In recent years, federal courts across the U.S. have seen a fair share of copyright infringement lawsuits involving peer-to-peer networks such as BitTorrent. In these cases, the plaintiffs are typically feature film or adult film copyright owners who allege that numerous unknown defendants (sued as John or Jane Does) are liable for copyright infringement by downloading and sharing the copyright owner’s film online.

Once a movie or other copyrighted work is shared online through peer-to-peer networks, the copyright owner can track the Internet Protocol (IP) address of each user who downloads, watches and shares the copyrighted work. Once those IP addresses are tracked and collected, the owner will file a lawsuit for copyright infringement in federal court. 

Because the copyright owner only collects the IP addresses and does not know the actual users’ identities, the owner will seek the court’s permission to subpoena each unknown defendant’s Internet Service Provider (ISP), usually a cable provider such as Comcast, Century Link or Cox Communications. Once the ISP receives the subpoena, they will notify each customer whose account was assigned an allegedly infringing IP address and tell them their identity will be shared with the copyright owner’s lawyer. Once shared, the copyright owner’s lawyer typically sends a demand letter to the customer threatening to publicly name them in the lawsuit and pursue a civil judgment against them unless they pay the copyright owner thousands of dollars to dismiss them from the case.

Copyright Infringement Lawsuit Flow

Copyright owner determines IP address

• Files lawsuit in Federal Court
  • Subpoenas ISP providers to identify unknown defendants
    • ISP Provider notifies customers and identifies them
      • Demand letter is sent to customers
        • Threats of judgment unless thousands paid for dismissal

The above described process has been used repeatedly by copyright owners to collect settlement money from countless ISP customers. However, a recent ruling by the Ninth Circuit Court of Appeals could change how some of these cases are handled. In Cobbler Nevada, LLC v. Gonzales, 901 F.3d 1142 (9th Cir. 2018), the Ninth Circuit recently affirmed an Oregon District Court ruling that merely identifying the registered subscriber of an IP address associated with infringing activity is not enough to support legal claims for direct or contributory copyright infringement.

In Cobbler, plaintiff Cobbler Nevada, LLC held copyrights in the Adam Sandler film, The Cobbler. Cobbler sued an IP address subscriber as a John Doe but later identified him as Thomas Gonzales, the owner of an adult foster care home in Portland, Oregon. Although Gonzales owned the home, the internet service there was accessible to visitors and residents. The home’s internet connection was allegedly used to download and share the Adam Sandler film multiple times using BitTorrent. As such, Cobbler alleged that Gonzales directly infringed Cobbler’s copyrights or alternatively, infringed indirectly by failing to secure and police his home internet connection.

Even in dismissing Cobbler’s direct infringement claim against Gonzales, the lower court had allowed Cobbler to file a second amended complaint to add additional factual allegations against Gonzales. Instead of doing this, Cobbler merely filed an amended complaint that again named the IP address as the sole defendant without asserting any additional facts. After the lower court ordered Cobbler to show why its second amended complaint shouldn’t be dismissed, Cobbler filed a voluntarily dismissal notice. Gonzales then filed a motion to enter judgment and asked for attorney’s fees totaling $17,222.40, which the lower court granted.

In affirming the lower court’s ruling, the Ninth Circuit ruled that Cobbler’s “direct infringement claim fails because Gonzales's status as the registered subscriber of an infringing IP address, standing alone, does not create a reasonable inference that he is also the infringer. Because multiple devices and individuals may be able to connect via an IP address, simply identifying the IP subscriber solves only part of the puzzle."

The Ninth Circuit also rejected Cobbler’s contributory copyright infringement claim based on Gonzales’s alleged failure to police his home internet connection after being notified of the infringement, stating that “[i]mposing such a duty would put at risk any purchaser of internet service who shares access with a family member or roommate, or who is not technologically savvy enough to secure the connection to block access by a frugal neighbor.”  To avoid dismissal of its complaint, Cobbler needed to plausibly allege not just that Gonzales failed to properly police his home internet connection, but that he “actively encouraged or induced copyright infringement through specific acts.” Finally, the Ninth Circuit determined that the lower court properly awarded attorney’s fees to Gonzales because it was unreasonable for Cobbler to name Gonzales as the defendant after concluding he was not a likely infringer and because a fee award would deter Cobbler from overaggressive litigation without a reasonable factual basis.

The Cobbler decision is a reminder to copyright owner plaintiffs that to support copyright infringement claims in a complaint, more is required  than the mere allegation that an internet subscriber’s IP address is associated with illegal downloading and sharing of copyrighted content.  If they continue to pursue their case without supporting facts, they could be ordered to pay the defendant’s attorney fees.