Viral DRM LLC v. Margarita

Background

Viral DRM LLC brought copyright infringement claims against Shubstor Margarita, alleging that he downloaded and copied Viral DRM's copyrighted materials from YouTube and re-uploaded infringing versions to his YouTube channel, When God is Angry. Margarita did not respond to the complaint. The Clerk entered default, and Viral DRM moved for default judgment.

At the hearing on the default-judgment motion, the court raised a question about Viral DRM's standing—the legal right to bring the claims—and directed Viral DRM to submit a copy of its license with the copyright holders.

Standing Analysis

Under 17 U.S.C. § 501(b), a legal or beneficial owner of an exclusive copyright right may sue for infringement of that right. The Copyright Act's exclusive rights include reproducing, preparing derivative works, distributing, publicly performing, publicly displaying, and recording and performing a work through audio transmission. An assignment or exclusive license can transfer a right in a copyright, but a nonexclusive license cannot confer standing to sue for infringement.

Viral DRM described itself as an exclusive licensee and alleged that it had registered the works. The registration certificates attached to the complaint, however, identified Michael Brandon Clement as the copyright registrant. Viral DRM submitted an "Exclusive Copyright Management Agreement" between Viral DRM and Bradley Arnold, not Clement. Because Viral DRM had filed an agreement with Clement in a related action and the agreements were otherwise identical, the court considered that agreement for purposes of this order but required Viral DRM to file the correct license for this action.

The agreement gave Viral DRM exclusive agency rights to manage and administer the content, including rights to search for infringements, register copyrights, authorize attorneys to negotiate settlements, issue takedown notices, and file claims. It also gave Viral DRM rights to display, store, transmit, and distribute the works as needed to fulfill the agreement. The court concluded that these provisions did not give Viral DRM the exclusive ownership rights required for standing, including the exclusive right to authorize third parties to reproduce, distribute, and display the copyrighted videos. The agreement also stated that the content creator retained all copyright and ownership rights.

The court separately noted that Viral DRM's claims under 17 U.S.C. § 512(f) and §§ 1201 and 1202 also have statutory limits on who may sue. The order specifically required Viral DRM to show cause as to how it had standing to bring claims under §§ 512(f), 1202(a), and 1202(b).

Sealing Request

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

Disposition

The court ordered Viral DRM to file a written response to the standing order by January 6, 2025, and to file the correct licensing agreement within seven days of the order. The court's administrative motion to seal was GRANTED IN PART and DENIED IN PART as described in the order. The order disposed of Docket No. 36. It did not decide Viral DRM's motion for default judgment.