2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 1 of 10 Pg ID 373
`
`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`
`
`MALIBU MEDIA,
`
`
`
`
`
`
`
`
`
`Plaintiff,
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`No. 13-11432
`
`Hon. Gershwin A. Drain
`
`
`
`
`
`
`
`
`
`
`v.
`
`
`
`
`JOHN DOE
`
`
`
`Defendant.
`
`
` /
`
`
`ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFF’S MOTION TO
`STRIKE [#41] AND GRANTING IN PART AND DENYING IN PART PLAINTIFF’S
`MOTION TO DISMISS DEFENDANT’S COUNTERCLAIM FOR DECLARATORY
`RELIEF [#42]
`I.
`Introduction
`On March 29, 2013, Plaintiff Malibu Media LLC, filed a Complaint under §106 of the
`
`
`
`Copyright Act of 1976 (“the Copyright Act”), as amended 17 U.S.C. §§101 et seq., against
`
`Defendant John Doe for copyright infringement. Plaintiff produces pornographic videos and
`
`markets them over the internet. Those who wish to view Plaintiff’s videos can purchase access
`
`to them on Plaintiff’s website. Plaintiff alleges Defendant used a file sharing method called a
`
`BitTorrent to infringe upon its copyrighted films. BitTorrents allow multiple internet users to
`
`download small amounts of large media files from one another until a user has obtained the
`
`whole file. Initially, Plaintiff did not know Defendant by name, but knew Defendant’s internet
`
`protocol address (“IP address”). The Court granted Plaintiff’s Motion for Leave to Serve a Third
`
`party Subpoena on Defendants internet service provider, and was able to determine Defendant’s
`
`name. Thereafter, the Court granted Defendant’s Motion to Proceed Anonymously Through
`
`Discovery and Dispositive Motions on September 26, 2013.
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 2 of 10 Pg ID 374
`
`
`
`Presently before the Court are Plaintiff’s Motion to Strike Defendant’s Affirmative
`
`Defenses [#41] and Motion to Dismiss Defendant’s Counterclaim for Declaratory Relief [#42].
`
`The Court finds that oral argument will not aide in the resolution of this matter. Accordingly,
`
`these motions will be decided on the briefs submitted. See E.D. Mich. L.R. 7.1(f)(2). For the
`
`reasons that follow, the Court will GRANT IN PART AND DENY IN PART Plaintiff’s
`
`Motions.
`
`II. Factual Background
`
`On February 20, 2014, Defendant filed an Answer containing thirteen Affirmative
`
`Defenses. See Dkt. #37. Defendant raised the defenses of unclean hands, copyright misuse,
`
`estoppel, implied license, innocent intent, no volitional conduct, unconstitutionality of statutory
`
`damages, misuse by others, intervening acts, knowledge, consent and acquiescence, fair use, de
`
`minimis infringement and laches. Id. Defendant also filed a counterclaim for declaratory relief.
`
`Id. Defendant seeks a declaration that the doctrines of unclean hands, copyright misuse,
`
`estoppel, and implied license preclude Plaintiff from enforcing its copyrights, therefore,
`
`Defendant is not liable for copyright infringement. Id.
`
`III. Law and Analysis
`
`A. Standard of Review
`
`i. Motion to Strike Affirmative Defenses
`
`The court can strike an insufficient defense or any redundant, immaterial, impertinent, or
`
`scandalous matter from a pleading. Fed R. Civ. P. 12(f). A defense is insufficient “if as a matter
`
`of law, the defense cannot succeed under any circumstances.” Hahn v. Best Recovery Servs.,
`
`LLC, No. 10–12370, 2010 WL 4483375, *2 (E.D.Mich. Nov.1, 2010). The decision to strike is
`
`within the court’s discretion. 2 Moore's Federal Practice § 12.37 (3d ed. 2002). Courts should
`
` 
`
`2
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 3 of 10 Pg ID 375
`
`only grant a motion to strike when the “purposes of justice require” it. Brown & Williamson
`
`Tobacco Corp. v. United States, 201 F.2d 819, 822 (6th Cir. 1953).
`
`Generally, motions to strike “are disfavored and should only be granted when
`
`‘insufficiency of the defense is clearly apparent.’” Malibu Media, LLC v. Doe, No. 12-2078,
`
`2013 U.S. Dist. Lexis 55985 *6 (E.D Pa. Mar. 6, 2013). The Sixth Circuit Court of Appeals has
`
`recognized “the action of striking a pleading should be sparingly used by the courts” and resorted
`
`to only when required for the purpose of justice” and when the pleading to be stricken has no
`
`possible relation to the controversy. Brown & Williamson Tobacco Corp., 201 F.2d at 822.
`
`Moreover, “a court should restrain from evaluating the merits of a defense where, as here, the
`
`factual background for the case is largely undeveloped.” Id. (quoting Cipollone v. Liggett Grp.,
`
`Inc., 789 F.2d 131, 188 (3d. Cir. 1986)).
`
`Lastly, the Sixth Circuit Court of Appeals has never expressly held that the heightened
`
`pleading standards in Iqbal and Twombly apply to affirmative defenses. See Peters v. Credit
`
`Portection Ass’n, LP, No. 2:13-cv-767, 201 U.S. Dist. LEXIS 34825, *6-7 (S.D. Ohio Mar. 14,
`
`2014). However, some courts have so held, including courts in this circuit. Other courts in this
`
`circuit have reached the opposite conclusion. Peters, 2014 U.S. Dist. LEXIS 34825, at *7-8; Joe
`
`Hand Promotions, Inc. v Havens, No.2:13-cv-0093 2013 U.S. Dist. LEXIS 104962, *2 (S.D.
`
`Ohio Jul. 26, 2013); Paducah River Painting, Inc. v. Mcnational, Inc., No. 5:11-cv-00135 U.S.
`
`Dist. LEXIS 131291, *4-10 (N.D. K.Y. Nov. 12, 2011). This Court finds the latter group of
`
`courts’ reasoning persuasive, thus affirmative defenses “need only be pleaded such that they give
`
`fair notice of the nature of the defense.” Paducah River Painting, Inc., 2011 U.S. Dist. LEXIS
`
`131291, at *4 (quoting Lawrence v. Chabot, 182 F. App’x 442, 456 (6th Cir. 2006)).
`
`
`
` 
`
`3
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 4 of 10 Pg ID 376
`
`ii. Motion to Dismiss
`
`Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint must contain “a
`
`short and plain statement of the claim showing that the pleader is entitled to relief.” Although
`
`this standard does not require “detailed factual allegations,” it does require more than “labels and
`
`conclusions” or “a formulaic recitation of the elements of a cause of action.” Bell Atlantic Corp.
`
`v. Twombly, 550 U.S. 544, 555 (2007). Rule 12(b)(6) of the Federal Rules of Civil Procedure
`
`allows the court to make an assessment as to whether the plaintiff has stated a claim upon which
`
`relief may be granted. Under the Supreme Court’s articulation of the Rule 12(b)(6) standard in
`
`Bell Atl. Corp. v. Twombly, the court must construe the complaint in favor of the plaintiff, accept
`
`the allegations of the complaint as true, and determine whether plaintiff=s factual allegations
`
`present plausible claims. To survive a Rule 12(b)(6) motion to dismiss, plaintiff=s pleading for
`
`relief must provide Amore than labels and conclusions, and a formulaic recitation of the elements
`
`of a cause of action will not do.@ Ass=n of Cleveland Fire Fighters v. City of Cleveland, 502 F.3d
`
`545, 548 (6th Cir. 2007). Even though the complaint need not contain Adetailed@ factual
`
`allegations, its Afactual allegations must be enough to raise a right to relief above the speculative
`
`level on the assumption that all of the allegations in the complaint are true.@ Id. To survive a
`
`motion to dismiss, the plaintiff must allege facts that, if accepted as true, are sufficient “to raise a
`
`right to relief above the speculative level” and to “state a claim to relief that is plausible on its
`
`face.” Ashcroft v. Iqbal, 556 U.S. 662, 667 (2009).
`
`When deciding a motion under Rule 12(b)(6), the court can take into account matters of
`
`public record, orders, items appearing in the record of the case, and exhibits attached to the
`
`complaint. Amini v. Oberlin College, 259 F.3d 493, 502 (6th Cir. 2001). The court can properly
`
`treat documents the defendant attaches to its motion as pleadings if those documents are central
`
` 
`
`4
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 5 of 10 Pg ID 377
`
`to the plaintiff’s complaint and its claims. Werner v. Klais & Co., Inc., 108 F.3d 86, 88 (6th Cir.
`
`1997).
`
`B. Motion to Strike
`
` Plaintiff seeks to strike Defendant’s affirmative defenses of unclean hands, copyright
`
`misuse, estoppel, implied license, knowledge, consent, acquiescence, and laches.
`
`
`
`Plaintiff’s first argument is that the Court should strike the affirmative defense of unclean
`
`hands. The doctrine of unclean hands allows the court to deny injunctive relief where the party
`
`applying for the relief is “guilty of fraud, deceit, unconscionability, or bad faith related to the
`
`matter at issue[.]” Performance Unlimited, Inc. v. Questar Publisher’s, Inc., 52 F.3d 1373, 1383
`
`(6th Cir. 1995). The plaintiff’s misconduct “must relate directly to the transaction about which
`
`the plaintiff has made a complaint.” Id.
`
`Defendant first argues that Plaintiff failed to comply with 18 U.S.C. § 2257, a statute
`
`aimed at protecting underage children from exploitation in the sex industry. See American
`
`Library Ass’n v. Reno, 33 F.3d 78, 86 (D.C. Cir. 1994). The statute requires pornographic movie
`
`producers to create and maintain a record of their performers’ ages. Id. (stating Congress’ intent
`
`in creating the act). This is a criminal statute with no private right of action. Bullard v. MRA
`
`Holding, LLC, 890 F. Supp.2d 1323, 1029 (N.D. Ga. 2012). Congress created civil remedies for
`
`the statutes under this chapter, but did not include one for section 2257. Id. at 1330.
`
`According to Defendant, the doctrine of unclean hands is appropriate because Plaintiff’s
`
`films feature “young-looking girls[.]” See Countercl. at ¶¶ 8,16. Regulations under the act
`
`require pornographic film producers to display section 2257 notice either at the beginning or at
`
` 
`
`5
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 6 of 10 Pg ID 378
`
`the end of the film. 28 C.F.R. § 75.8 (b)-(c) (2014). Plaintiff’s website contains a link to the
`
`statute, but defendant alleges the movies do not contain the notice the regulation requires.
`
`The law in this circuit regarding unclean hands requires that plaintiff’s conduct relate to
`
`the transaction about which Plaintiff has complained. See Performance Unlimited, Inc., 52 F.3d
`
`at 1383. While Defendant’s assertions with respect to section 2257 do not relate to the
`
`transaction underlying the complaint, some of Defendant’s facts do relate to the transaction at
`
`issue. Defendant argues that IPP International UG (“IPP”), Plaintiff’s investigator, was engaged
`
`in a “honey pot” scheme in Germany by seeding its works in an attempt to lure would be
`
`infringers. See Answer. at ¶¶ 15, 17, 22-23. Insofar as Defendant’s unclean hands defense
`
`relies on section 2257, the Plaintiff’s Motion will be GRANTED IN PART. To the extent
`
`defendant’s unclean hand defense relies on a seeding of Plaintiff’s videos, the Plaintiff’s motion
`
`to strike will be DENIED IN PART.
`
`Second, Plaintiff moves to strike the affirmative defense of copyright misuse. To assert
`
`copyright misuse, defendants must establish that plaintiff violated antitrust laws, plaintiff
`
`unlawfully extended the scope of the monopoly granted under its copyright or violated the public
`
`policy behind the copyright laws. Microsoft Corp. v Compusource Distributors, Inc., 115
`
`F.Supp.2d 800, 810 (E.D. Mich. 2000). Some courts have applied this defense without finding a
`
`violation of antitrust laws. Lasercomb Am., Inc. v. Reynolds, 911 F.2d 970, 978 (4th Cir. 1990)
`
`(stating copyright misuse as a defense does not require a showing of an antitrust violation); see
`
`also Practice Mgmt. Info. Corp. v. American Med. Ass’n, 121 F.3d 516, 521 (9th Cir. 1997)
`
`(holding granting a license in exchange for exclusive use of copyrighted material constituted
`
`misuse).
`
` 
`
`6
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 7 of 10 Pg ID 379
`
`Defendant argues Plaintiff is unlawfully extending its monopoly beyond the scope
`
`allowed by its copyright because it is producing child pornography. For the reasons mentioned
`
`above, the Court rejects any argument that failure to comply with section 2257 amounts to
`
`copyright misuse. However, the Court declines to strike this affirmative defense altogether as
`
`the Court cannot conclude that this defense will not succeed under any circumstance. At this
`
`point in the case, the factual record is not fully developed, thus it is too early to determine
`
`whether such a defense will succeed. See Malibu Media, LLC v. Koh, No. 13-cv-10313, 2013
`
`WL 5853480, at *2 (E.D. Mich. Oct. 30, 2013); see Jeeper's of Auburn, Inc. v. KWJB Enterprise,
`
`LLC, 2011 WL 1899195, at *1-2 (E.D.Mich.2011) (“motion to strike will not be granted if the
`
`insufficiency of the defense is not clearly apparent, or if it raises factual issues that should be
`
`determined on a hearing on the merits”). The Court will DENY Plaintiff’s Motion to Strike the
`
`defense of copyright misuse.
`
`Defendant raises estoppel and/or implied license as his third and fourth affirmative
`
`defenses. For estoppel to apply, the party to be estopped must have acted or spoken in a way that
`
`represented a material fact, and the party asserting estoppel must have “detrimentally relied” on
`
`the representation. Bridgeport Music, Inc. v. Justin Combs Pub., 507 F.3d 470, 494 (6th Cir.
`
`2007). In the alleged “honey pot” scheme, IPP seeds Plaintiff’s content to members of the
`
`particular BitTorrent swarm, which allows IPP to locate various John Does in the United States
`
`by IP address. See Def.’s Resp. at 24. However, even if Defendant can establish this at trial, he
`
`has not pointed to any representations made by Plaintiff about permission to share its works.
`
`The Defense of estoppel cannot succeed as a matter of law. The Court will STRIKE estoppel.
`
`An implied license can be the result of conduct or an oral agreement between parties.
`
`Johnson v. Jones, 149 F.3d 494, 500 (6th Cir. 1998). Courts find an implied license in a limited
`
` 
`
`7
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 8 of 10 Pg ID 380
`
`set of circumstances in which one party creates a work for another with the intent that the party
`
`receiving the work will distribute it. Tang v. Putruss, 521 F. Supp.2d 600, 608 (E.D. Mich.
`
`2007). No elements of the purported “honeypot” scheme involve Plaintiff creating work and
`
`giving it to the Defendant with the intent that Defendant distribute it. The implied license cannot
`
`succeed as a matter of law, and the Court will STRIKE this defense.
`
`The fifth affirmative defense Plaintiff seeks to strike is knowledge, consent, and
`
`acquiescence. This defense is redundant because Defendant has already raised estoppel and
`
`implied license. Defendant must show Plaintiff’s conduct “amounted to an assurance to the
`
`defendant, express or implied, that plaintiff would not assert his rights against the defendants.”
`
`Elvis Presley Enterprises, Inc. v. Elvisly Yours, Inc., 936 F.2d 889, 894 (6th Cir. 1991).
`
`Defendant argues Plaintiff was aware of the infringement and took steps to facilitate it. Answer
`
`¶¶ 46-47. However, Defendant offers no facts suggesting that any actions undertaken by
`
`Plaintiff amount to an assurance Plaintiff would not assert its rights under the Copyright Act.
`
`This defense cannot succeed, and the Court will STRIKE it.
`
`The sixth and final affirmative defense Plaintiff seeks to strike is laches. Defendants can
`
`raise laches when a plaintiff has negligently failed to protect its rights as evidenced by an
`
`unreasonable delay in filing suit. Elvisly Yours, Inc., 936 F.2d at 894. A party asserting laches
`
`must demonstrate the opposing party lacked diligence and prejudice resulted from the lack of
`
`diligence. Herman Miller, Inc. v. Palazzetti Imports and Exports, Inc., 270 F.3d 298, 320 (6th
`
`Cir.2001). In the Sixth Circuit, there is a strong presumption against laches if the statute of
`
`limitations on a claim has not lapsed. Id. The statute of limitations on a claim under the
`
`Copyright Act is three years. 17 U.S.C. § 507(b) (2012). Only if there are compelling
`
`circumstances, will laches cut short statute of limitations under the Copyright Act. Chirco v.
`
` 
`
`8
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 9 of 10 Pg ID 381
`
`Corsswinds Communities, Inc., 474 F.3d 227, 234 (6th Cir. 2007). The Sixth Circuit Court of
`
`Appeals has not delineated what qualifies as compelling circumstances, however it has
`
`recognized and applied the Ninth Circuit Court of Appeals’ view that equity cannot allow a
`
`plaintiff to watch defendant expend significant resources exploiting infringement until the
`
`plaintiff is certain it will succeed on its infringement claim. Chirco, 474 F.3d at 232 (citing
`
`Danjaq LLC v. Sony Corp., 263 F.3d 942, 951 (9th Cir. 2001).
`
`Defendant’s Answer and briefing suggest that Plaintiff’s awareness of Defendant’s use of
`
`BitTorrent to download Plaintiff’s material for more than a year is the type of delay that justifies
`
`applying laches to cut the statute of limitation short. Thus far, Defendant has not shown any
`
`expenditure of money or other assets in furtherance of his infringement. Moreover, Plaintiff only
`
`seeks a remedy at law. Given the Sixth Circuit’s strong presumption against laches when the
`
`statute of limitations has not expired, the Court will STRIKE the affirmative defense of laches.
`
`Defendant’s affirmative defenses of estoppel, implied license, knowledge, consent,
`
`acquiescence, and laches cannot succeed as a matter of law. Thus, the Court will GRANT IN
`
`PART AND DENY IN PART Plaintiff’s Motion to Strike [#41]. The affirmative defenses of
`
`estoppel, implied license, knowledge consent and acquiescence and laches will be STRICKEN.
`
`The Court will DENY Defendant’s Motion to Strike the Affirmative Defenses of unclean hands
`
`and copyright misuse.
`
`C. Plaintiff’s Motion to Dismiss
`
`
`
`Plaintiff argues Defendant’s claim for declaratory relief fails to state a claim and repeats
`
`issues already in front of this Court. Defendant seeks a declaration that its affirmative defenses
`
`have merit and it is not liable for infringement because of Plaintiff’s supposed failure to comply
`
`with section 2257 and seeding of copyrighted content by Plaintiff or IPP.
`
` 
`
`9
`
`

`
`2:13-cv-11432-GAD-RSW Doc # 49 Filed 06/12/14 Pg 10 of 10 Pg ID 382
`
`Defendant’s reliance on section 2257 is irrelevant to Plaintiff’s claim. This statute is a
`
`criminal statute and offers no private right of action. For the reasons stated above, Defendant’s
`
`reliance on section 2257 is misguided.
`
`For reasons already addressed, the defenses of implied license and estoppel cannot
`
`succeed as a matter of law. The defenses of unclean hands and copyright misuse, however, do
`
`have merit. Given the lack of development of the factual record, there are circumstances under
`
`which these defenses could succeed. The Court will GRANT IN PART AND DENY IN PART
`
`Plaintiff’s Motion to Dismiss Defendant’s Counterclaim for Declaratory Relief [#42]. The Court
`
`GRANTS Plaintiff’s Motion to Dismiss Defendant’s count for Declaratory Relief as it relates to
`
`estoppel and implied license, but DENIES it as it relates to unclean hands and copyright misuse.
`
`IV. Conclusion
`
`
`
`For the reasons mentioned above, the Court GRANTS IN PART AND DENIES IN
`
`PART Plaintiff’s Motion to Strike Defendant’s Affirmative Defenses [#41], and GRANTS IN
`
`PART AND DENIES IN PART Plaintiff’s Motion to Dismiss Defendant’s Counterclaim for
`
`Declaratory Relief [#42].
`
`
`
` SO ORDERED.
`
`Dated: June 12, 2014
`
`
`
`
`
`
`
`
`
`s/Gershwin A. Drain
`United States District Court Judge
`
`
`
`
`
`
`
` I
`
` hereby certify that a copy of the foregoing document was served upon the parties and/or
`counsel of record on June 12, 2014, by electronic and/or ordinary mail.
`
`
`
`
`
`
`
`
`
`
`
`
`
`s/Julie Owens acting in the absence of Tanya Bankston
`Case Manager
`
`
`
`
`
`
`
` 
`
`10