Viral DRM LLC v. Rizky Fadilah

Background

Viral DRM LLC asserted copyright and related claims against Rizky Fadilah, alleging that he downloaded and copied Viral DRM’s copyrighted materials from YouTube and re-uploaded infringing versions to a YouTube channel identified as GOD | WTF. Fadilah did not respond to the amended complaint. The clerk entered his default, and Viral DRM moved for default judgment.

During the default-judgment proceedings, the court questioned whether Viral DRM had standing, meaning the legal right to bring the claims. The court required Viral DRM to submit its licensing agreement and later ordered it to explain why it had standing. Viral DRM submitted the same response in several related cases, and the court found that the response did not adequately address the facts or record in this case.

The copyright registrations attached to the amended complaint identified Michael Brandon Clement as the registrant. Clement stated that he was a principal and owner of Viral DRM and that the works were exclusively licensed to Viral DRM. Viral DRM also submitted an agreement with Clement and a declaration concerning a license from Noah Tomkinson, the author of an unregistered work.

Claims under Sections 501(b), 1201, and 1202

Section 501(b) of the Copyright Act allows a legal or beneficial owner of an exclusive copyright right to sue for infringement of that right. The court explained that an assignment or exclusive license can transfer a copyright right and support standing, while a nonexclusive license cannot.

The agreements gave Viral DRM “exclusive agency rights” to manage and administer submitted content, search for infringement, register copyrights, authorize attorneys to negotiate settlements, issue takedown notices, file claims on behalf of content creators, and display, store, transmit, and distribute works as needed to fulfill the agreements. The content creators otherwise retained their copyright and ownership rights.

The court held that these agreements did not give Viral DRM the exclusive right to authorize third parties to reproduce, distribute, and display the copyrighted videos. Enforcement rights were not the same as ownership of an exclusive right under the Copyright Act. The court therefore found that Viral DRM lacked standing for its Section 501(b) copyright-infringement claim.

Viral DRM’s Sections 1201 and 1202 claims concerned alleged removal or falsification of watermarks identifying the works as belonging to Live Storms Media. The court found that Viral DRM had not established standing to challenge removal of Live Storms Media’s watermark. The record did not clearly explain the relationships among Live Storms Media, Viral DRM, the videographers, and the works. The court therefore found that Viral DRM lacked standing for these claims as well.

Section 512(f) claim and default judgment

Section 512(f) permits a claim for material misrepresentations in copyright takedown or counter-notice procedures by a copyright owner or authorized licensee. The court found that Viral DRM had established standing for this claim because it submitted licensing agreements with Clement and Tomkinson, evidence that Clement submitted takedown notices on Viral DRM’s behalf, and copies of the counter-notices.

The court also found that it had federal-question jurisdiction and that Fadilah consented to personal jurisdiction in the district by submitting a counter-notification. It concluded that the factors used to evaluate default judgment favored Viral DRM. The amended complaint adequately alleged the Section 512(f) claim, Viral DRM submitted supporting evidence, Fadilah was properly served, and he never appeared.

The court did not award the amount Viral DRM sought. Viral DRM’s evidence described employee time spent preparing and submitting takedown notices, not harm caused by Fadilah’s counter-notices. The court found no evidence that YouTube restored the videos after receiving the counter-notices or that Viral DRM suffered actual damages because of them.

Because Viral DRM did not prove actual harm, the court awarded nominal damages of $1 for each of five false counter-notifications, for a total of $5. It also awarded post-judgment interest at the federal rate on unpaid principal. The opinion states that Viral DRM waived any claim for pre-judgment interest, attorney’s fees, and costs.

Disposition

The court granted default judgment on Viral DRM’s Section 512(f) claim and awarded $5 in nominal damages plus post-judgment interest. It denied Viral DRM’s motion for default judgment on the Sections 501(b), 1201, and 1202 claims and dismissed those claims without leave to amend for lack of standing. The court separately denied leave to amend those claims and stated that a separate judgment would follow.