1 2 3 6 7 VIRAL DRM, LLC, Case No. 3:24-cv-00733-JSC
8 Plaintiff, ORDER TO SHOW CAUSE 9 v. REGARDING VIRAL DRM’S STANDING
Defendant. 11
12 13 Plaintiff Viral DRM LLC brings copyright infringement claims against Defendant Anton 14 Shubstorsky alleging he downloaded and copied Viral DRM’s copyrighted materials from 15 YouTube, and then re-uploaded infringing versions of its copyrighted media content to his 16 YouTube channel WAHR. This is one of several related copyright infringement actions. See 17 Case Nos. 23-4300, 23-5045, 23-5594, 23-5977, 23-6261, 23-6598, 24-731, 24-739, 24-746, 24- 18 747. After Defendant failed to respond to the Complaint, Viral DRM moved for entry of default, 19 which the Clerk granted, and now moves for entry of default judgment. (Dkt. Nos. 25, 31.1) At 20 the hearing on Viral DRM’s motion for default judgment, the Court raised an issue regarding Viral 21 DRM’s standing to bring the copyright infringement claims and directed Viral DRM to submit a 22 copy of its license with the copyright holders. (Dkt. No. 38.) Having considered the supplemental 23 submission, the Court ORDERS Viral DRM to SHOW CAUSE as to its standing to enforce the 24 copyrights at issue. 25 Section 501(b) of the Copyright Act specifies who has standing to sue for infringement: 26 “The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the 27 1 [registration] requirements of section 411, to institute an action for any infringement of that 2 particular right committed while he or she is the owner of it.” 17 U.S.C. § 501(b). Section 106 3 sets forth an “exhaustive list” of those exclusive rights. Silvers v. Sony Pictures Entm’t., Inc., 402 4 F.3d 881, 887 (9th Cir. 2005) (en banc) (citing 17 U.S.C. § 106). These include:
5 the rights “to do and to authorize” others to do six things with the copyrighted work: to reproduce the work, to prepare derivative works 6 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 7 the work by means of an audio transmission. 8 Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1002 (9th Cir. 2015) (quoting 17 9 U.S.C. § 106). In Minden, the Ninth Circuit held “either an assignment (which transfers legal title 10 to the transferee) or an exclusive license (which transfers an exclusive permission to use to the 11 transferee) qualifies as a ‘transfer’ of a right in a copyright for the purposes of the Act.” Minden, 12 795 F.3d at 1003 (emphasis in original). In contrast, a “‘nonexclusive license’ does not constitute 13 a ‘transfer of copyright ownership’ and therefore cannot confer standing to assert an infringement 14 claim.” DRK Photo v. McGraw-Hill Glob. Educ. Holdings, LLC, 870 F.3d 978, 983 (9th Cir. 15 2017) (citing 17 U.S.C. § 101). 16 Viral DRM’s other copyright-based claims for violation of 17 U.S.C. § 512(f) and 17 17 U.S.C. §§ 1201, 1202, respectively, also have limitations on who may bring a claim. See 17 18 U.S.C. § 512(f) (authorizing claims for damages for material misrepresentations by the “copyright 19 owner or copyright owner’s authorized licensee”); 17 U.S.C. § 1203 (“Any person injured by a 20 violation of section 1201 or 1202 may bring a civil action in an appropriate United States district 21 court for such violation). 22 This action is brought by Viral DRM “a syndicator of award-winning videographic content 23 created by talented videographers.” (Dkt. No. 1 at ¶ 14.) According to the Complaint, “Viral 24 DRM was the exclusive licensee of the Works at issue in this case” and “Viral DRM registered the 25 Works at issue in this case with the Register of Copyrights pursuant to 17 U.S.C. § 411(a).” (Id. at 26 ¶¶ 38, 39.) The Registration Certificates attached to the Complaint, however, show that five of the 27 works at issue are registered to “Michael Brandon Clement” and the other work is registered to 1 Mr. Clement’s declaration in support of the motion for default judgment, he is a principal and one 2 || of the owners of Viral DRM LLC. (Dkt. No. 31-2 at § 1.) Mr. Clement attests “[a]ll the works are 3 exclusively licensed to Viral DRM for distribution and syndication pursuant to written agreements 4 || that provide Viral DRM with the necessary rights to sue for the infringements at issue in this 5 case.” (Id. at J 8.) 6 In response to the Court’s inquiry at the hearing, Viral DRM filed its “Exclusive Copyright 7 || Management Agreement” purportedly with the videographer holding the copyrights.” (Dkt. No. 8 39-3.) Not so. As explained above, the copyright registrations for the works at-issue in this action 9 are held by Michael Brandon Clement, and Michael Brandon Clement and Jonathan Petramala 10 || jointly, but the Agreement offered here is only between Viral DRM and Michael Brandon 11 Clement. (Compare Dkt. No. 28-1 with Dkt. No. 39-3.) However, because Viral DRM filed the 12 || Agreement with Petramala in the related action, see, e.g., Case No. 24-746, Dkt. No. 41-3, and the
13 agreements are otherwise identical, the Court will consider it here, but ORDERS Viral DRM to
v 14 || file the correct license(s) for this action within seven days of the date of this Order. As relevant © 15 || here, the copyright holder—referred to as a “Content Creator”—grants Viral DRM:
16 1. Grant of Exclusive Agency Rights. Content Creator hereby grants to 3 17 VDEM the exclusive agency rights to manage and administer any content submitted by Content Creator to VORM (the “Works"), including but not limited to the right to search 18 for copyright infringements of the Works, to register copyrights for the Works with the United States Copyright Office; to authorize VDRM's attorneys to negotiate settlements, issue takedown notices pursuant to the Digital Millennium Copyright Act or otherwise 19 file claims on behalf of the Content Creator in an effort to enforce the copyrights in and to the Works; Content Creator grants VDORM exclusive agency rights to display, store, 20 transmit, and distribute Works as needed to fulfill obligations set forth in this agreement. 21 2 Viral DRM requests leave to file the Agreement under seal because its agreements with the videographers “are confidential with its photographers, not only to protect Viral DRM’s assets and 93 || terms, but also to protect the photographer’s private information.” (Dkt. No. 39.) A party seeking to file documents under seal “bears the burden of overcoming [the] strong presumption” in favor 24 of public access to court records. Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016). “[C]ompelling reasons must be shown to seal judicial records attached to a 25 dispositive motion.” Kamakana vy.
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1 2 3 6 7 VIRAL DRM, LLC, Case No. 3:24-cv-00733-JSC
8 Plaintiff, ORDER TO SHOW CAUSE 9 v. REGARDING VIRAL DRM’S STANDING
Defendant. 11
12 13 Plaintiff Viral DRM LLC brings copyright infringement claims against Defendant Anton 14 Shubstorsky alleging he downloaded and copied Viral DRM’s copyrighted materials from 15 YouTube, and then re-uploaded infringing versions of its copyrighted media content to his 16 YouTube channel WAHR. This is one of several related copyright infringement actions. See 17 Case Nos. 23-4300, 23-5045, 23-5594, 23-5977, 23-6261, 23-6598, 24-731, 24-739, 24-746, 24- 18 747. After Defendant failed to respond to the Complaint, Viral DRM moved for entry of default, 19 which the Clerk granted, and now moves for entry of default judgment. (Dkt. Nos. 25, 31.1) At 20 the hearing on Viral DRM’s motion for default judgment, the Court raised an issue regarding Viral 21 DRM’s standing to bring the copyright infringement claims and directed Viral DRM to submit a 22 copy of its license with the copyright holders. (Dkt. No. 38.) Having considered the supplemental 23 submission, the Court ORDERS Viral DRM to SHOW CAUSE as to its standing to enforce the 24 copyrights at issue. 25 Section 501(b) of the Copyright Act specifies who has standing to sue for infringement: 26 “The legal or beneficial owner of an exclusive right under a copyright is entitled, subject to the 27 1 [registration] requirements of section 411, to institute an action for any infringement of that 2 particular right committed while he or she is the owner of it.” 17 U.S.C. § 501(b). Section 106 3 sets forth an “exhaustive list” of those exclusive rights. Silvers v. Sony Pictures Entm’t., Inc., 402 4 F.3d 881, 887 (9th Cir. 2005) (en banc) (citing 17 U.S.C. § 106). These include:
5 the rights “to do and to authorize” others to do six things with the copyrighted work: to reproduce the work, to prepare derivative works 6 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 7 the work by means of an audio transmission. 8 Minden Pictures, Inc. v. John Wiley & Sons, Inc., 795 F.3d 997, 1002 (9th Cir. 2015) (quoting 17 9 U.S.C. § 106). In Minden, the Ninth Circuit held “either an assignment (which transfers legal title 10 to the transferee) or an exclusive license (which transfers an exclusive permission to use to the 11 transferee) qualifies as a ‘transfer’ of a right in a copyright for the purposes of the Act.” Minden, 12 795 F.3d at 1003 (emphasis in original). In contrast, a “‘nonexclusive license’ does not constitute 13 a ‘transfer of copyright ownership’ and therefore cannot confer standing to assert an infringement 14 claim.” DRK Photo v. McGraw-Hill Glob. Educ. Holdings, LLC, 870 F.3d 978, 983 (9th Cir. 15 2017) (citing 17 U.S.C. § 101). 16 Viral DRM’s other copyright-based claims for violation of 17 U.S.C. § 512(f) and 17 17 U.S.C. §§ 1201, 1202, respectively, also have limitations on who may bring a claim. See 17 18 U.S.C. § 512(f) (authorizing claims for damages for material misrepresentations by the “copyright 19 owner or copyright owner’s authorized licensee”); 17 U.S.C. § 1203 (“Any person injured by a 20 violation of section 1201 or 1202 may bring a civil action in an appropriate United States district 21 court for such violation). 22 This action is brought by Viral DRM “a syndicator of award-winning videographic content 23 created by talented videographers.” (Dkt. No. 1 at ¶ 14.) According to the Complaint, “Viral 24 DRM was the exclusive licensee of the Works at issue in this case” and “Viral DRM registered the 25 Works at issue in this case with the Register of Copyrights pursuant to 17 U.S.C. § 411(a).” (Id. at 26 ¶¶ 38, 39.) The Registration Certificates attached to the Complaint, however, show that five of the 27 works at issue are registered to “Michael Brandon Clement” and the other work is registered to 1 Mr. Clement’s declaration in support of the motion for default judgment, he is a principal and one 2 || of the owners of Viral DRM LLC. (Dkt. No. 31-2 at § 1.) Mr. Clement attests “[a]ll the works are 3 exclusively licensed to Viral DRM for distribution and syndication pursuant to written agreements 4 || that provide Viral DRM with the necessary rights to sue for the infringements at issue in this 5 case.” (Id. at J 8.) 6 In response to the Court’s inquiry at the hearing, Viral DRM filed its “Exclusive Copyright 7 || Management Agreement” purportedly with the videographer holding the copyrights.” (Dkt. No. 8 39-3.) Not so. As explained above, the copyright registrations for the works at-issue in this action 9 are held by Michael Brandon Clement, and Michael Brandon Clement and Jonathan Petramala 10 || jointly, but the Agreement offered here is only between Viral DRM and Michael Brandon 11 Clement. (Compare Dkt. No. 28-1 with Dkt. No. 39-3.) However, because Viral DRM filed the 12 || Agreement with Petramala in the related action, see, e.g., Case No. 24-746, Dkt. No. 41-3, and the
13 agreements are otherwise identical, the Court will consider it here, but ORDERS Viral DRM to
v 14 || file the correct license(s) for this action within seven days of the date of this Order. As relevant © 15 || here, the copyright holder—referred to as a “Content Creator”—grants Viral DRM:
16 1. Grant of Exclusive Agency Rights. Content Creator hereby grants to 3 17 VDEM the exclusive agency rights to manage and administer any content submitted by Content Creator to VORM (the “Works"), including but not limited to the right to search 18 for copyright infringements of the Works, to register copyrights for the Works with the United States Copyright Office; to authorize VDRM's attorneys to negotiate settlements, issue takedown notices pursuant to the Digital Millennium Copyright Act or otherwise 19 file claims on behalf of the Content Creator in an effort to enforce the copyrights in and to the Works; Content Creator grants VDORM exclusive agency rights to display, store, 20 transmit, and distribute Works as needed to fulfill obligations set forth in this agreement. 21 2 Viral DRM requests leave to file the Agreement under seal because its agreements with the videographers “are confidential with its photographers, not only to protect Viral DRM’s assets and 93 || terms, but also to protect the photographer’s private information.” (Dkt. No. 39.) A party seeking to file documents under seal “bears the burden of overcoming [the] strong presumption” in favor 24 of public access to court records. Ctr. for Auto Safety v. Chrysler Grp., LLC, 809 F.3d 1092, 1096 (9th Cir. 2016). “[C]ompelling reasons must be shown to seal judicial records attached to a 25 dispositive motion.” Kamakana vy. City & County of Honolulu, 447 F.3d 1172, 1179 (9th Cir.2006); see also Koninklijke Philips Electronics, N.V. v. KXD Tech., Inc., 347 F. App’x 275, 26 || 276 (9th Cir. 2009) (stating default judgment is “case dispositive”). While the Court agrees there are compelling reasons for sealing portions of the Agreement, this does not include the 97 || Agreement’s title or paragraph | of the Agreement which is discussed in the publicly filed Clement Declaration. (Dkt. No. 40-1 at 4/3.) So, the motion to seal is GRANTED except as to 28 these portions of the document.
1 (Dkt. No. 39-3 at ¶ 1; Case No. 24-746, Dkt. No. 41-3 at ¶ 1.) The Content Creator otherwise 2 retains all copyright and ownership rights in the work. (Id. at ¶ 3.) 3 In Minden, the photography stock company “entered into agency agreements with its 4 contributing photographers under which the photographers authorized Minden to license and sell 5 certain photographs to third parties.” DRK Photo, 870 F.3d at 983-84 (citing Minden, 795 F.3d at 6 999–1000). “Importantly, in those licensing agreements, the photographers agreed to appoint 7 Minden ‘as sole and exclusive agent and representative with respect to the Licensing of any and all 8 uses of [specified photographs].’” DRK Photo, 870 F.3d at 984 (quoting Minden, 795 F.3d at 9 1000). “The key to determining whether Minden’s agency agreements conferred a nonexclusive 10 or exclusive license [] was not whether the photographers retained some fractional right but 11 instead that the photographers promised ‘that Minden, and only Minden, will have the power, as 12 the photographers’ licensing agent, to authorize third parties to reproduce, distribute, and display 13 the photographs.’” Id. (quoting Minden, 795 F.3d at 1005) (emphasis in original)). 14 The Agreement here gives Viral DRM the “exclusive agency right to manage and 15 administer any content.” (Dkt. No. 39-3 at ¶ 1; Case No. 24-746, Dkt. No. 41-3 at ¶ 1.) Managing 16 and administering content is not among the exhaustive list of exclusive rights which confer 17 ownership under 17 U.S.C. § 106. The Agreement provision giving Viral DRM “the exclusive 18 agency rights to display, store, transmit, and distribute Works as needed to fulfill obligations set 19 forth in this agreement,” also does not confer exclusive ownership rights. (Dkt. No. 39-3 at ¶ 1; 20 Case No. 24-746, Dkt. No. 41-3 at ¶ 1 (emphasis added).) Giving Viral DRM the rights necessary 21 to enforce the videographer’s copyright, is not the same as the exclusive right to “authorize third 22 parties to reproduce, distribute, and display the photographs” required to have standing to bring a 23 copyright infringement action. Minden, 795 F.3d at 1005; see also Silvers, 402 F.3d at 884 (“The 24 right to sue for an accrued claim for infringement is not an exclusive right under § 106.”). Unlike 25 the agreement in Minden, the Agreement does not give Viral DRM the exclusive right to authorize 26 third parties to reproduce, distribute, and display the copyrighted video. 27 Accordingly, Viral DRM is ORDERED TO SHOW CAUSE as to how it has standing to 1 17 U.S.C. §§ 512(f), 1202(a), (b). Viral DRM shall file a written response to this Order by 2 January 6, 2025. 3 Within seven days of this Order Viral DRM shall file the correct licensing agreement(s). 4 Viral DRM’s administrative motion to seal is GRANTED IN PART and DENIED IN 5 PART as set forth in this Order. (Dkt. No. 39.) 6 This Order disposes of Docket No. 39. 7 9 Dated: December 9, 2024 10 ll ne JACQUELINE SCOTT CORLE 12 United States District Judge 13 (14
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