Viral DRM LLC v. Navez

• Court: District Court, N.D. California
• Decided: March 17, 2025
• Docket: 3:23-cv-06598
• Status: Unknown

Opinion

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 VIRAL DRM LLC, Case No. 3:23-cv-06598-JSC

8 Plaintiff, ORDER RE: MOTION FOR DEFAULT JUDGMENT AND VIRAL DRM’S 9 v. STANDING

10 JUDITH LIDUVINA ALFARO NAVEZ, Re: Dkt. Nos. 46, 53 Defendant. 11

12 Plaintiff Viral DRM LLC brings copyright infringement and related claims against 13 Defendant Judith Liduvina Alfaro Navez alleging she downloaded and copied Viral DRM’s 14 copyrighted materials from YouTube, and then re-uploaded infringing versions of its copyrighted 15 media content to her YouTube channel Huguitoo. This is one of several related copyright 16 infringement actions. See Case Nos. 23-4300, 23-5045, 23-5594, 23-5977, 23-6261, 24-731, 24- 17 733, 24-739, 24-746, 24747. After Defendant failed to respond to the Amended Complaint, Viral 18 DRM moved for entry of default, which the Clerk granted, and now moves for entry of default 19 judgment. (Dkt. Nos. 42, 46.1) At the hearing on Viral DRM’s motion for default judgment, the 20 Court raised an issue regarding Viral DRM’s standing to bring the copyright infringement claims 21 and directed Viral DRM to submit a copy of its license with the copyright holders. (Dkt. No. 50.) 22 After reviewing Viral DRM’s response, the Court issued an Order to Show Cause (OSC) as to 23 Viral DRM’s standing to bring the copyright infringement claims at issue here. (Dkt. No. 53.) 24 Viral DRM has filed the exact same OSC response in each case—without any citations to 25 the record or even tailoring the responses to the facts of the particular case. See Case Nos. 23- 26 27 1 4300, Dkt. No. 112; Case No. 23-5045, Dkt. No. 78; Case No. 23-5594, Dkt. No. 75; Case No. 23- 2 5977, Dkt. No. 61; Case No. 23-6598, Dkt. No. 56; Case No. 24-731, Dkt. No. 39; Case No. 24- 3 733, Case No. 24-739, Dkt. No. 42; Case No. 24-746, Dkt. No. 49; Case No. 24-747, Dkt. No. 42. 4 Viral DRM’s response fails to demonstrate it has standing to bring the claims under 17 U.S.C. §§ 5 501(b), 1201, 1202. Those claims are therefore dismissed without leave to amend. Viral DRM 6 does have standing to bring its claim under 17 U.S.C. § 512(f) and default judgment is entered in 7 its favor on this claim. 8 DISCUSSION 9 Viral DRM is “a syndicator of award-winning videographic content created by talented 10 videographers.” (Dkt. No. 28 at ¶ 15.) According to the Amended Complaint, Viral DRM is 11 “affiliated” with WXChasing LLC, “a video production company that creates some of the 12 videographic Works that Viral DRM syndicates and licenses,” and Live Storms Media LLC, “a 13 licensing broker of video content owned by or exclusively licensed to Viral DRM and 14 WXchasing.” (Id. at ¶ 16.) Viral DRM alleges it “was the exclusive licensee of the Works at 15 issue in this case” and it “registered the Works at issue in this case with the Register of Copyrights 16 pursuant to 17 U.S.C. § 411(a).” (Id. at ¶¶ 57, 58.) The Registration Certificate attached to the 17 Amended Complaint, however, shows the work at issue is registered to “Michael Brandon 18 Clement.” (Dkt. No. 28-3.) 19 According to Clement’s declaration in support of the motion for default judgment, he is a 20 principal and one of the owners of Viral DRM. (Dkt. No. 46-5 at ¶ 1.) Clement attests “[a]ll the 21 works are exclusively licensed to Viral DRM for distribution and syndication pursuant to written 22 agreements that provide Viral DRM with the necessary rights to sue for the infringements at issue 23 in this case.” (Id. at ¶ 8.) Following the hearing on the motion for default judgment, Viral DRM 24 filed its “Exclusive Management Agreement” between it and Clement. (Dkt. No. 51-3.) In 25 response to the OSC, Viral DRM also submitted a declaration from Reed Timmer who attests he 26 has a licensing agreement with Viral DRM as well. (Dkt. N. 56; Dkt. No. 56-4.) 27 A. Copyright Infringement under Section 501(b) 1 “The legal or beneficial owner of an exclusive right under a copyright 1s entitled, subject to the 2 [registration] requirements of section 411, to institute an action for any infringement of that 3 || particular right committed while he or she is the owner of it.” 17 U.S.C. § 501(b). Section 106 sets 4 forth an “exhaustive list” of those exclusive rights. Si/vers v. Sony Pictures Entm'’t., Inc., 402 F.3d 5 881, 887 (9th Cir. 2005) (en banc) (citing 17 U.S.C. § 106). These include: 6 the rights “to do and to authorize” others to do six things with the copyrighted work: to reproduce the work, to prepare derivative works 7 based upon the work, to distribute copies of the work, to perform the work publicly, to display the work publicly, and to record and perform 8 the work by means of an audio transmission. 9 Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1002 (9th Cir. 2015) (quoting 17 10 || U.S.C. § 106). In Minden, the Ninth Circuit held “either an assignment (which transfers legal title 11 to the transferee) or an exclusive license (which transfers an exclusive permission to use to the 12 || transferee) qualifies as a ‘transfer’ of a right in a copyright for the purposes of the Act.” Minden, & 13 795 F.3d at 1003 (emphasis in original). In contrast, a “‘nonexclusive license’ does not constitute

v 14 || a ‘transfer of copyright ownership’ and therefore cannot confer standing to assert an infringement © 15 claim.” DRK Photo v. McGraw-Hill Glob. Educ. Holdings, LLC, 870 F.3d 978, 983 (9th Cir.

Q 16 || 2017) (citing 17 U.S.C. § 101).

17 According to the Agreement between Viral DRM and Clement, the copyright holder—

Oo : Z 18 || referred to as a “Content Creator”—grants Viral DRM: 19 1. Grant of Exclusive Agency Rights. Content Creator hereby grants to VDEM the exclusive agency rights to manage and administer any content submitted by 20 Content Creator to VDORM (the “Works”), including but not limited to the right to search for copyright infringements of the Works, to register copyrights for the Works with the 21 United States Copyright Office; to authorize VDRM's attorneys to negotiate settlements, issuc takedown notices pursuant to the Digital Millennium Copyright Act or otherwise 92 file claims on behalf of the Content Creator in an effort to enforce the copyrights in and to the Works; Content Creator grants VORM exclusive agency rights to display, store, transmit, and distribute Works as needed to fulfill obligations set forth in this 23 agreement 24 || (Dkt. No. 51-3 at 1.) The Content Creator otherwise retains all copyright and ownership rights 25 in the work. (/d. at 3.) Timmer submitted a declaration attesting to an agreement with the same 26 || language. (Dkt. Nos. 56-4 at § 4.) 27 In response to the Court’s OSC, Viral DRM circularly argues “[t]he grant of ‘exclusive 28 agency rights’ in the agreements between videographers and Viral DRM are sufficient to appoint

1 Viral as exclusive owner of at least one of the § 106 rights and provide Viral with standing to sue” 2 because in order to “fulfill its responsibility to ‘manage and administer any content’” Viral DRM 3 “must be empowered to ‘display, store, transmit, and distribute Works as needed to fulfill 4 obligations set forth in this agreement.’” (Dkt. No. 56 at 4-5.) That Viral DRM believed its 5 licensing agreements would allow it to bring the copyright infringement claims before the Court 6 does not confer standing under Section 501. Statutory standing cannot be willed into existence. 7 In this case, it is a matter of contract and it exists or it does not. As the Court previously noted:

8 Giving Viral DRM the rights necessary to enforce the videographer’s copyright, is not the same as the exclusive right to “authorize third 9 parties to reproduce, distribute, and display the photographs” required to have standing to bring a copyright infringement action. Minden 10 [Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1005 (9th Cir. 2015)]; see also Silvers [v. Sony Pictures Ent., Inc., 402 F.3d 881, 11 884 (9th Cir. 2005)] (“The right to sue for an accrued claim for infringement is not an exclusive right under § 106.”). Unlike the 12 agreement in Minden, the Agreement does not give Viral DRM the exclusive right to authorize third parties to reproduce, distribute, and 13 display the copyrighted video. 14 (Dkt. No. 53 at 4.) Accordingly, under binding Ninth Circuit precedent, Viral DRM lacks 15 standing to bring a copyright infringement claim under Section 501(b). 16 B. Removal and Misrepresentation of CMI under Sections 1202(a), (b) 17 Viral DRM’s 17 U.S.C. §§ 1201, 1202 claims allege the CMI watermarks identify the 18 Works as the property of Live Storms Media. (Dkt. No. 28 at ¶ 77.) Under 17 U.S.C. § 1203, 19 “[a]ny person injured by a violation of section 1201 or 1202 may bring a civil action in an 20 appropriate United States district court for such violation.” 21 Viral DRM has not established it has standing to bring a claim challenging removal or 22 falsification of Live Storms Media’s watermark. According to the Amended Complaint, Viral 23 DRM is “affiliated” with WXchasing LLC, and Live Storms Media LLC, and “Live Storms Media 24 is a licensing broker of video content owned by or exclusively licensed to Viral DRM and 25 WXchasing.” (Dkt. No. 28 at ¶ 15.) While the record contains evidence of license agreements 26 between Timmer, Clement, and Viral DRM, these agreements do not mention Live Storms Media. 27 To further complicate things, Viral DRM’s response to the OSC indicates “[s]ince this case was 1 distribution business underwent a change” and because of “disagreements” between Clement and 2 Brett Adair, the manager of [Live Storms Media]” Mr. Adair has assigned his interest in Viral 3 DRM to Clement. (Dkt. No. 56 at 2-3.) On this record, it is impossible to unravel the web of 4 connections between all the entities and individuals here and determine the relationship between 5 the entities and individuals involved with the copyrighted works at issue. Given the lack of clarity 6 regarding Live Storms Media’s relationship with Viral DRM, the videographers, or the Works at 7 issue, Viral DRM has not demonstrated it has standing to bring a claim regarding the removal of 8 Live Storms Media’s watermark from the Works. 9 C. DMCA False Counternotice under Section 512(f) 10 Section 512(f) authorizes claims for damages for material misrepresentations by the 11 “copyright owner or copyright owner’s authorized licensee.” 17 U.S.C. § 512(f). Viral DRM has 12 established its standing to pursue this claim as (1) it has produced evidence of licensing 13 agreements between it and Clement2; (2) the DMCA takedown notice was submitted by Michael 14 Clement who is identified as the Owner; and (3) Viral DRM has submitted copies of the 15 counternotification. (Dkt. No. 28-4 at 2-7.) The Court thus proceeds to consider its motion for 16 default judgment as to this claim. 17 This Court has jurisdiction to enter default judgment as it is brought under the federal 18 Copyright Act. 28 U.S.C. § 1331; 17 U.S.C. § 512. By submitting a counternotification 19 Defendant consented to personal jurisdiction in this District. (Dkt. No. 28-4 at 7.) Further, each 20 of the Eitel factors favors default judgment. See Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th 21 Cir. 1986). The Amended Complaint’s allegations as to the DMCA claim are well pled and state 22 plausible claims for relief, and Viral DRM has presented reliable evidence in support of this claim. 23 Defendant never appeared even though she was properly served. Defendant’s decision not to 24 respond suggests that no material facts are in dispute. And her failure to appear makes any 25 decision on the merits impossible. So, a default judgment is the only recourse Viral DRM has. 26 The amount of money at stake for this claim—$2,500—is not excessive, although Viral 27 1 DRM has failed to justify the amount sought. See Geddes v. United Fin. Grp., 559 F.2d 557, 560 2 (9th Cir. 1977) (“[U]pon default the factual allegations of the complaint, except those relating to 3 the amount of damages, will be taken as true.”). Under Section 512(f), any person who makes a 4 misrepresentation:

5 shall be liable for any damages, including costs and attorneys’ fees, incurred by the alleged infringer, by any copyright owner or copyright 6 owner's authorized licensee, or by a service provider, who is injured by such misrepresentation, as the result of the service provider relying 7 upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing, or in replacing the 8 removed material or ceasing to disable access to it. 9 17 U.S.C. § 512(f). In drafting the statute, Congress did not limit damages to monetary loss or 10 other forms of specific relief even though such limitations are included in other sections of the 11 DMCA. See Lenz v. Universal Music Corp., 815 F.3d 1145, 1156 (9th Cir. 2016) (“The term 12 ‘monetary relief’ appears in § 512(a), (b)(1), (c)(1), and (d), but is notably absent from § 512(f). 13 As a result, the damages an alleged infringer may recover under § 512(f) from ‘any person’ are 14 broader than monetary relief.”). A “[plaintiff] may seek recovery of nominal damages due to an 15 unquantifiable harm suffered as a result of [defendant’s] actions.” Lenz, 815 F.3d at 1156 (“the 16 DMCA is akin to a statutorily created intentional tort whereby an individual may recover nominal 17 damages for a ‘knowingly material misrepresent[ation] under this section [512]’”) (quoting 17 18 U.S.C. § 512(f)). 19 Viral DRM has failed to show it suffered any harm “as a result of” Defendant’s false 20 counternotification. Upon receipt of the DMCA takedown notice, YouTube took down the video. 21 (Dkt. No. 28-4 at 2-7.) There is no evidence YouTube put the video back up upon receipt of the 22 counternotification, and the communication from YouTube indicates it would not do so provided 23 Viral DRM took “legal action against the uploader,” which it did when it filed this copyright 24 infringement action. (Id.) The evidence Viral DRM offers in support of default judgment does 25 not establish it incurred any actual damages because of Defendant’s counternotification. Rather, 26 Clement’s declaration in support of default judgment contends:

27 Viral DRM incurred the expense of my time and the time of other dedicates a team of people to this task. We need to prepare extensive 1 documentation to support our claims, submit the claims, follow up with the claims, inform our attorneys of our claims, and participate in 2 litigation concerning those claims. I have determined that for each counternotice the cost of the time that Viral DRM employees must 3 devote to this process is $2,500 per counternotice. 4 (Dkt. No. 46-5 at ¶ 30.) This declaration establishes Clement’s documented time is for 5 preparation of the takedowns, not responding to the counternotification; so, it does not 6 demonstrate any injury arising from Defendant’s “material misrepresentation” in the 7 counternotification. See 17 U.S.C. § 512(f). Viral DRM is therefore only entitled to nominal 8 damages for its section 512(f) claim. See Moonbug Ent. Ltd. v. BabyBus (Fujian) Network Tech. 9 Co., No. 21-CV-06536-EMC, 2024 WL 2193323, at *17 (N.D. Cal. May 15, 2024) (“In general, 10 nominal damages are intended to recognize a plaintiff’s legal injury when no actual monetary 11 damages may be discerned.”) (citing Magnett v. Pelletier, 488 F.2d 33, 35 (1st Cir. 1973)). 12 Accordingly, the Court awards Viral DRM nominal damages of $1.00 for the one false 13 counternotification. Viral DRM is entitled to post-judgment interest at the federal rate on all 14 unpaid principal sums until the judgment is paid.3 See 28 U.S.C. § 1961 (“Interest shall be 15 allowed on any money judgment in a civil case recovered in a district court.”). 16 CONCLUSION 17 For the reasons stated above, default judgement is GRANTED as to Viral DRM’s Section 18 512(f) claim and it is awarded $1.00 in nominal damages plus post-judgment interest. 19 Viral DRM’s motion for default judgment on the 17 U.S.C. §§ 501(b), 1201, 1202 claims 20 is DENIED and those claims are dismissed without leave to amend for lack of standing. To the 21 extent Viral DRM now seeks leave to name the videographers as “nominal Plaintiffs,” it is unclear 22 what this even means. (Dkt. No. 56 at 6.) In support, Viral DRM cites a Supreme Court case 23 from 1897 discussing in whose name a wrongful death action should be brought. See Stewart v. 24 Baltimore & O.R. Co., 168 U.S. 445, 449 (1897) (describing the person in whose name a wrongful 25 death suit is brought a “nominal plaintiff.”). When considering whether to grant leave to amend, 26 3 Viral DRM has waived any claim to pre-judgment interest or attorneys’ fees and costs, but 27 suggests it might “seek an amendment of the judgment” later to recover prejudgment interest. 1 the Court considers five factors: “bad faith, undue delay, prejudice to the opposing party, futility 2 || of amendment, and whether the plaintiff has previously amended the complaint.” United States v. 3 Corinthian Colleges, 655 F.3d 984, 995 (9th Cir. 2011). “Although a district court ‘should freely 4 || give leave [to amend] when justice so requires,’ the court’s discretion to deny such leave is 5 ‘particularly broad’ where the plaintiff has previously amended its complaint.” Ecological Rts. 6 Found. v. Pac. Gas & Elec. Co., 713 F.3d 502, 520 (9th Cir. 2013) (quoting Fed. R. Civ. P. 7 15(a)(2); Miller v. Yokohama Tire Corp., 358 F.3d 616, 622 (9th Cir. 2004)). Viral DRM has 8 || previously been granted leave to amend and has been afforded several opportunities to clarify its 9 || claims and the evidence in support of its claims. Each successive filing raises more questions than 10 || it answers. It is impossible to tell whether this is sloppiness or something nefarious, but the Court 11 has expended tremendous resources trying to figure it out and has given Viral DRM chance after 12 || chance to clarify the record, but each response only muddies the record. Accordingly, the Court 13 in its discretion denies leave to amend as to Viral DRM’s 17 U.S.C. §§ 501(b), 1201, 1202 claims. 14 A separate judgment will follow. 3 15 This Order disposes of Docket Nos. 46, 53. a 16 IT IS SO ORDERED. 18 Dated: March 17, 2025

20 ne JAZQUELINE SCOTT COR 21 United States District Judge 22 23 24 25 26 27 28