless and until the Government has clearly made out its case, the First Amendment commands that no injunction may issue.”); Fort Wayne Books, Inc., 489 U.S. at 66 (“mere probable cause to believe a legal violation has transpired is not adequate to remove books or films from circulation”). Cf. Alexander v. United States, 509 U.S. 544 (1993)
(distinguishing Fort Wayne and holding that post-conviction forfeiture of assets related to adult entertainment business did not violate the First Amendment because “government established beyond a reasonable doubt the basis for the forfeiture” after a “full criminal trial on the merits of the obscenity and RICO charges”). Because the government’s interpretation is the forfeiture statute would render it unconstitutional, Rojadirecta’s narrower interpretation should be adopted to preserve the statute’s constitutionality. E. The Government Has Not Shown That U.S. Copyright Law Can Apply to Rojadirecta’s Alleged “Facilitation” of Copyright Infringement
The government’s rebuttal to Puerto 80’s extraterritoriality argument misses the point. It argues that Puerto 80’s “availing itself of the benefits” of registering its domain names with U.S. companies provides “sufficient nexus” to the U.S. to warrant the application of U.S. copyright law. Opp’n at 19. The government appears to be conflating the question of jurisdiction (which asks whether Rojadirecta may be haled into court in the United States) with the question of extraterritoriality (which asks whether acts undertaken abroad can violate United States copyright law). It does not matter whether there is a sufficient connection or nexus between Puerto 80 and the United States; what matters is that the government has not alleged a single act of criminal infringement occurring in the United States to permit application of U.S. copyright law. See, e.g., Palmer v. Braun, 376 F.3d 1254, 1258 (11th Cir. 2004) (“[I]t is only where an infringing act occurs in the United States that the infringement is actionable under the federal Copyright Act . . .”); Perfect 10, Inc. v. Amazon.com, Inc., 487 F.3d 701, 719 (9th Cir. 2007) (holding that the situs of infringement is the server which sends the content, not the browser which receives it). Accordingly, the government cannot base its forfeiture on U.S. copyright law, because it has not alleged the necessary acts within the United States. Moreover, as Puerto 80 explained in its Motion to Dismiss, the only way its operation of the Rojadirecta site could be actionable under U.S. copyright law is under a theory of secondary liability for infringement occurring in the United States. The government, now having disavowed any intent to accuse the Rojadirecta sites of committing copyright infringement
(secondary or otherwise), cannot now circumvent the domestic limits of federal copyright law. Because any alleged “facilitation” by the Rojadirecta site occurred solely outside the United States, where Puerto 80 and its servers are located, U.S. copyright law has no application. F. The Government Should Not Be Granted Leave to Amend
The government’s arguments are legally deficient, not factually deficient. Even assuming the government had alleged the additional facts contained in its Opposition, those facts would not support forfeiture. There is no reason to grant leave to amend. III. CONCLUSION For the reasons stated above and as set forth in Puerto 80’s Motion, the government’s Complaint should be dismissed without leave to amend. Should the Court grant Puerto 80’s Motion with leave to amend, Puerto 80 respectfully requests that the government be required to return the domain names to Puerto 80 in the interim, since the Court’s ruling would amount to a finding that the basis for seizure is, at this juncture, invalid.
United States v. Moffitt, Zwerling & Kemler, P.C., American Civil Liberties Union of Virginia National Association of Criminal Defense Lawyers, Amici Curiae. United States of America v. Moffitt, Zwerling & Kemler, P.C., American Civil Liberties Union of Virginia National Association of Criminal Defense Lawyers, Amici Curiae, 83 F.3d 660, 4th Cir. (1996)
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