Nintendo v. RomUniverse: Why Statutory Damages Yielded Only $2M

[00:00:00]so there's an update in the rom universe case rom universe was a website hosted by matthew storman that got sued by nintendo for illegally hosting nintendo roms and distributing them to thousands of people around the internet and this is a really interesting topic for me i really enjoy exploring this because i am a gamer i love my nintendo games i love other games and the question of whether you can just go grab games off of a rom hosting archive website poses many interesting issues for someone who's become a copyright attorney while being a lifelong gamer i like the idea of getting free games but it's piracy so maybe i shouldn't be doing that but then nintendo is one of the more restrictive copyright owners and you often can't get a game that you might want an older nintendo game or something so if you wanted to play excite bike before it was finally put on to the nintendo estore as a ported game to the nintendo switch you couldn't you had to go find old hardware that might not be available might not work you had to find an old copy of the cartridge from the nest so you had to have a working-ness and a working cartridge and yeah i can see where you start to get this access problem where you can't access the copyrighted works that you want however do we as a society really want to force companies in general including companies like nintendo to release their properties when they don't want to we know that disney does this they'll restrict access to some disney movies in order to build this sense of scarcity even though it's a digital good and they can just release it whenever but they want to build scarcity and scarcity builds the higher value for the copyrighted work i can't find a perfect solution to those problems if i'm a copyright owner i want to be able to have control over the release and distribution of my copyrighted work if i'm a copyright consumer i want to have unlimited access to those copyrighted works i'll give you a real quick example kaylee and i wanted to watch downton abbey season 6 which wasn't available here in luxembourg until june first so for the end of may we were trying to figure out where can we get this i could try to get it in the u.s and then i would have to use a vpn and then there's companies that detect vpns we could try to buy it on amazon but amazon would only sell it to us if we were in germany and used a german credit card so it was something we considered you know should we pirate this but then the other day we finally saw that it had become available on june 1st it was just a matter of waiting for the time and so there's an access problem there and so yeah rom universe solves the access problem but it does so without the permission of nintendo so nintendo sued matthew storman this is the order regarding plaintiff's motion for summary judgment this action arises from pro se unrepresented defendant matthew storman's purported copying distribution reproduction and offering of copies of plaintiff's copyrighted video games through a website owned and operated by defendant rahm universe on september 10 2019 nintendo filed the complaint against defendant storm in asserting three causes of action copyright infringement trademark infringement and unfair competition under california's law nintendo moves for summary judgment on all of its claims and matthew storman's counter claim and seeks statutory damages attorneys fees and a permanent injunction in joining defendant from engaging in further activity and ordering the transfer of websites that he used for the infringement to establish successful copyright infringement claims a plaintiff must show that he owns a copyright and that defendant copied protected elements of the work defendant testified at his deposition that he does not dispute that nintendo owns the copyrighted works defendant responded to written interrogatories and testified during his deposition that he is the sole owner of the website romuniverse.com defendant also testified at his deposition that he and or his admin uploaded the roms of nintendo's copyrighted works a rom is a read-only memory file or image here defendant and his administrators loaded and distributed copies of nintendo's copyrighted video games on defendant's website as roms those copies could be downloaded from the website nintendo filed a declaration from alicia bell an attorney retained by nintendo to gather evidence related to the distribution of copies on plaintiff's video game software from the website located at romuters.com who declares her firm went to defendant's website between june 12 2019 and july 1 2019 and downloaded copies of nintendo's copyrighted works from its website as nintendo's copyrighted box art bell attaches screenshots of images of nintendo's box art which appeared on defendant's website on the download page for the nintendo video games defendant filed a declaration in opposition to the motion wherein he declares that he denies and disputes that he uploaded any files to said website and that at no time did he verify the content of said rahm file i mean that would be part of discovery he would he would be able to ask them for copies of their evidence and he would then be able to scrutinize their evidence it sounds like maybe he didn't do that which would be a mistake and would be a mistake typical of a pro se defendant this is directly contradictory to his sworn deposition testimony wherein he testified that he uploaded the rom files onto his website under the sham affidavit rule defendant cannot create an issue of fact by an affidavit contradicting his prior deposition testimony this sham affidavit rule prevents a party who has been examined at length on deposition from raising an issue of fact simply by submitting an affidavit contradicting his own prior testimony which would greatly diminish the utility of summary judgment as a procedure for screening out sham issues effect therefore the court strikes defendant's declaration with respect to the copying of nintendo's copyrighted works under the sham affidavit rule accordingly disregarding defendant's sham declaration which the court has stricken it is undisputed defendant copied nintendo's copyrighted works by uploading copies onto his website both uploading and downloading copyrighted material are infringing acts the former violates the copyright holder's right to distribution the latter the right to reproduction defendant also declares his website has been recognized by nintendo as a service provider under the dmca service providers are immune from copyright infringement for transitory digital network communications system caching information residing at the direction of users and information location tools the dmca defines a service provider as an entity offering the transmission routing or providing of connections for digital online communications between or among points specified by a user of material of the user's choosing without modification to the content of the material as sent or received defendant does not mention the dmca that would seem kind of fatal right there nor provide any evidence demonstrating his website constitutes a service provider under the dmca moreover the dmca safe harbors for protection from liability for infringement only apply if the service provider has adopted a termination policy we've talked about this at length see the cox case if you haven't already seen me refer to like 10 times in the last week and accommodates and does not interfere with standard technical measures defendant provides no evidence to support that he has complied with the dmca's notification and policy requirements to prove the dmca safe harbors for protection from liability apply here defendant also fails to provide evidence showing one the infringing material was stored by defendant at the direction of the user two defendant did not receive a financial benefit directly attributable to the infringement three defendant had designated a dmca agent during the infringement yeah you have to have one if you don't have one guess what you're not in your safe harbor and for the required information for dmca notices was displayed on defendant's rom universe website so it was not therefore there is no genuine issue of material fact which is a summary judgment standard that plaintiff owns the copyrighted works and defendant copied the works accordingly the court grants summary judgment in favor of plaintiff on its direct copyright infringement claim to prevail on a claim for contributory copyright infringement plaintiff must demonstrate defendant one knew of any direct infringement and two either induced caused or contributed materially to the infringing conduct providing the site and the facilities for known infringing activity is sufficient to establish contributory liability here bell for nintendo declares the roms uploaded to defendant's website were playable copies of nintendo's video games moreover bell attached screenshots of the download pages on defendant's website to her declaration which showed the number of times the file had been downloaded and demonstrate almost 50 000 downloads of the copies of nintendo's copyrighted works from defendant's website occurred before this lawsuit was filed downloading copyrighted material are infringing acts because it violates the copyright holder's right to pre-production therefore there is no genuine issue of material fact further defendant testified at his deposition that his website indicated that copies of nintendo's copyrighted video games were available for download on the website nintendo also submits a copy of a screenshot of defendant's website wherein the website states best rom site in the universe and lists copies of nintendo's copyrighted video games for download moreover plaintiff filed a copy of a promotional advertisement from defendant's website for purchase of a premium unlimited account for access to thousands of game roms movies isos and ebooks including nintendo switch wii 3ds ds gba and more unlimited downloads for only 30 defendant testified at his deposition that he used promotional advertisement to promote premium memberships where users could have unlimited downloads of files including copies of nintendo's video games defendant further testified at his deposition that he and users of his rom website would receive notifications when new rom files were uploaded to his website so he had actual or red flag knowledge of new rom files therefore there is no genuine issue a material fact that defendant knew its users were engaging in infringing conduct so stormin materially contributed accordingly the court grants summary judgment in favor of plaintiff on the contributory infringement claim vicarious copyright infringement to prevail on a vicarious copyright infringement claim nintendo must prove defendant enjoyed a direct financial benefit from the infringing activity and declined to exercise the right and ability to supervise or control that infringing activity a financial benefit exists where the availability of infringing material acts as a draw for customers so this was also very similar to the cox case where cox knew that there were some users that were infringing and it refused to terminate their accounts because it didn't want to lose the business but it knew that they were infringing because it had received dozens or more of dmca notices a defendant exercises control over a direct infringer when he has both a legal right to stop or limit the direct infringing conduct as well as a practical ability to do so as discussed above defendant filed evidence demonstrating almost 50 000 downloads of the copies of nintendo's work from defendant's website i think they mean the plaintiff filed this evidence but okay and users of defendant's website infringed on nintendo's copyrights by downloading copies of rom files from defendant's website moreover defendant testified at his deposition that he offered users the ability to purchase a premium membership for a fee etc defendant responded to written interrogatories and testified that he is a sole owner of the website we're starting to repeat ourselves here a little bit he further testified that he could block users from visiting his website he could delete available data including roms on his website he could change rom files that were available or not available on his website he testified that while he was aware plaintiff claimed the majority of the content infringed on nintendo's copyrights he did not do anything after receiving the complaint to prevent anyone from adding or not adding files to his website even though he had the ability to do so therefore there's no genuine issue of material fact and the court grants summary judgment in favor of nintendo on its vicarious copyright infringement claim damages nintendo seeks statutory damages for defendants copyright infringement here plaintiff seeks ninety thousand dollars in statutory damages for each of the forty nine copyrights infringed by defendants totaling 4.41 million dollars section 504 of the copyright act limits statutory damages to 150 thousand dollars for willful infringement and thirty thousand dollars for innocent infringement to prove willfulness a plaintiff must show that the defendant was actually aware of the infringing activity or that the defendant's action were the result of reckless disregard or willful blindness to the copyright holders right so that's red flag knowledge moreover the number of awards available under this provision depends not on the number of separate infringements but rather on the number of works infringed and the number of separate infringers the district court has broad discretion in determining the amount of statutory damages here defendant testified at his deposition that he and his admin uploaded copies of nintendo's copyrighted video games and he received notices from nintendo identifying several roms that were uploaded but he failed to remove those files nintendo also submits undisputed evidence that additional copies of nintendo's video games were uploaded to the defendant's website as recently as september 2020 therefore the court finds defendants copyright infringement was willful based on plaintiff's evidence plaintiff contends it suffered lost revenue ranging between approximately 1 million and 3 million from defendants copyright infringement and offers evidence that the retail price of the video games was between twenty to sixty dollars per game and there were approximately fifty thousand downloads of plaintiff's copyrighted video games at the time the lawsuit was filed defendant testified at his deposition that his income for 2019 was approximately thirty to thirty six thousand dollars his rom universe website was his main source of income his monthly income from the website was eight hundred dollars a month before he shut it off all that for eight hundred dollars a month really and his only source of income at the time of the deposition was unemployment and food stamps therefore considering defendant's willful infringement the court finds thirty five thousand dollars in statutory damages for each infringed copyright for a total of one point seven one five one million seven hundred and fifteen thousand dollars in statutory damages for the 49 infringed copyrights the court concludes that would compensate plaintiff for its lost revenue and deter defendant who is currently unemployed and has already shut down his website unfair competition plaintiff is entitled to summary judgment on its copyright infringement claim the court grants summary judgment in favor of plaintiff on its unfair competition claim as well trademark infringement plaintiff's trademark infringement claim against defendant is based on the display of nintendo's trademarks when the copies of nintendo's video games are played after they are downloaded from defendant's website so a counterfeited or pirated game shouldn't be displaying the trademarks and defendant used nintendo's trademarks on its website the court ordered the parties to address whether plaintiff has a cognizable trademark infringement claim plaintiff's trademark claim based on the display of nintendo's trademarks when copies are played is more accurately conceived of as attacking unauthorized copying however the court finds plaintiff has a cognizable trademark claim based on defendant's use of the trademarks on the website the court will only analyze whether it prevails on that trademark infringement claim so plaintiff must demonstrate ownership of a trademark and likelihood of confusion nintendo does have registered trademarks so we're going to go straight to likelihood of confusion there are eight factors strength of the mark proximity of the goods similarity of the marks evidence of actual confusion marketing channels used types of goods and degree of care exercised by the purchaser defendant's intent in using the mark or selecting the mark and likelihood of expansion however in cases involving counterfeit marks it is unnecessary to perform this step-by-step examination counterfeit marks are inherently confusing here defendant's goods are unauthorized copies of plaintiff's video games and plaintiff submits undisputed evidence that defendant used plaintiff's registered trademarks to display and promote defendants counterfeit goods accordingly plaintiff demonstrates a likelihood of confusion plaintiff seeks 400 000 in statutory damages under the lanham act based on defendant's infringement of 28 of plaintiff's trademarks the lanham act provides an award of statutory damages for the use of a counterfeit mark in connection with the sale or distribution of goods or services in an amount of not less than one thousand not more than two hundred thousand per counterfeit mark per type of goods or services sold not more than two million dollars per counterfeit mark and for a willful infringement not more than two million dollars per counterfeit mark here plaintiff offers evidence that defendant displayed 28 of plaintiff's marks on its website in offering illegal downloads of nintendo's copyrighted games therefore defendant did use counterfeit marks as to willfulness plaintiff submits evidence demonstrating the copies of plaintiff's trademarks were to promote the download of unauthorized copies during this litigation therefore the evidence demonstrates willfulness plaintiff only requests four hundred thousand dollars total in statutory damages for defendants willful trademark infringement the court finds the requested four hundred thousand statutory damages is appropriate fourteen thousand two hundred and eighty six dollars per work for 28 counterfeit marks so four hundred thousand dollars is the ruling they also allow attorneys fees under copyright and trademark trademark allows it in exceptional cases copyright allows it to the prevailing party and so they the judge asks nintendo to submit a request for attorneys fees as well then a permanent injunction you need to show irreparable injury and inadequate remedy at law but nintendo got a damage award so how is their irreparable injury you can get a monetary damage award it's not a irreparable injury just because the defendant can't pay lost revenue is insufficient to show irreparable harm the court also rules that because mr storman shut down his rom universe website and the parties met and conferred in september and storming agreed to take down the ram universe website and he has abandoned his business the court uses the statutory damage award to compensate them so they do have an adequate remedy at law and therefore plaintiff fails to demonstrate an inadequate remedy thus the plaintiff failing to demonstrate irreparable harm and inadequate remedy denies a permanent injunction plaintiff also seeks dismissal of defendants dorman's counter claims defendants stated it was asserting a counter claim in document number 33.

[00:20:59]the nature of the counterclaim is unclear defendant pled that its counter claim is plaintiff misrepresented their copyright trademark and unfair competition claims against defendant based on plaintiff's claim that all material on defendants website was infringing in violation of okay 17 usc 512-f means he's asserting a misrepresentation claim if i recall correctly stormin's defense was that because nintendo had sent dmca claims in the past that meant that it recognizes he's a service provider and therefore he should be treated as a service provider and nintendo's claims should be denied as misrepresenting that they know he's a service provider and therefore they shouldn't be bringing claims it was a very weak defense and i think we talked about that in our previous video this statement in defendants pleading does not state a counter claim against nintendo instead pleads a defense plaintiff also submits deposition testimony stormin testified he asserted counter claims against nintendo the basis was that nintendo has to prove the actual files were theirs and the actual validity of the files were what nintendo said they were meaning that just because somebody uploaded a file and listed it as mario doesn't necessarily mean that file was playable i think that was the basis he said in his deposition defendant's deposition testimony therefore demonstrates his purported counter claims are simply alleged defenses to plaintiff's claims therefore the court dismisses any alleged counter claims asserted by defendant against nintendo spoliation this happened plaintiff argued for an adverse inference based on defendants failure to preserve evidence of data from rom universe showing the number of times each infringing rom was downloaded and stormen's communications regarding nintendo ram universe or this litigation they want an adverse inference that he destroyed evidence and therefore the evidence he destroyed would be used against him can be assumed to be adverse it can be inferred to be adverse uh so this is when you destroy evidence for some reason the latin is spolis exfoliation um fortunately i guess the judge uses spoilation which is the modern word for it for spoiling evidence or destroying evidence if you don't present the requested evidence or if you destroy evidence it can be used against you the judge can infer that the response would have been adverse to you and would have been used against you so why not just use it against you anyway so nintendo requests 9 300 in attorney's fees but they already got 3 100 based on an agreement so they can't get it now so the court concludes the plaintiff's motion for summary judgment is granted a total of 2 million 115 000 in statutory damages no permanent injunction no counter claims they're dismissed and denies the sanctions but grants the attorney's fees and that was judge consuelo b marshall the united states district judge for the central district of california and that's the right result it's what i expected the entire time i didn't really see any way that a rom hosting website that hosted unauthorized nintendo roms and made a profit from it was really going to survive a copyright claim from nintendo the thing that surprises me is the amount of money i expected the judgment to be way higher because the numbers that were on his website were much higher than 50 000 downloads in my recollection i could be wrong maybe i'm conflating numbers from a non-nintendo rom you know just because it's for the nintendo platform doesn't mean it was authored by and copyright owned by nintendo so like mario is owned by nintendo but uh final fantasy is not so maybe there were lots of downloads of other roms i thought it was in the hundreds of thousands i thought it was a one billion dollar copyright lawsuit no it's a two million one hundred and fifteen thousand dollar copyright and trademark judgment plus the attorney's fees now if matthew storman really is living off of food stamps and unemployment i don't know how he's ever going to pay that back but i believe federal judgments like these can survive for many years i think it's 25 and they can be renewed or something like that i haven't had to deal with that myself so i'm not 100 sure off the top of my head but nintendo could execute this judgment against matthew storman at the county level in the state where he lives who i'm guessing is california and then if matthew storman has future prospects or any a property to attach to or wages to garnish only if the state law allows then nintendo will get some of their money back so it's probably a pretty empty victory for nintendo they got the website taken down that's the big victory did they get any money worth writing home about probably not it's a really interesting situation i understand i i feel like i understand both sides of piracy when you want to get something i wanted back in the early 2000s when streaming services like netflix were just becoming available amazon was just starting to offer uh streaming and hosting of tv shows and things i wanted to watch mythbusters adam savage was one of my is a great guy jamie heinemann they put on a great show and i really appreciated discovery's production of mythbusters but you couldn't get it on any streaming platform at first so where's a guy to get it if i want to get one channel the discovery channel the only place to get it was to buy a 120 plus dollar per month cable subscription because discovery wasn't on basic cable no it's on the extended cable extended basic at the minimum or premium cable i think at one point it went up to a hundred and eighty dollars a month in order to get the discovery channel not because you just buying the discovery channel because you have to buy the whole package i wanted to use some colorful metaphors there now that you can actually buy the episodes for two dollars an episode i bought them all i own i think all of the mythbusters that myth that they're i think all of them i think i own all of the mythbusters episodes now and i think i'm starting to buy the new ones too just i don't haven't had all that time all that much time to watch but the only place to get it reliably was the pirate bay so that's i think why most people turn to piracy not because they just want all their content for free but because it's inaccessible and when you remove the accessibility problem and charge an appropriate accessible price people will pay for it more people will pay for it than would pirate it but when it's inaccessible to you when it's hidden behind a massive paywall like extended or premium cable tv service then that that creates a barrier to entry that people are willing to take chances to get around i i even hear that there's a new resurgence in piracy now thanks to there being a dozen different streaming platforms you got to have disney plus for this you got to have netflix for that you got to have amazon for this and there's a couple other new streaming services out there i think nbc now has peacock which i think is kind of ridiculous but then i subscribed to formula one tv because i've never been able to watch the f1 races before so it's a difficult situation i don't think there's a really great one solution to all of these problems we can't require disney or we can't require discovery we can't require the formula one i don't know what the group is that owns that we can't require them to make their titles available to everyone for a reasonable price at all times it's more of like a civil problem it's more of like a policy problem and it's their place to make the mistake of restricting access and then having to deal with piracy some companies seem to want to deal with piracy as opposed to wanting to deal with gaining at giving access to paying subscribers so it's it's a real balancing act for anybody who's got media that's popular at that level let me know what you think and what you might do in the comments below thanks for watching this channel would not exist without your support on patreon.com ljfrench sponsors.com law float plane subscriptions and youtube memberships special thanks in the month of june to the following supporters joe tyson john steele gavin barnard evie spirit bear benjamin hitoff ugly grill rudolph becherer jr torpedon brandon able shadow tycho earthbound star rdh dragon and pure magma and thank you to the rest of our supporters scrolling on the screen in front of you i'm leonard french your favorite copyright attorney i love you all i'll see you in the videos have a great week bye [Music] so [Music] so there's a summary judge well yeah ram universe came back from the grave to choke me as i'm trying to talk about it