Trial Film LLC v. Daoai ( 2021 )

1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8 9 Trial Film LLC, et al., No. CV-21-00984-PHX-JJT 10 Plaintiffs, ORDER 11 v. 12 Wu Daoai, et al., 13 Defendants. 14 15 The Court previously entered a Temporary Restraining Order (TRO) in this matter 16 locking the websites Defendants had used to offer and display by streaming Plaintiffs’ 17 copyrighted Work, and temporarily freezing the PayPal and AliPay US accounts 18 Defendants used to collect payments in conjunction with their websites showing the 19 protected Work. (Doc. 16.) In issuing the TRO, the Court set a hearing as required by Rule 20 65(b)(3), Fed. R. Civ. P., requiring Defendants to appear by telephone on this day to show 21 cause, if any, why the Court should not enter a Preliminary Injunction (PI) continuing the 22 locking of the websites and freezing of the associated payment accounts, pending final 23 ruling on the Complaint. (Doc. 16 at 10.) The Court required Plaintiffs to serve Defendants 24 by July 3, 2021, with the Complaint, Summonses, Second Application for TRO and PI, and 25 Notice of today’s PI hearing by email “or any other means authorized under the Federal 26 Rules of Civil Procedure,” owing to Defendants’ apparent residences overseas and 27 deliberate efforts to avoid identification or contact other than through email accounts 28 associated with the locked websites (Doc. 16 at 10), and required Plaintiffs to file proof of 1 service on the docket. Plaintiffs complied with the Order, and the Court called the PI 2 hearing to order at 9:30 a.m., Arizona Time, today, July 13, 2021. No Defendant appeared 3 at the hearing, either themselves or through counsel, nor did any Defendant evince any 4 intent to participate. The Court therefore concludes for purposes of evaluating whether a 5 PI should issue mirroring the terms of the TRO in this matter, that Plaintiffs’ proffered 6 evidence is unrefuted. The Court repeats that evidence and analysis from the TRO here. 7 To obtain a temporary restraining order or preliminary injunction, a plaintiff must 8 show that “(1) [it] is likely to succeed on the merits, (2) [it] is likely to suffer irreparable 9 harm in the absence of preliminary relief, (3) the balance of equities tips in [its] favor, and 10 (4) an injunction is in the public interest.” Garcia v. Google, Inc., 786 F.3d 733, 740 (9th 11 Cir. 2015) (citing Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7, 20 (2008)). The Ninth 12 Circuit Court of Appeals, employing a sliding scale analysis, has also stated that “‘serious 13 questions going to the merits’ and a hardship balance that tips sharply toward the plaintiff 14 can support issuance of an injunction, assuming the other two elements of the Winter test 15 are also met.” Drakes Bay Oyster Co. v. Jewell, 747 F.3d 1073, 1078 (9th Cir. 2013) cert. 16 denied, 134 S. Ct. 2877 (2014) (quoting Alliance for the Wild Rockies v. Cottrell, 632 F.3d 17 1127, 1132 (9th Cir. 2011)). 18 1. Likelihood of Success on the Merits 19 Plaintiffs have demonstrated they are likely to succeed on the merits of their 20 copyright claim. They have shown that Plaintiff Trial Film, LLC, is the owner of the 21 copyrights in the Work—the film “Infidel”—and that Plaintiff American Cinema Inspires, 22 Inc. (ACI) is the beneficial owner and sales agent for the licensing and exploitation of Trial 23 Film’s exclusive rights in the Work. No Plaintiff has given permission for any of the 24 Defendants to reproduce, display, perform or make derivative use of the Work. Yet the 25 exhibits to the Complaint and second Motion for TRO demonstrate that each of the four 26 Defendants operates at least one website1 on which the Work is available to stream for free 27 1 Defendant Wu Daoai aka Bo Ye owns and operates the websites 17ys.net, mmov.cc, 52ys.tv and tvju.tv; Defendant Cheng Hsien Yang owns and operates 17drama.org, 92- 28 tv.com, 92-tv.xyz and 94-tv.xyz; Defendant Yuan Niu owns and operates awsltv.com; and Defendant Doe, aka “Win Double,” owns and operates the website msyy.cc. Screenshots 1 by anyone accessing their websites. Moreover, the Work shown on all four Defendants’ 2 websites has been altered to include a Chinese language caption across the bottom of the 3 screen. The original Work is in English with no Chinese subtitles. 4 Defendants each use domain registrar and hosting services located in Arizona for 5 their websites to host and store the Work.2 And because the Work bears an embedded notice 6 of copyright protection, for purposes of determining the TRO application, Plaintiffs are 7 likely to be able to show that Defendants knew of such copyrights and intentionally 8 engaged in infringement, or at a minimum, acted with willful blindness to Plaintiffs’ 9 registered copyright and exclusive rights or in reckless disregard thereof. Defendants’ 10 websites generate revenue for Defendants from marketers and data sellers including Baidu 11 and Google Analytics. Defendants’ websites generate cookies on the browsers of all 12 visitors who come to their websites to view movies. This results in the marketers tailoring 13 advertisements to the visitors based on, among other factors, their geographic location, and 14 then compensating Defendants for access to the visitors Defendants have drawn. The 15 compensation flows, Plaintiffs have demonstrated in their attached declarations, from the 16 marketers to Defendants’ respective Paypal (Defendants Daoai, Yang and Niu) and AliPay 17 US (Defendant Doe aka “Win Double”) accounts, which are linked to the websites. 18 Additionally, Plaintiffs have demonstrated they are likely to succeed on the merits 19 of their DMCA claim against Defendant Niu under 17 U.S.C. § 1202. Plaintiffs allege in 20 the Complaint, and demonstrate in the exhibits thereto, that Defendant Niu intentionally 21 altered the copyright management information (“CMI”) on the Work by removing the 22 listing of Plaintiff CMI as the copyright holder to whom interested parties would direct 23 their inquiries about the Work and the copyright, and replacing it with the website 24 www.458028.com. As this URL has no connection to Plaintiffs, the Court can conclude 25 from each of these websites show the Work streaming. (Complaint, Ex. 2.) 26 2 Defendant Daoai/Ye uses NameSilo, LLC as host and registrar for his websites; Defendants Yang and Niu use NameCheap, Inc. for their websites; and Defendant Doe aka 27 “Win Double” uses GoDaddy.com, LLC, as host and registrar for his or her website. GoDaddy, NameCheap and NameSilo all maintain their principal places of business in 28 Arizona. 1 for purposes of the TRO application that Defendant Nui so altered the CMI with the intent 2 to conceal infringement of the Work by directing inquiries—and therefore knowledge that 3 Defendant Niu was showing the Work—away from the Plaintiffs. 4 2. Irreparable Harm 5 Plaintiffs also have demonstrated that Defendants’ reproduction, alteration, display, 6 and distribution of their Work has resulted in injury to their ability to financially exploit 7 that Work and will continue to result in such immediate and irreparable harm. The Plaintiffs 8 indicate in the attached declarations that distributors and other potential business partners 9 have expressed reluctance to take on the Work, as they are aware it is being shared and 10 displayed for free on Defendants’ websites, thus diminishing Plaintiffs’ ability to earn a 11 return on their investment. 12 3. Whether Injunction is in the Public Interest 13 Next, Plaintiffs have demonstrated that the public interest in the protection of 14 copyrighted works is served by an injunction ceasing the infringement of that Work. The 15 Court has no trouble so finding, where the evidence demonstrates the existence of a 16 copyrighted work and Plaintiffs’ ownership thereof. 17 4. Balance of Hardships or Equities 18 Finally, the Court is satisfied that the balance of hardships or equities falls in favor 19 of Plaintiffs as regards the issuance of an injunction locking the websites owned by 20 Defendants that display the copyrighted Work, as well as other named servers that would 21 allow Defendants to simply redirect traffic to alternate websites they might set up to 22 continue to show the copyrighted Work. The Court is aware from the Complaint, Motion 23 and supporting filings that the websites make available many other recorded films for 24 streaming that are neither owned by Plaintiffs nor the subject of this action, and that 25 Defendants’ websites’ offering for display of some or many of those other recordings may 26 not violate an owner’s or licensee’s copyright. But counsel’s avowal at the ex parte hearing 27 in this matter that at least one of his other clients’ works were present on several of the 28 websites, in violation of his other client’s copyrights, would confirm that the Defendants’ 1 infringement of Plaintiffs’ copyrights in the Work here is not isolated or accidental in a 2 collection of otherwise properly displayed works. Moreover, the Court concludes that there 3 is no more narrowly tailored way to halt the irreparable harm to Plaintiffs than to 4 temporarily restrain the websites. 5 The Court also is satisfied that freezing the Defendants’ Paypal and AliPay US 6 accounts linked to their subject websites is justified upon a balancing of the hardships or 7 equities. As the Court previously found in denying Plaintiffs’ first TRO request, it lacks 8 the authority to grant an injunction solely to preserve assets for satisfaction of a possible 9 money judgment on a claim that is one at law only, and not in equity. In Grupo Mexicano 10 de Desarrollo v. Alliance Bond Fund, 527 U.S. 308, 333 (1999), the Supreme Court held 11 that a district court has no authority to issue a preliminary injunction to freeze assets 12 pending adjudication of a pure money damages claim because such a remedy was 13 historically unavailable from a court of equity. Put another way, an injunction to freeze 14 assets was authorized only when it was necessary to preserve the possibility of equitable 15 relief. The Ninth Circuit made this limitation clear in Republic of the Philippines v. Marcos, 16 862 F.2d 1355, 1364 (9th Cir. 1988). 17 Upon Plaintiffs’ submission of additional authority at the Court’s invitation, as well 18 as the Court’s own research, the Court recognizes the proscription against asset freezes is 19 not as broad as it previously concluded. First, in Hilao v Estate of Marcos, 25 F.3d 1467, 20 1479 (9th Cir. 1994), the Ninth Circuit considered, in the circumstance of a claim purely 21 at law seeking money damages, whether a preliminary injunction to freeze assets still could 22 be appropriate where the plaintiff showed the defendant intended to frustrate any judgment 23 on the merits by transferring its assets out of the jurisdiction, making the judgment 24 uncollectible. The court in Hilao held that a district court does have the authority to issue 25 a preliminary injunction to freeze assets where a plaintiff can establish that money damages 26 will be an inadequate remedy due to impending insolvency of the defendant or because a 27 defendant has engaged in a pattern of secreting or dissipating assets to avoid judgment. Id. 28 at 1480. 1 Second, Plaintiffs cited in their Second Motion for TRO Amazon Content Servs. 2 LLC v. Kiss Library, No. 2:20-cv-01048-MJP, 2020 U.S. Dist. LEXIS 155676 (W.D. Wash 3 Aug. 27, 2020), which presents factual circumstances very similar to the instant case and 4 the identical question of law. In Kiss Library, the plaintiffs presented a sister district court 5 of this circuit with copyright infringement claims against the operators of substantively 6 identical mirror websites that were reproducing, distributing, and displaying copyrighted 7 works without the permission of the copyright holders, for profit. The plaintiffs sought and 8 received temporary injunctive relief disabling the websites and freezing the defendants’ 9 assets. In concluding that an asset freeze was an appropriate component of temporary 10 injunctive relief in a copyright case, the court found in relevant part as follows: 11 6. With regard to the need for injunctive relief to 12 secure assets without notice and expedited discovery to 13 discover Defendants’ identities and assets, the Court finds Plaintiffs have provided evidence showing: 14 15 a. Defendants have gone to great lengths to conceal their identities, locations, and proceeds from 16 Plaintiffs’ and this Court's detection, including using 17 multiple false identities and addresses associated with their operations and purposely deceptive contact 18 information; 19 b. at least some of the Defendants are likely overseas and Defendant Kiss Library appears to 20 communicate solely through email; and 21 c. Defendants would likely destroy, move, 22 hide, or otherwise make inaccessible the proceeds of their infringement, copies of infringed Works, and the 23 Websites used to display and distribute those Works, to the Court and Plaintiffs if they received advance 24 notice, thus frustrating the ultimate relief Plaintiffs 25 seek in this action. 26 7. Entry of an order other than the requested Order 27 would not adequately achieve the purposes of the Copyright Act to preserve Plaintiffs’ equitable remedies for copyright 28 infringement, including among other things: the restraint of 1 Defendants’ unauthorized sale and distribution of Plaintiffs’ Works, including through Defendants’ Websites, the 2 acquisition of business records relating to Defendants’ 3 operations, and the preservation of Plaintiffs’ right to an equitable accounting of proceeds from Defendants’ sale of 4 Plaintiffs’ Works . . . . 5 6 Kiss Library, 2020 U.S. Dist. LEXIS 155676 at 6-7. While a decision of a sister district 7 court within this circuit does not constitute binding precedent, the Court concludes Judge 8 Pechman’s reasoning has great persuasive value. Like the defendants in Kiss Library, 9 Defendants here distributed copyrighted material via remote websites for profit. And like 10 the defendants in Kiss Library, Defendants here have gone to great lengths to conceal their 11 identities and locations from Plaintiffs, and are overseas,3 communicating only via email. 12 Finally, like the circumstances in Kiss Library, there is a high likelihood here that 13 Defendants will destroy, hide, move and/or make unavailable the proceeds of their 14 infringement if alerted to this action. These facts drove the court in Kiss Library to conclude 15 that an account freeze was appropriately part of the temporary injunctive relief necessary 16 to stop irreparable harm to the plaintiffs. In so finding, Judge Pechman concluded that the 17 assets in the accounts to be frozen were not only proceeds of the copyright violation, but 18 also instrumentalities of it, and without a freeze, the preliminary injunction “would not 19 adequately achieve” its purpose, including “the restraint of Defendants’ unauthorized sale 20 and distribution of Plaintiffs’ Works . . . .” Id. 21 The Court adopts Judge Pechman’s reasoning in its analysis of the present case. If 22 the Court’s injunctive relief here is limited to the disabling of the present websites on which 23 Defendants offer the Work, all hallmarks of the structure of Defendants’ current operations 24 indicate they simply will deploy those assets to quickly reestablish the infringing 25 distribution schemes on new websites under different names, rendering the injunctive relief 26 a nullity and continuing the irreparable harm to Plaintiffs. In other words, the freezing of 27 3 Plaintiffs allege upon information and belief, and the contact and website domain name information they submit supports, that Defendants Daoai and Yang reside in Taiwan, 28 Defendant Niu resides in Canada, and Defendant Doe aka “Win Double” resides in the People’s Republic of China. 1 the accounts is necessary to deliver the temporary injunctive relief. The Court therefore 2 finds all factors have been met for granting the temporary injunctive relief Plaintiffs seek. 3 For the same reasons, the Court finds the requirements for a Preliminary Injunction, as set 4 forth in Rule 65(a), Fed. R. Civ. P., and Garcia and Winter are met. 5 IT IS ORDERED granting Plaintiffs’ Request (Doc. 12) converting the Temporary 6 Restraining Order previously entered in this matter to a Preliminary Injunction. 7 IT IS FURTHER ORDERED that domain name registries NameSilo, LLC, 8 NameCheap, Inc., GoDaddy, LLC, and or the individual registrars holding or listing one 9 or more of the domain names used in conjunction with Defendants’ websites as listed in 10 Footnote 1 of this Order shall continue to disable these domain names, or any subset of 11 these domain names specified by Plaintiffs, through a registry hold or otherwise, and 12 maintain them as inactive and nontransferable pending further Order of this Court. 13 IT IS FURTHER ORDERED that CloudFlare, Inc. shall continue to refrain from 14 providing any services, including but not limited to content delivery network and Domain 15 Name System service, to Defendants’ websites as listed in Footnote 1 of this Order, and 16 maintain its lock on Defendants’ CloudFlare accounts to prevent Defendants from 17 frustrating the above domain lock provision by redirecting traffic intended for the disabled 18 website(s) to different websites pending further Order of this Court. 19 IT IS FURTHER ORDERED that PayPal, Inc. shall continue its freeze on all 20 funds associated with the following accounts and continue to restrain and enjoin the 21 transfer of any funds held in such accounts until further ordered by the Court: 22 • As to Defendant Wu Daoai: 903757528@qq.com, paypal@61bk.com, 23 wudaoai.com@gmail.com, cfbk@61bk.com. 24 • As to Defendant Cheng Hsien Yang: jm@house108.com.tw, 25 ppt616543@gmail.com, yang1673@gmail.com. 26 • As to Defendant Yuan Niu: javettejpy@gmail.com, 27 awsltvcom@gmail.com. 28 1 IT IS FURTHER ORDERED that AliPay US, Inc. shall continue its freeze on all funds associated with the following accounts and continue to restrain and enjoin the 3 || transfer of any funds held in such accounts until further ordered by the Court: 4 e Defendant Doe aka “Win Double”: admin @msyy.cc, 5 simonovboleslav @ gmail.com, ouba@qq.com, 96461 @qq.com, 6 964672451 @qq.com. 7 IT IS FURTHER ORDERED that any United States financial institution or 8 || payment provider holding funds for any Defendant in an account linked to be above PayPal or AliPay accounts shall continue its freeze on said funds upon receipt of a copy of this Order, until further Order of the Court. 11 Dated this 13th day of July, 2021. CN 12 “wok: 13 wefflee— Unifgd State#District Judge 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 -9-