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`LHF Productions, Inc.,
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`Plaintiff
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`v.
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`Matthew Wilson,
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`Defendant
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`UNITED STATES DISTRICT COURT
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`DISTRICT OF NEVADA
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`Case No.: 2:16-cv-02368-JAD-NJK
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`Order Granting Motion for Default
`Judgment
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`[ECF No. 46]
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`This is one of several essentially identical cases filed by plaintiff LHF Productions, Inc.,
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`in which LHF sues many unidentified Doe defendants—under a single filing fee—for separately
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`infringing its copyright in the film “London Has Fallen” by using BitTorrent software. LHF’s
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`practice in these cases is to move for expedited discovery to identify the defendants, and then
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`systematically dismiss the claims against defendants after failing to serve them or settling with
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`them.1 Now, only one defendants remains: Matthew Wilson. It has been over six months since
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`the Clerk of Court entered default against Wilson, and he continues to avoid this action against
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`him. So, LHF moves for default judgment against him,2 and I grant the request in part.
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`Discussion
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`A.
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`Default-judgment standard
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`Federal Rule of Civil Procedure 55(b)(2) permits a plaintiff to obtain default judgment if
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`the clerk previously entered default based on a defendant’s failure to defend. After entry of
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`default, the complaint’s factual allegations are taken as true, except those relating to damages.3
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`“[N]ecessary facts not contained in the pleadings, and claims [that] are legally insufficient, are
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`1 See, e.g., LHF Productions, Inc. v. Kabala, 2:16-cv-02028-JAD-NJK; LHF Productions, Inc. v.
`Buenafe, 2:16-cv-01804-JAD-NJK; LHF Productions, Inc. v. Smith, 2:16-cv-01803-JAD-NJK;
`LHF Productions, Inc. v. Boughton, 2:16-cv-01918-JAD-NJK.
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`2 ECF No. 46.
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`3 Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (per curiam); FED. R.
`CIV. P. 8(b)(6) (“An allegation—other than one relating to the amount of damages—is admitted
`if a responsive pleading is required and the allegation is not denied.”).
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`not established by default.”4 The court has the power to require a plaintiff to provide additional
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`proof of facts or damages in order to ensure that the requested relief is appropriate.5 Whether to
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`grant a motion for default judgment lies within my discretion,6 which is guided by the seven
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`factors outlined by the Ninth Circuit in Eitel v. McCool:
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`(1) the possibility of prejudice to the plaintiff; (2) the merits of
`plaintiff’s substantive claim; (3) sufficiency of the complaint; (4)
`the sum of money at stake in the action; (5) the possibility of a
`dispute concerning material facts; (6) whether the default was due
`to excusable neglect; and (7) the strong policy underlying the
`Federal Rules of Civil Procedure favoring decisions on the merits.7
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`A default judgment is generally disfavored because “[c]ases should be decided upon their merits
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`whenever reasonably possible.”8
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`B.
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`The BitTorrent protocol
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`A brief description of the BitTorrent protocol is helpful to contextualize my Eitel
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`analysis. Safety Point Products, LLC v. Does describes it well:
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`BitTorrent is a program that enables users to share files via the
`internet. Unlike other “peer-to-peer” (P2P) file sharing networks
`that transfer files between users or between a user and a central
`computer server, BitTorrent allows for decentralized file sharing
`between individual users who exchange small segments of a file
`between one another until the entire file has been downloaded by
`each user. Each user that either uploads or downloads a file
`segment is known as a “peer.” Peers that have the entire file are
`known as “seeds.” Other peers, known as “leeches” can
`simultaneously download and upload the pieces of the shared file
`until they have downloaded the entire file to become seeds.
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`Groups of peers that download and upload the same file during a
`given period are known as a “swarm,” with each peer being
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`4 Cripps v. Life Ins. Co., 980 F.2d 1261, 1267 (9th Cir. 1992).
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`5 See FED. R. CIV. P. 55(b)(2).
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`6 Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986).
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`7 Id. at 1471–72.
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`8 Id. at 1472.
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`Case 2:16-cv-02368-JAD-NJK Document 47 Filed 06/01/18 Page 3 of 10
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`identified by a unique series of alphanumeric characters known as
`“hashtag” that is attached to each piece of the file. The swarm’s
`members are relatively anonymous, as each participant is
`identifiable only by her Internet Provider (IP) address. Overseeing
`and coordinating the entire process is a computer or server known
`as a “tracker” that maintains a record of which peers in a swarm
`have which files at a given time. In order to increase the likelihood
`of a successful download, any portion of the file downloaded by a
`peer is available to subsequent peers in the swarm so long as the
`peer remains online.
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`But BitTorrent is not one large monolith. BitTorrent is a computer
`protocol, used by various software programs known as “clients” to
`engage in electronic file-sharing. Clients are software programs
`that connect peers to one another and distributes data among the
`peers. But a peer’s involvement in a swarm does not end with a
`successful download. Instead, the BitTorrent client distributes data
`until the peer manually disconnects from the swarm. It is only
`then that a given peer no longer participates in a given BitTorrent
`swarm.9
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`C.
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`Evaluating the Eitel factors
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`1.
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`Possibility of prejudice to LHF
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`The first Eitel factor weighs in favor of granting default judgment against Wilson. LHF
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`sent Wilson numerous demand letters and a summons along with the first-amended complaint,
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`but Wilson never responded.10 LHF claims that Wilson infringed its copyright by downloading
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`its film using BitTorrent software. Given the nature of BitTorrent software, Wilson may be
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`exacerbating LHF’s injury by continuing to seed the file to the BitTorrent swarm.
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`2.
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`Substantive merits and sufficiency of the claims
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`The second and third Eitel factors require LHF to demonstrate that it has stated a claim
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`on which it may recover.11 The first-amended complaint sufficiently pleads LHF’s direct-
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`copyright-infringement, contributory-copyright-infringement, and vicarious-liability claims.
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`9 Safety Point Products, LLC v. Does, 2013 WL 1367078, at *1 (N.D. Ohio Apr. 4, 2013)
`(internal citations omitted).
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`10 ECF No. 46 at 4.
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`11 See Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978).
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`Case 2:16-cv-02368-JAD-NJK Document 47 Filed 06/01/18 Page 4 of 10
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`To present a prima facie case of direct infringement, LHF must show that: (1) it owns the
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`allegedly infringed material, and (2) the alleged infringers violate at least one exclusive right
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`granted to copyright holders under 17 U.S.C. § 106.12 LHF alleges that it is the owner of the
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`copyright registration for the film “London Has Fallen.”13 LHF also alleges that Wilson
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`willfully violated several exclusive rights granted by 17 U.S.C. § 106, and that those violations
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`caused it to suffer damages.14
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`The contributory-copyright-infringement claim requires LHF to allege that Wilson “had
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`knowledge of the infringing activity” and “induce[d], cause[d,] or materially contribute[d] to the
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`infringing conduct of another.”15 “Put differently, liability exists if the defendant engages in
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`personal conduct that encourages or assists the infringement.”16 Given the nature of BitTorrent
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`technology, BitTorrent swarm participants who download files compulsorily upload those same
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`files so that other participants may download them at a faster rate. Accordingly, LHF’s
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`allegations that each defendant is a contributory copyright infringer because they participated in
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`a BitTorrent swarm17 is sufficient to satisfy the induced-caused-or-contributed requirement.
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`LHF satisfies the remaining requirements by alleging that Wilson knew or should have known
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`that other BitTorrent-swarm participants were directly infringing on LHF’s copyright by
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`downloading the files that they each uploaded.18
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`12 A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1013 (9th Cir. 2001).
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`13 ECF No. 8 at 10, ¶ 46; see also ECF No. 8-2.
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`14 ECF No. 8 at 10–11.
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`15 A&M Records, 239 F.3d at 1019 (quoting Gershwin Publ’g Corp. v. Columbia Artists Mgmt.,
`443 F.2d 1159, 1162 (2d Cir. 1971) and citing Fonovisa, Inc. v. Cherry Auction, Inc., 76 F.3d
`259, 264 (9th Cir. 1996)).
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`16 Id. (quoting Matthew Bender & Co. v. West Publ’g Co., 158 F.3d 693, 706 (2d Cir. 1998)).
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`17 ECF No. 8 at 11, ¶ 56.
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`18 Id. at 12, ¶¶ 58–61.
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`LHF also claims that Wilson, as the account holder for the Internet service, is vicariously
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`liable for any infringing activity conducted by other users on his internet connection.19
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`“Vicarious infringement is a concept related to, but distinct from, contributory infringement.”20
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`“To state a claim for vicarious copyright infringement, [LHF] must allege that [Wilson] had (1)
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`the right and ability to supervise the infringing conduct and (2) a direct financial interest in the
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`infringing activity.”21
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`LHF’s allegations satisfy the first prong. As the court discussed in Dallas Buyers Club,
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`LLC v. Doughty, “the Internet service account holder, appea[rs] to have had exclusive control
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`over use of the Internet service” and the account holder “could have simply secured access to the
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`Internet by creating a password or by changing an already existing password.”22 “Thus, . . . [the
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`account holder] had the capacity to terminate use of his Internet service by any infringing third
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`party if he believed it was being used to violate applicable law.”23
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`LHF also satisfies the direct-financial-interest prong. “The essential aspect of the direct
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`financial benefit inquiry is whether there is a causal relationship between the infringing activity
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`and any financial benefit a defendant reaps, regardless of how substantial the benefit is in
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`proportion to a defendant’s overall profits.”24 “Financial benefit exists where the availability of
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`infringing material acts as a ‘draw’ for customers.”25 “The size of the ‘draw’ relative to a
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`defendant’s overall business is immaterial. A defendant receives a ‘direct financial benefit’ from
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`a third-party infringement so long as the infringement of third parties acts as a ‘draw’ for
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`customers ‘regardless of how substantial the benefit is in proportion to a defendant’s overall
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`19 Id. at 14.
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`20 Perfect 10, Inc. v. Visa Intern. Service Ass’n, 494 F.3d 788, 802 (9th Cir. 2007).
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`21 Id.
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`22 Dallas Buyers Club, LLC v. Doughty, 2016 WL 1690090 (D. Or. Apr. 27, 2016).
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`23 Id. (citing A&M Records, 239 F.3d 1004).
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`24 Perfect 10, Inc. v. Giganews, Inc., 2014 WL 8628031, at *3 (C.D. Cal. Nov. 14, 2014)
`(quoting Ellison v. Robertson, 357 F.3d 1072, 1079 (9th Cir. 2004)).
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`25 A&M Records, 239 F.3d at 1023.
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`profits.”26 LHF alleges that Wilson benefitted from third-party infringement by viewing
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`“London Has Fallen” without paying for it.27 The law is clear that it doesn’t matter how large
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`the financial benefit is: by watching the BitTorrent-downloaded film, Wilson saved the cost of a
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`movie ticket, and that is a direct financial benefit.
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`I therefore find that LHF sufficiently pled each of its claims in the first-amended
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`complaint. I also find that LHF’s claims have substantive merit, subject to any defenses that
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`Wilson could raise.
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`3.
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`Sum of money at stake
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`The sum-of-money factor requires me to consider “the amount of money at stake in
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`relation to the seriousness of [Wilson’s] conduct.”28 “If the sum of money at stake is completely
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`disproportionate or inappropriate, default judgment is disfavored.”29 LHF asks for statutory
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`damages and attorney’s fees and costs.
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`For statutory damages, LHF requests $15,000 under 17 U.S.C. § 504(c).30 The statute
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`sets a $750 minimum and a $30,000 maximum award of damages for copyright infringement,31
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`and that maximum can be increased up to $150,000 where the infringement was willful.32 I have
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`“wide discretion in determining the amount of statutory damages to be awarded, constrained only
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`by the specified maxima and minima.”33
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`26 Perfect 10, 2014 WL 8628031, at *3 (quoting Ellison, 357 F.3d at 1079).
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`27 ECF No. 8 at 13, ¶ 68.
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`28 Twentieth Century Fox Film Corp. v. Streeter, 438 F. Supp. 2d 1065, 1071 (D. Ariz. 2006)
`(quoting PepsiCo. Inc v. California Security Cans, 238 F. Supp. 2d 1172, 1176 (C.D. Cal.
`2002)).
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`29 Twentieth Century Fox, 438 F. Supp. 2d at 1071.
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`30 ECF No. 46 at 8.
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`31 17 U.S.C. § 504(c)(1).
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`32 17 U.S.C. § 504(c)(2).
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`33 Peer Int’l Corp. v. Pausa Records, Inc., 909 F.2d 1332, 1336 (9th Cir. 1990) (quoting Harris
`v. Emus Records Corp., 738 F.2d 1329, 1335 (9th Cir. 1984)).
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`Given Wilson’s numerous opportunities to respond to LHF’s demand letters, first-
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`amended complaint, and this motion, coupled with LHF’s unopposed allegations that I take as
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`true, the factual showing before me indicates that Wilson is a willful copyright infringer. But I
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`do not find that $15,000 is necessary to compensate LHF for its injury and to deter Wilson and
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`other BitTorrent users. Although I acknowledge that other courts—even in LHF’s other cases in
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`another district—awarded $15,000 for the same offense, I am not persuaded by their actions.
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`After considering the lost-profits movie ticket sales, the cost of identifying infringers and
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`pursuing litigation, and the boundaries provided by § 504(c), I determine that $1,500 is the
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`appropriate damage award. This amount—187.5 times as much as the average $8.00 per movie
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`ticket suggested by LHF34—adequately accomplishes the goals of § 504(c) to protect
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`copyrighted works and deter infringement. This amount is also not excessive because it is only
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`1% of the statutory maximum for willful infringement.
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`The Copyright Act also allows courts to award the recovery of full costs and reasonable
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`attorney’s fees to the prevailing party as part of those costs.35 LHF, in applying the lodestar
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`method,36 moves for $5,625 in attorney’s fees37 and $480 in costs, for a total of $6,105. The
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`total sum of money at stake, then, is $7,605, and I find that this factor weighs in favor of default
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`judgment.
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`4.
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`Possibility of a dispute concerning material facts
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`Next I consider the possibility that material facts are disputed. LHF adequately alleged
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`three copyright-infringement claims against Wilson. Wilson failed to appear or otherwise
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`respond, so he admitted as true all of the material facts alleged in LHF’s complaint. Because
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`those facts are presumed true and Wilson failed to oppose this motion, no factual disputes exist
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`that would preclude the entry of default judgment against him.
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`34 See case 2:16-cv-2028-JAD-NJK, ECF No. 66 at 9 n.3 and accompanying text (LHF’s
`objection to report and recommendation, incorporated by reference in this case at ECF No. 38).
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`35 17 U.S.C. § 505 (2012).
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`36 See Camacho v. Bridgeport Financial, Inc., 523 F.3d 973, 978 (9th Cir. 2008).
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`37 This number is based on a rate of $375.00 per hour for 15 hours.
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`5.
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`Excusable neglect
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`Under this factor, I consider whether Wilson’s default may have resulted from excusable
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`neglect. LHF sent Wilson two demand letters roughly eight and five weeks prior to filing its
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`first-amended complaint. Wilson did not respond to either of them. Then LHF filed its first-
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`amended complaint on January 5, 2017, and sent Wilson a third demand letter. He didn’t
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`respond to that letter either. LHF served Wilson with process on March 2, 2017,38 and Wilson
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`failed to appear or file an answer to the first-amended complaint. Six and a half months later,
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`LHF moved for entry of default against Wilson, and three weeks after that motion was granted,
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`LHF moved for default judgment.39 Wilson has never appeared or responded. Wilson has
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`demonstrated a habit of ignoring LHF, so I can only conclude that his default was not the product
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`of excusable neglect. This factor thus weighs in favor of entering default judgment.
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`6.
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`Favoring decisions on the merits
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`“Generally, default judgments are disfavored because cases should be decided upon their
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`merits whenever reasonably possible.”40 Because Wilson has failed to respond to anything at all
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`in this action, it is not possible to decide this case on its merits, so this factor, too, weighs in
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`favor of default judgment. As every factor weighs in favor of entering default judgment, I grant
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`LHF’s motion.
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`D.
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`Permanent injunction
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`As its final claim for relief, LHF asks for a permanent injunction enjoining Wilson from
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`“directly or indirectly infringing [its] rights” over its film “including[,] without limitation[,]
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`using the Internet to reproduce, to distribute, to copy, or to publish the motion picture.”41 The
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`Copyright Act allows me to “grant temporary and final injunctions on such terms as [I] may
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`38 ECF No. 14.
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`39 ECF Nos. 43, 45, 46.
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`40 Eitel, 782 F.2d at 1472.
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`41 ECF No. 55 at 14.
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`deem reasonable to prevent or restrain infringement of a copyright.”42 The Supreme Court held
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`in eBay Inc. v. MercExchange, L.L.C. that a plaintiff must satisfy a four-factor test to receive a
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`permanent injunction in a patent-infringement case.43 LHF must demonstrate: “(1) that it has
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`suffered an irreparable injury; (2) that remedies available at law, such as monetary damages, are
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`inadequate to compensate for that injury; (3) that, considering the balance of hardships between
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`the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest
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`would not be disserved by a permanent injunction.”44 This test also applies to copyright-
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`infringement cases.45
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`LHF argues that “[m]onetary damages alone are simply inadequate” because “absent
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`injunctive relief to force the deletion of each torrent file from [Wilson’s] computer[] . . .
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`infringement will continue unabated in exponential fashion.”46 But I conclude that a monetary
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`judgment of $7,605 is sufficient to compensate LHF for any infringement injury and likely to
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`sufficiently deter Wilson from further infringing LHF’s copyright, so LHF fails to satisfy the
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`second factor of the permanent-injunction test, and I deny its request for injunctive relief.
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`Conclusion
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`Accordingly, IT IS HEREBY ORDERED that LHF’s motion for default judgment
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`against Matthew Wilson [ECF No. 46] is GRANTED in part and DENIED in part. I award
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`LHF $1,500 in statutory damages and $6,105 in reasonable attorney’s fees and costs for a total of
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`$7,605. I decline to issue a permanent injunction against Wilson.
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`42 17 U.S.C. § 502(a).
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`43 eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006).
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`44 Id.
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`45 Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 995–96 (9th Cir. 2011).
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`46 ECF No. 46 at 11.
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`Case 2:16-cv-02368-JAD-NJK Document 47 Filed 06/01/18 Page 10 of 10
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`The Clerk of Court is directed to ENTER JUDGMENT in favor of LHF Productions,
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`Inc. and against Matthew Wilson in the total amount of $7,605 and CLOSE THIS CASE.
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`Dated: June 1, 2018
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`_______________________________
`U.S. District Judge Jennifer A. Dorsey
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