Viral DRM LLC v. Francisco Morante Fuentes

Background

Viral DRM LLC asserted copyright-based claims against Francisco Morante Fuentes, alleging that he downloaded and copied Viral DRM’s copyrighted materials from YouTube and re-uploaded infringing versions to his YouTube channel, Fulltops. The opinion identifies this as one of several related copyright infringement actions.

Fuentes did not respond to the amended complaint. The Clerk entered default, after which Viral DRM moved for default judgment. At the hearing on that motion, the court raised a question about Viral DRM’s standing—its legal right to bring the claims—and directed Viral DRM to provide a copy of its license agreements with the copyright holders.

Standing issue

Under Section 501(b) of the Copyright Act, the legal or beneficial owner of an exclusive copyright right may sue for infringement of that right. The exclusive rights listed in Section 106 include the rights to reproduce a work, prepare derivative works, distribute copies, publicly perform or display the work, and make certain audio transmissions. The court explained that an assignment or exclusive license can transfer a copyright right for this purpose, while a nonexclusive license cannot confer standing.

Viral DRM described itself as a syndicator of videographic content and alleged that it was the exclusive licensee of the works at issue. The copyright-registration certificates attached to the amended complaint, however, showed that one work was registered to John Michael Sibley and another to Michael Brandon Clement. Michael Brandon Clement stated that the works were exclusively licensed to Viral DRM under written agreements giving Viral DRM the rights needed to sue for the alleged infringements.

The agreement Viral DRM initially submitted in response to the court’s inquiry was with “Chris Tangey,” not with either of the people identified in the registrations. Because an agreement with Clement had been filed in a related action and appeared otherwise identical, the court considered that agreement for purposes of this order, but required Viral DRM to file the correct license or licenses for this action, including any license with Sibley.

The Clement agreement gave Viral DRM “exclusive agency rights” to manage and administer content, search for infringements, register copyrights, authorize attorneys to negotiate settlements, issue takedown notices, file claims, and display, store, transmit, and distribute works as needed to fulfill the agreement. The court concluded that managing and administering content is not one of the exclusive rights listed in Section 106. It also concluded that the agreement’s limited rights to display, store, transmit, and distribute the works did not give Viral DRM the exclusive right to authorize third parties to reproduce, distribute, and display the copyrighted videos. The court stated that the right to enforce a copyright is not itself an exclusive Section 106 right. It further stated that, if there is no agreement with Sibley, Viral DRM has no standing to bring any claim involving that work.

The court also directed Viral DRM to show cause—that is, to explain—how it has standing to bring its claims under 17 U.S.C. §§ 512(f) and 1202(a) and (b), which have their own limits on who may sue.

Sealing ruling and disposition

Viral DRM asked to file the agreement under seal, citing confidentiality and the protection of its assets, contract terms, and the videographer’s private information. The court found compelling reasons to seal portions of the agreement, but not the agreement’s title or paragraph 1, because those portions were discussed in a publicly filed declaration.

The court ordered Viral DRM to file its written response to the standing order by January 6, 2025, and to file the correct licensing agreement within seven days of the order. Viral DRM’s administrative motion to seal was granted in part and denied in part. The order disposed of the sealing motion; the opinion does not state that the court ruled on the pending motion for default judgment.