Case 1:19-cv-00874-RBJ-MEH Document 38 Filed 05/28/19 USDC Colorado Page 1 of 24
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`UNITED STATES DISTRICT COURT
`DISTRICT OF COLORADO
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`WARNER BROS. RECORDS INC., et al.,
`
`Plaintiffs,
`
`v.
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`CHARTER COMMUNICATIONS, INC.,
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`Defendant.
`
`C.A. No.: 19-cv-00874-MSK-MEH
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`DEFENDANT CHARTER COMMUNICATIONS, INC.’S MOTION TO DISMISS
`PLAINTIFFS’ CLAIM FOR VICARIOUS LIABILITY
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`Case 1:19-cv-00874-RBJ-MEH Document 38 Filed 05/28/19 USDC Colorado Page 2 of 24
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`
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`TABLE OF CONTENTS
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`Page
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`INTRODUCTION ......................................................................................................................1
`FACTS .......................................................................................................................................3
`ARGUMENT ..............................................................................................................................5
`A.
`Burden of Proof ...................................................................................................5
`B.
`Elements ..............................................................................................................6
`C.
`Elements Not Supported by Complaint.................................................................7
`1.
`Plaintiffs seek to stretch the doctrine of vicarious liability far beyond the
`narrow construction applied by courts....................................................... 7
`Plaintiffs fail to allege a causal connection between the alleged
`infringement and Charter’s profits; any benefit is, therefore, too indirect to
`state a claim. ............................................................................................. 9
`Plaintiffs also fail to plausibly allege Charter maintained the right and
`ability to control infringement by its subscribers. .................................... 14
`CONCLUSION ......................................................................................................................... 17
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`
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`3.
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`2.
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`i
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`
`
`Cases
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`BMG Rights Mgmt. (US) LLC v. Cox Commc’ns, Inc,
`149 F. Supp. 3d 634 (E.D. Va. 2015), aff’d in part, rev’d in part, 881 F.3d 293
`(4th Cir. 2018) ..................................................................................................................... 16
`
`BMG Rights Mgmt. (US) LLC v. Cox Commc’ns, Inc.,
`881 F.3d 293 (4th Cir. 2018) ............................................................................................... 16
`
`Coach, Inc. v. Swap Shop, Inc.,
`2012 WL 12887010, at *8 (S.D. Fla. Sept. 21, 2012) ............................................................. 8
`
`Dennis v. Watco Cos., Inc.,
`631 F.3d 1303 (10th Cir. 2011).............................................................................................. 6
`
`Diversey v. Schmidly,
`738 F.3d 1196 (10th Cir. 2013).......................................................................................... 6, 8
`
`Ellison v. Robertson,
`357 F.3d 1072 (9th Cir. 2004) ......................................................................................... 9, 11
`
`Fonovisa v. Cherry Auction Inc.,
`76 F.3d 259 (9th Cir. 1996) ............................................................................................. 8, 16
`
`Gallagher v. Shelton,
`587 F.3d 1063 (10th Cir. 2009).............................................................................................. 6
`
`Io Grp., Inc. v. Veoh Networks, Inc.,
`586 F. Supp. 2d 1132 (N.D. Cal. 2008) ................................................................................ 16
`
`Packingham v. North Carolina,
`137 S. Ct. 1730 (2017) ........................................................................................................ 13
`
`Perfect 10, Inc. v. Amazon.com, Inc.,
`508 F.3d 1146 (9th Cir. 2007) ........................................................................... 14, 15, 16, 17
`
`Perfect 10, Inc. v. CCBill LLC,
`488 F.3d 1102 (9th Cir. 2007) ............................................................................................... 9
`
`Perfect 10, Inc. v. Giganews, Inc.,
`847 F.3d 657 (9th Cir.), cert. denied, 138 S. Ct. 504, 199 L. Ed. 2d 385 (2017) ......... 9, 10, 11
`
`Perfect 10, Inc. v. Visa Intern. Service Ass’n.,
`494 F.3d 788 (9th Cir. 2007) ............................................................................................... 16
`
`ii
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`
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`Ridge at Red Hawk, LLC v. Schneider,
`493 F.3d 1174 (10th Cir. 2007)........................................................................................ 6, 14
`
`Robbins v. Okla. ex rel. Okla. Dep’t of Human Servs.,
`519 F.3d 1242 (10th Cir. 2008)........................................................................................ 6, 13
`
`Shapiro, Bernstein & Co. v. H. L. Green Co.,
`316 F.2d 304 (2d Cir. 1963) .................................................................................................. 7
`
`Shell v. Am. Family Rights Ass’n,
`2010 WL 1348548 (D. Colo. Mar. 31, 2010) ......................................................................... 9
`
`Sony Corp. of Am. v. Universal City Studios,
`464 U.S. 417 (1984) ........................................................................................................ 7, 13
`
`Sony Music Entm’t v. Cox Comm. Inc.,
`2018 WL 6059386 (E.D. Va. Nov. 19, 2018) ......................................................................... 1
`
`Thomson v. HMC Grp.,
`2014 WL 12589313 (C.D. Cal. July 25, 2014) ................................................................. 9, 10
`
`Tomelleri v. Zazzle, Inc.,
`2015 WL 8375083 (D. Kan. Dec. 9, 2015) ............................................................................ 8
`
`UMG Recordings, Inc., et al v. Bright House Networks,
`LLC, No. 8:19-cv-00710-MSS-TGW (M.D. Fla. Mar. 3, 2019) ............................................. 1
`
`UMG Recordings Inc., et al. v. Grande Comm.,
`2018 WL 1096871 (W.D. Tex. Feb. 28, 2018) ..................................................... 1, 11, 12, 13
`
`UMG Recordings, Inc. v. Veoh Networks Inc.,
`2009 WL 334022 (C.D. Cal. Feb. 2, 2009), aff’d sub nom. UMG Recordings,
`Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022 (9th Cir. 2011), opinion
`withdrawn, superseded, and aff’d on reh’g, 718 F.3d 1006 (9th Cir. 2013) ............................ 9
`
`Viesti Assocs., Inc. v. Pearson Educ., Inc.,
`2013 WL 4052024 (D. Colo. Aug. 12, 2013) ......................................................................... 6
`
`Other Authorities
`
`Federal Rule of Civil Procedure 12(b)(6)..................................................................................... 5
`
`Aaron Smith, “Searching for Work in the Digital Era,” Pew Research Center
`(Nov. 19, 2015), https://www.pewinternet.org/2015/11/19/1-the-internet-and-
`job-seeking/ ........................................................................................................................... 5
`
`iii
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`
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`Economic Advisers Issue Brief, “The Digital Divide and Economic Benefits of
`Broadband Access,” (March 2016),
`https://obamawhitehouse.archives.gov/sites/default/files/page/files/20160308_
`broadband_cea_issue_brief.pdf.............................................................................................. 5
`
`In re Inquiry Concerning Deployment of Advanced Telecommunications Capabil-
`ity to All Americans in a Reasonable and Timely Fashion, 2018 Broadband
`Deployment Report, 33 FCC Rcd 1660 ¶ 1 (Feb. 2, 2018) .................................................... 5
`
`In re Promoting Telehealth for Low-Income Consumers,
`Notice of Inquiry, 33 FCC Rcd 7825 ..................................................................................... 5
`
`Remarks of Commissioner Jessica Rosenworcel, Federal Communications
`Commission, 20 Years of Connecting Schools and Libraries: Policy Summit,
`(Jan. 24, 2018), https://docs.fcc.gov/public/attachments/DOC-320122A1.pdf ........................ 5
`
`
`
`iv
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`Defendant Charter Communications, Inc. by and through its attorneys Fairfield and
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`Woods, P.C. and Winston and Strawn LLP, hereby moves to dismiss the second claim for relief
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`(vicarious liability), and as grounds therefor states as follows:
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`INTRODUCTION
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`This suit is the latest effort in the music industry’s campaign to hold Internet Service Pro-
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`viders (“ISPs”) liable for copyright infringement, allegedly carried out by internet subscribers,
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`for merely providing internet access. See, e.g., Sony Music Entm’t v. Cox Comm. Inc., 2018 WL
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`6059386 (E.D. Va. Nov. 19, 2018); UMG Recordings Inc., et al. v. Grande Comm., 2018 WL
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`1096871 (W.D. Tex. Feb. 28, 2018); UMG Recordings, Inc., et al v. Bright House Networks,
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`LLC, No. 8:19-cv-00710-MSS-TGW (M.D. Fla. Mar. 3, 2019). ISPs such as Charter Communi-
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`cations, Inc. (“Charter”) provide access to the internet, enabling subscribers to access the vast ar-
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`ray of information available on the world wide web, including critical information during storms
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`or national emergencies, job search sites, educational resources, news sites, as well as entertain-
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`ment. There are a variety of threats involved with internet access, including hackers, spammers,
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`and infringers who utilize evolving technology to facilitate illegal activity. Rather than view ISPs
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`as other victims of these abusers—or allies in the fight against them—Plaintiffs accuse ISPs like
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`Charter of infringement for merely providing access to the internet.
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`Plaintiffs assert two claims for secondary liability against Charter—contributory infringe-
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`ment and vicarious liability, each having separate elements. Both claims will ultimately fail for
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`many reasons, including the fact that Plaintiffs cannot establish the predicate direct infringement
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`of their copyrights. In this motion, however, Charter seeks only to dismiss the vicarious liability
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`claim. Vicarious liability requires a defendant to profit directly from infringement that it has both
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`a right and ability to control. Plaintiffs’ effort to hold the wrong party accountable for vicarious
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`1
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`liability out of convenience—seeking vast windfalls in statutory damages—is inherently flawed
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`in this context. Specifically, Plaintiffs’ vicarious liability claim is foreclosed as a matter of law
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`by Plaintiffs’ failure to make plausible allegations that Charter has directly enjoyed a financial
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`benefit from the allegedly infringing activity or has the ability to control subscribers allegedly
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`infringing activity in the first place. That claim must therefore be dismissed.
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`First, Plaintiffs fail to make plausible allegations that Charter received any financial ben-
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`efit directly from the alleged infringements of its subscribers. For example, Plaintiffs do not al-
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`lege that Charter itself owns or operates any file-sharing service, that Charter encourages or di-
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`rects traffic to BitTorrent or other peer-to-peer file sharing protocols, that Charter receives any
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`compensation from the use of such protocols, or that the revenue that Charter receives from al-
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`legedly infringing subscribers varies in any way based on whether they infringe while using the
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`internet—which, of course, has a host of important noninfringing uses. Nor do Plaintiffs allege
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`that Charter specifically targets subscribers who infringe, that to infringe copyrights more easily
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`infringers seek out Charter over competing providers, or that, but for Charter’s conduct, its sub-
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`scribers would not use its internet services. Even crediting Plaintiffs’ allegations that subscribers
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`can use Charter’s internet access service for allegedly infringing purposes, Plaintiffs do not, and
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`cannot, allege that such allegedly infringing purposes act as a draw for subscribers to purchase
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`Charter’s internet access service. Indeed, as other courts have recognized in distinguishing be-
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`tween general-purpose ISPs like Charter and file-sharing protocols like BitTorrent or Napster,
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`Plaintiffs’ profit theory is far too attenuated to support imposing vicarious liability here.
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`Second, Plaintiffs do not plausibly allege that Charter maintains the right and ability to
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`stop users from engaging in infringing activity. Charter cannot monitor and control its subscrib-
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`ers’ use of the internet, and its ability to terminate subscribers altogether does not prevent them
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`2
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`from committing acts of infringement from other connections. Nor do Plaintiffs allege that Char-
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`ter can block access to peer-to-peer file sharing protocols, which can be used for both infringing
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`and non-infringing purposes.
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`In sum, Plaintiffs’ claim that Charter is complicit in copyright infringement stretches vi-
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`carious liability beyond the breaking point. That claim should be dismissed with prejudice.
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`FACTS
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`Plaintiffs, some of the largest labels and publishers in the music industry, have regularly
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`engaged in litigation alleging the unauthorized distribution of their works. Compl. ¶¶ 13, 33, 82.
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`Plaintiffs’ allegations here stem from internet users’ alleged proliferation of infringing material
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`using “peer-to-peer (“P2P”) distribution systems” and “most notably a protocol called ‘Bit-
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`Torrent.’” Compl. ¶ 79. BitTorrent is a file-sharing service that permits users to upload and
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`download content. Id. ¶¶ 79-81.
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`Plaintiffs’ agents regularly send auto-generated copyright notices to ISPs regarding sub-
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`scriber activity in droves. Id. ¶ 85. A typical notice indicates the ISP associated with the IP ad-
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`dress involved in the alleged infringing activity, the work allegedly infringed, and the date and
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`time of the alleged infringement. Id. ¶ 85. Notably, however, a notice does not amount to a find-
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`ing or proof of infringement—it is merely an allegation that infringement has occurred. That is
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`why Plaintiffs carefully plead that notices identify when activity has been “detected” rather than
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`“confirmed.” Id. ¶ 86. Plaintiffs do not provide any further details concerning that detection, how
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`any infringement occurred, and most importantly, how it was authenticated. See id.; ¶ 88 (alleg-
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`ing only that specific IP addresses were “identified” in various notices without further detailing
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`the alleged infringement or verification thereof).
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`3
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`Charter is one of the nation’s largest providers of high-speed internet access. Id. ¶ 74.
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`Charter has never charged its subscribers based on the amount of downloaded content; Charter
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`utilizes flat-fee subscription rates with graduated rate tiers for faster connections. Id. Importantly,
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`Plaintiffs do not allege—because they cannot—that Charter has any connection to any file-shar-
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`ing websites or technology. Plaintiffs do not allege that Charter has had any corporate relation-
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`ship with, or financial interest in, BitTorrent at any point. Nor do Plaintiffs allege that Charter
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`has ever promoted or offered any file-sharing services to subscribers—services freely available
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`on the internet.
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`Plaintiffs acknowledge that Charter utilizes a DMCA program to track, catalog, and re-
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`spond to the notices it receives in an effort to curtail infringement. Id. ¶ 76. Nonetheless, Plain-
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`tiffs claim that Charter “turns a blind eye” to the alleged infringement because its “failure to po-
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`lice its infringing subscribers adequately was a draw to subscribers to purchase Charter’s ser-
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`vices.” Id. ¶ 91. Notably, however, Plaintiffs’ “draw” theory lacks allegations that competing
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`ISPs were terminating subscribers such that Charter’s supposed failure to do so attracted them.
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`As pled, Plaintiffs also assume that P2P abuses are committed by the account holder who sub-
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`scribed to Charter’s services instead of other household members, visitors, or people who have
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`accessed Charter’s service in an unauthorized manner (or, with commercial accounts, those who
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`use the service without having decision-making authority over the account).1
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`1 If the allegedly infringing activity is committed by a person other than the individual in a
`household who makes the decision regarding to which ISP service the household subscribes, then
`it goes without saying that such activity cannot be a draw to subscribe to Charter’s service.
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`Further, Plaintiffs recognize that Charter’s only ability to prevent or limit any infringe-
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`ment occurring on its network stems from its technical ability to “suspend or terminate a cus-
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`tomer’s [i]nternet access.” Id. ¶ 89.2 But as discussed below, the ability to terminate does not
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`give Charter the ability to control infringing activity on the internet.
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`ARGUMENT
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`A.
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`Burden of Proof
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`A claim should be dismissed pursuant to Federal Rule of Civil Procedure 12(b)(6) where
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`the plaintiff has failed to state a claim for which relief can be granted. While a plaintiff need
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`plead only sufficient facts to state a claim to relief that is plausible on its face, the facts must be
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`pled in sufficient detail to “give the court reason to believe that this plaintiff has a reasonable
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`2 It goes without saying that in the modern world disconnecting a subscriber’s internet access is a
`drastic remedy. The federal government has recognized that having internet access is critical for
`people to participate in the modern world economy. See, e.g., In re Inquiry Concerning
`Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and
`Timely Fashion, 2018 Broadband Deployment Report, 33 FCC Rcd 1660 ¶ 1 (Feb. 2, 2018)
`(“Fixed and mobile broadband services provide Americans, especially those in rural and remote
`areas of the country, access to numerous employment, education, entertainment, and health care
`opportunities.”); Council of Economic Advisers Issue Brief, “The Digital Divide and Economic
`Benefits of Broadband Access,” at 1 (March 2016), https://obamawhitehouse.archives.gov/sites/
`default/files/page/files/20160308_broadband_cea_issue_brief.pdf) (“Broadband provides
`numerous socio-economic benefits to communities and individuals, improving labor market
`outcomes for subscribers, increasing economic growth, providing access to better health care,
`and enhancing civic participation.”); Aaron Smith, “Searching for Work in the Digital Era,” Pew
`Research Center (Nov. 19, 2015), https://www.pewinternet.org/2015/11/19/1-the-internet-and-
`job-seeking/ (“Digital resources are now more important than ever to Americans’ ability to
`research and apply for jobs,” and “the proportion of Americans who research jobs online has
`doubled in the last ten years.”); Remarks of Commissioner Jessica Rosenworcel, Federal
`Communications Commission, 20 Years of Connecting Schools and Libraries: Policy Summit,
`(Jan. 24, 2018), https://docs.fcc.gov/public/attachments/DOC-320122A1.pdf (noting “seven in
`ten teachers now assign homework that requires access to broadband” and raising concern that
`the lack of access is creating a “Homework Gap”); In re Promoting Telehealth for Low-Income
`Consumers, Notice of Inquiry, 33 FCC Rcd 7825 ¶ 1 (Aug. 3, 2018) (“High-quality health care
`has become increasingly reliant on the widespread availability of high-speed connectivity, and
`broadband-enabled telehealth services are assuming an increasingly vital role in providing
`care.”).
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`likelihood of mustering factual support for these claims.” Ridge at Red Hawk, LLC v. Schneider,
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`493 F.3d 1174, 1177 (10th Cir. 2007) (emphasis in original).
`
`“Plausibility” in the Tenth Circuit “refer[s] to the scope of the allegations in a com-
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`plaint.” Robbins v. Okla. ex rel. Okla. Dep’t of Human Servs., 519 F.3d 1242, 1247 (10th Cir.
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`2008). Allegations are not sufficient “if they are so general that they encompass a wide swath of
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`conduct, much of it innocent.” Id. (internal quotations omitted). “The allegations must be enough
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`that, if assumed to be true, the plaintiff plausibly (not just speculatively) has a claim for relief.”
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`Id. “This requirement of plausibility serves not only to weed out claims that do not (in the ab-
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`sence of additional allegations) have a reasonable prospect of success, but also to inform the de-
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`fendants of the actual grounds of the claim against them.” Id. at 1248. Thus, the allegations must
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`“‘nudge[] [the] claims across the line from conceivable to plausible.’” Dennis v. Watco Cos.,
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`Inc., 631 F.3d 1303, 1305 (10th Cir. 2011) (quotation omitted). Conclusory allegations are insuf-
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`ficient. Gallagher v. Shelton, 587 F.3d 1063, 1068 (10th Cir. 2009).
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`B.
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`Elements
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`Vicarious liability requires a plaintiff to “establish that a defendant directly benefitted
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`from the third parties’ infringement and had the ability to control the third parties’ infringing
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`conduct.” Viesti Assocs., Inc. v. Pearson Educ., Inc., 2013 WL 4052024, at *8 (D. Colo. Aug. 12,
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`2013) (quoting MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913, 914 (2005)) (emphasis
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`added); see also Diversey v. Schmidly, 738 F.3d 1196, 1204 (10th Cir. 2013). Courts in this cir-
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`cuit follow Ninth Circuit precedent in assessing the defendant’s ability to control infringing con-
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`duct—the defendant must have “both a legal right to stop or limit the directly infringing conduct,
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`as well as the practical ability to do so.” Viesti, 2013 WL 4052024, at *8 (quoting Perfect 10,
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`Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1173 (9th Cir. 2007)) (emphasis added).
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`C.
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`Elements Not Supported by Complaint
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`Plaintiffs fail to adequately plead vicarious liability: the Complaint lacks plausible alle-
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`gations that Charter (1) received a direct financial benefit from the alleged infringement, or
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`(2) had the practical ability to stop it. Thus, their claim for vicarious liability must be dismissed.
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`1.
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`Plaintiffs seek to stretch the doctrine of vicarious liability far beyond
`the narrow construction applied by courts.
`
`Vicarious copyright liability is a theory of implied secondary liability that must be nar-
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`rowly construed. Sony Corp. of Am. v. Universal City Studios, 464 U.S. 417, 431 (1984) (citing
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`several Supreme Court decisions reflecting the “recurring theme” that courts “must be circum-
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`spect in construing the scope of [the] rights” created by implied copyright liability and “reluc-
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`tan[t] to expand the[ir] protections … without explicit legislative guidance”). The doctrine origi-
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`nated in Shapiro, Bernstein & Co. v. H. L. Green Co., 316 F.2d 304 (2d Cir. 1963), a Second
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`Circuit decision that distinguished between two lines of cases detailing agency-type relation-
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`ships: landlord-tenant situations and “dance hall” cases. Id. at 307; see Sony, 464 U.S. at 437
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`n.18 (discussing Shapiro). The court there explained that if a “landlord lets his premises without
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`knowledge of the impending infringement by his tenant, exercises no supervision over him,
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`charges a fixed rental and receives no other benefit from the infringement, and contributes in no
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`way to it, it has been held that the landlord is not liable for his tenant’s wrongdoing.” Shapiro,
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`316 F.2d at 304 By contrast, the court explained, dance hall operators would be “liable for the
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`infringement of copyright resulting from the performance of a musical composition by a band or
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`orchestra whose activities provide the proprietor with a source of customers and enhanced in-
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`come.” Id. at 307.
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`The reason is obvious: When a landlord leases premises to someone, it is understood that
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`the lessee will use the property for various purposes, at least some of which are plainly lawful, so
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`it makes little sense to attribute the financial benefit that the landlord receives from the tenant di-
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`rectly to the lessee’s infringing activity as opposed to the lessee’s general use of the premises. By
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`contrast, a dance-hall operator is directly benefitting financially not from general use of the
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`premises, many of the uses of which are lawful, but from dance-hall activities involving copy-
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`right infringement. And this case—where Charter provides general internet services which all
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`subscribers will use for plainly lawful purposes—is akin to the former, not the latter.
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`More recently in Coach, Inc. v. Swap Shop, Inc., a federal district court in Florida ex-
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`pounded upon this direct/indirect distinction in the context of a swap meet. 2012 WL 12887010,
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`at *8 (S.D. Fla. Sept. 21, 2012).3 The plaintiff there brought direct infringement claims against
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`retailers selling knock-off Coach bags at a swap meet and secondary claims against the swap
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`meet operator and the landlord of the property where the swap meet was held. Id. Drawing a dis-
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`tinction between the defendants, the court held that the swap meet operator had “a direct finan-
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`cial interest in the infringing activities because [the operator] receive[d] rents from [its] vendors,
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`including those selling fake Coach products, along with parking and concession fees, which are
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`fueled in large part by the draw created by the widespread availability of fake Coach products at
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`the Flea Market,” whereas the landlord merely received the rent of the operator and therefore ex-
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`perienced no direct financial benefit.4 Id.
`
`
`3 The court in Coach relied on Fonovisa v. Cherry Auction Inc., 76 F.3d 259, 263 (9th Cir.
`1996), to form the basis of its analysis. Fonovisa has been cited favorably by the Tenth Circuit
`and district courts in this Circuit for analyses of vicarious liability. See, e.g., Diversey, 738 F.3d
`at 1204.
`4 The outcome in Coach is consistent with precedent in this district dismissing claims of
`vicarious liability against the operator of an online marketplace on summary judgment where any
`financial benefit was too attenuated. See Tomelleri v. Zazzle, Inc., 2015 WL 8375083, at *15 (D.
`Kan. Dec. 9, 2015) (dismissing vicarious liability claim where infringement was not a “draw” to
`users). Dismissal is appropriate at this phase in light of Plaintiffs’ failure to allege a causal
`connection between any benefit received by Charter from infringement of Plaintiffs’ works.
`
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`2.
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`Plaintiffs fail to allege a causal connection between the alleged in-
`fringement and Charter’s profits; any benefit is, therefore, too indi-
`rect to state a claim.
`
`To adequately plead vicarious liability, Plaintiffs must allege that Charter received a “di-
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`rect financial interest in the exploited copyrighted materials.” Shell v. Am. Family Rights Ass’n,
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`2010 WL 1348548, at *16 (D. Colo. Mar. 31, 2010). Critically, the infringing activity must be
`
`more than an “added benefit” to a subscription; it must be the attracting factor, the “draw” for
`
`subscribers. Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 674 (9th Cir. 2017), cert. de-
`
`nied, 138 S. Ct. 504, 199 L. Ed. 2d 385 (2017); see also Ellison v. Robertson, 357 F.3d 1072,
`
`1079 n.10 (9th Cir. 2004) (plaintiff must establish that an ISP attracted subscriptions “because
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`of” the infringement to establish a direct financial benefit); Perfect 10, Inc. v. CCBill LLC, 488
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`F.3d 1102, 1117-18 (9th Cir. 2007) (finding no vicarious liability because evidence that “[de-
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`fendant] ‘hosts’ websites for a fee” was too sparse to show a direct financial benefit and thus not
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`“a draw” to subscribers); UMG Recordings, Inc. v. Veoh Networks Inc., 2009 WL 334022, at *6
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`(C.D. Cal. Feb. 2, 2009), aff’d sub nom. UMG Recordings, Inc. v. Shelter Capital Partners LLC,
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`667 F.3d 1022 (9th Cir. 2011), opinion withdrawn, superseded, and aff’d on reh’g, 718 F.3d
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`1006 (9th Cir. 2013) (dismissing vicarious liability claim where financial benefit was too attenu-
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`ated to be direct); Thomson v. HMC Grp., 2014 WL 12589313, at *4 (C.D. Cal. July 25, 2014)
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`(dismissing vicarious liability claim where infringing content was not the draw for defendant’s
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`patients).
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`This case presents the digital version of Coach’s physical-world analog. As pled, the P2P
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`technologies and related websites at issue function as a digital swap meet. See Coach, 2012 WL
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`12887010, at *8. Allegedly infringing subscribers act as the directly infringing retailers by ex-
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`changing infringing material using the swap meet (P2P technology) as the vehicle for such ex-
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`change. Charter, however, is akin to the landlord—not the operator—as it merely provides the
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`Case 1:19-cv-00874-RBJ-MEH Document 38 Filed 05/28/19 USDC Colorado Page 15 of 24
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`digital space—internet access—in which the alleged direct infringers operate. Just as the land-
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`lord-defendant in Coach could not be held vicariously liable for the swap meet, Charter cannot,
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`as a matter of law, be held vicariously liable for the acts of the alleged infringers—in both cases
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`the financial benefit is too attenuated. See id. Charter is even further removed from the alleged
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`direct infringers than the landlord at issue in Coach, as it merely provides a means of access to
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`the internet and does not in any manner control the “premises” of the internet. Any direct finan-
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`cial benefit from the alleged infringement would pass to providers of unlawful services, while
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`only indirect benefits—subscription fees instead of rent, and flat-fee rates at that—would flow to
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`Charter. Such indirect benefits are insufficient to support vicarious liability as a matter of law.
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`Consider Perfect 10 v. Giganews, for example, where a copyright owner sued an operator
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`of Usenet servers, an online distributed discussion system enabling user-generated content, for
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`infringement of images posted by users onto online bulletin boards. 847 F.3d at 674. As the
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`Ninth Circuit recognized, Giganews could not be held vicariously liable unless the plaintiff es-
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`tablished that “Giganews attracted subscriptions because of the infringing Perfect 10 material.”
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`Id. (emphasis added). Perfect 10 failed to do so, offering only evidence that some subscribers
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`joined Giganews to access infringing materials generally. Id. Thus, the fact that a user may have
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`accessed the copyrighted material was as best an added benefit to the subscription, not the draw
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`sufficient to support a finding of vicarious liability. Id.
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`Likewise, here Plaintiffs fail to allege a plausible causal connection between any alleged
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`direct infringement and the subscription fees received by Charter. For example, Plaintiffs do not
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`allege that infringers specifically chose Charter over other providers so they could infringe Plain-
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`tiffs’ copyrights, or that other ISPs were terminating subscribers, leading them to seek out Char-
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`ter as a safe haven. Nor do they, or can they, allege that Charter itself owns or operates any file-
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`sharing service, that Charter promotes or directs traffic to BitTorrent, or that Charter receives any
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`compensation from peer-to-peer file sharing services. The only financial benefit that Charter re-
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`ceives is a flat fee for the provision of internet services, which is insufficient to state a claim. El-
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`lison, 357 F.3d at 1079 (holding that “flat periodic payments for service” cannot establish a di-
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`rect financial benefit for vicarious liability).
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`At most, Plaintiffs assert that subscribers are able to utilize their internet connection for
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`illegal activity as an added benefit to the subscribers, not the draw. Giganews, 847 F.3d at 674;
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`Ellison, 357 F.3d at 1079; see also Grande, 2018 WL 1096871, at *10. Plaintiffs allege that
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`“[m]any of Charter’s subscribe