Advanced Copyright Issues on the Internet - Fenwick & West LLP

eBay in a permanent injunction case. 1515 Nevertheless, the court found that irreparable harm hadbeen established for two reasons. First, Streamcast had and would continue to induce far moreinfringement than it could ever possibly redress with damages. Second, absent an injunction, asubstantial number of the plaintiffs’ copyrighted works would continue to be made available forunending infringement outside of the Morpheus system and software, effectively eviscerating theplaintiffs’ ability to protect their property rights. 1516The court found that the plaintiffs had no adequate remedy at law because a statutoryrecovery for those infringements induced through the Morpheus system would not compensatethe plaintiffs when those same files were subsequently shared outside the Morpheus system. Thebalance of hardships tipped in the plaintiffs’ favor because StreamCast would likely engage infurther inducement in the absence of a permanent injunction. Finally, an injunction would servethe public interest since it would protect the plaintiffs’ copyrights against increasedinfringement. 1517Turning to the scope of the injunction, the court first ruled that the scope should notextend beyond inducement activities, because inducement was the only form of infringement thatStreamCast had been found liable for. Accordingly, the court rejected the plaintiffs’ proposedbroad wording for the injunction to the extent it would reach activities giving rise to liabilitysolely under contributory or vicarious liability doctrines, although the court noted that theinjunction could properly extend to copyrighted works of the plaintiffs whether then in existenceor later created. 1518The court then turned to the most interesting and significant issue relating to theinjunction – whether it should require StreamCast to implement filtering of the plaintiffs’copyrighted works on its system, and if so, to what extent. StreamCast argued that, under Sony,its continued distribution of the Morpheus system and software was legal, even without filteringtechnology, so long as StreamCast did not engage in any additional actions or statementspromoting infringement, because the system and software were capable of substantial noninfringinguses. 1519 The court rejected this argument, reasoning that under the Supreme Court’sGrokster opinion, once acts of encouragement or promotion of infringement through a product orsystem have taken place, the further distribution of that product or system can be restricted asfurther acts of inducement:1515 Id. at *38-40. The court noted significant division among the existing post eBay decisions concerning whetherthe traditional presumption of irreparable harm in a preliminary injunction context flowing from a showing oflikelihood of success on the merits also failed to survive eBay. The court noted that, although the law wasmuddled and the Ninth Circuit had not yet spoken on the point post eBay, the better view is that thepresumption probably did not survive eBay in a preliminary injunction context. Id. at *43-49.1516 Id. at *57-62. The court ruled it would make no difference to the irreparable harm analysis if Streamcast’sinducement was demonstrated to increase the plaintiffs’ sales because, as copyright owners, plaintiffs “have theexclusive right to decide when and how their material should be reproduced and/or distributed, regardless ofwhether their decisions make good business sense.” Id. at *63.1517 Id. at *66-73.1518 Id. at *88,-94.1519 Id. at *100.- 334 -