Viral DRM LLC v. Rizky Fadilah

Background

Viral DRM LLC sued Rizky Fadilah for copyright infringement, alleging that he downloaded and copied Viral DRM’s copyrighted materials from YouTube and re-uploaded infringing versions to his YouTube channel, GOD | WTF. The opinion states that this was one of several related copyright-infringement actions.

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

Standing analysis

Section 501(b) of the Copyright Act permits the legal or beneficial owner of an exclusive copyright right to 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, perform or display the work publicly, and make certain audio transmissions.

The court explained that an assignment or an exclusive license can transfer a copyright right for purposes of standing. A nonexclusive license, however, does not transfer copyright ownership and cannot by itself give the licensee standing to sue for infringement.

Viral DRM’s amended complaint described it as the exclusive licensee of the works and stated that it had registered them with the Copyright Office. The attached registration certificates, however, identified Michael Brandon Clement as the copyright owner. Clement, identified as a principal and one of Viral DRM’s owners, 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.

Viral DRM then filed an “Exclusive Copyright Management Agreement” with Clement. The agreement gave Viral DRM exclusive agency rights to manage and administer the content, including rights to search for infringement, register copyrights, authorize attorneys to negotiate settlements, issue takedown notices, file claims on Clement’s behalf, and display, store, transmit, and distribute the works as needed to perform the agreement. Clement otherwise retained the copyright and ownership rights.

The court concluded that managing and administering content was 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 ownership rights required for standing. In particular, the agreement did not give Viral DRM the exclusive right to authorize third parties to reproduce, distribute, and display the copyrighted videos. The court distinguished an agreement that did provide that kind of exclusive authorization power.

The court also identified limits on who may bring Viral DRM’s other copyright-related claims under 17 U.S.C. § 512(f) and 17 U.S.C. §§ 1201 and 1202. The order specifically required Viral DRM to show cause regarding its standing to bring the infringement claims, including claims under 17 U.S.C. §§ 512(f), 1202(a), and 1202(b).

Rulings

The court ordered Viral DRM to file a written response to the order to show cause by January 6, 2025. This order did not decide the pending request for default judgment on the merits; the opinion instead required Viral DRM to address the threshold standing issue.

Viral DRM also filed an administrative motion to seal its agreement. The court found compelling reasons to seal portions of the agreement but ruled that the agreement’s title and paragraph 1, which were discussed in a publicly filed declaration, should not be sealed. The motion to seal was therefore granted in part and denied in part. The order disposed of Docket No. 70.