Moonbug Entertainment Limited v. Babybus Network Technology Co., Ltd

Background

Moonbug Entertainment Limited and Treasure Studio, Inc. sued BabyBus Co., Ltd. and BabyBus (Fujian) Network Technology Co., Ltd. over alleged copyright infringement. After the court allowed a supplemental complaint, Moonbug asserted claims for copyright infringement and copyright misrepresentation concerning BabyBus’s continued display and performance of the “Yes Yes Playground” video on a Portuguese-language YouTube channel. BabyBus answered and asserted the affirmative defenses of laches and unclean hands.

The court had previously found at summary judgment that six BabyBus videos, including “Yes Yes Playground,” infringed Moonbug’s copyrights. BabyBus later submitted counter-notifications to YouTube concerning videos for which infringement remained disputed. Moonbug moved to strike BabyBus’s two affirmative defenses.

Legal standard

The court explained that courts in the Northern District of California generally require affirmative defenses to satisfy the plausibility standard associated with Twombly and Iqbal. An affirmative defense must provide fair notice and cannot consist only of unsupported legal conclusions. On a motion to strike, the court views the pleading in the light most favorable to the party that asserted the defense.

Laches defense

Laches is a defense based on unreasonable delay. The Supreme Court has held that laches cannot bar a copyright claim seeking legal relief when the claim was filed within the three-year limitations period. Because BabyBus did not assert laches against Moonbug’s claim for legal relief, the court denied as moot Moonbug’s motion to strike laches in that respect.

Laches may theoretically apply to copyright claims seeking equitable relief, but only in extraordinary circumstances. The court did not decide whether BabyBus’s allegations were sufficient to plead laches because it found another basis for resolving the motion. The Ninth Circuit recognizes an exception to laches for willful infringement, and BabyBus had conceded willful infringement involving six accused videos and four compilations that included them. The court therefore held that laches was unavailable to BabyBus, granted Moonbug’s motion to strike that defense, and dismissed the laches defense with prejudice.

Unclean-hands defense

Unclean hands is a defense claiming that a plaintiff’s inequitable conduct should prevent relief. The court stated that the defense requires both inequitable conduct and a connection between that conduct and the subject matter of the plaintiff’s claims.

For the copyright infringement claims, BabyBus alleged that Moonbug had sent erroneous, knowingly false, or misleading Digital Millennium Copyright Act takedown notices and had failed to alert BabyBus that one video had already been found infringing. The court did not decide whether these allegations showed inequitable conduct because it found that they lacked the required close connection to the merits of the copyright dispute. The court therefore granted the motion to strike unclean hands as to the copyright infringement claims.

For the copyright misrepresentation claim, the court found that the alleged campaign of takedown notices did not include the notice concerning the Portuguese “Yes Yes Playground” video. The court also found no cited authority supporting an unclean-hands defense based on a plaintiff’s failure to notify a defendant of the defendant’s own infringement, and noted that the takedown request itself notified BabyBus of the infringement claim. The court granted the motion to strike unclean hands as to the copyright misrepresentation claim and dismissed that defense with prejudice.

Disposition

The court granted Moonbug’s motion to strike. The order dismissed the laches and unclean-hands affirmative defenses; it expressly dismissed those defenses with prejudice in the portions of the ruling addressing their applicable claims. The order disposed of Docket No. 389.