Advanced Access Content System Licensing Administrator, LLC v. Shen

Background

Advanced Access Content System Licensing Administrator, LLC develops and licenses Advanced Access Content System (AACS) technology, which protects audiovisual content on high-definition media such as Blu-ray discs from unauthorized access, copying, and distribution. The plaintiff sued the defendants under the Digital Millennium Copyright Act (DMCA), a federal law addressing circumvention of technological protections for copyrighted works. It sought monetary damages and equitable relief in the form of a permanent injunction.

After the defendants failed to appear at a hearing, the court entered a preliminary injunction. The Clerk later entered certificates of default against all defendants. The court denied Feng Tao’s motion to set aside the default certificate and denied his motion to amend the preliminary injunction. It granted the plaintiff’s motion to amend the preliminary injunction in part and denied it in part. The Second Circuit later affirmed that ruling. The court also denied Tao’s motion to dismiss for improper service.

The court subsequently entered default judgment against all defendants on liability, referred damages to Magistrate Judge Stewart D. Aaron for an inquest, and requested additional briefing on the permanent injunction’s scope. On July 5, 2023, the court adopted Magistrate Judge Aaron’s recommendation and awarded the plaintiff $14,927,000 in damages, but that decision did not address the request for injunctive relief.

Legal standard

To obtain a permanent injunction, a plaintiff must show four things: irreparable injury, meaning harm that money cannot adequately repair; inadequate legal remedies such as damages; a balance of hardships favoring equitable relief; and that the injunction would not harm the public interest. In a default-judgment setting, the plaintiff must also show a statutory basis for the injunction and satisfy the requirements for issuing one. The DMCA authorizes courts to issue temporary and permanent injunctions to prevent or restrain violations.

Entitlement to a permanent injunction

The court held that the plaintiff was entitled to a permanent injunction. It relied on its earlier findings that monetary remedies were inadequate and that the plaintiff faced irreparable harm without injunctive relief. The court also relied on the Second Circuit’s statement that Tao’s conduct indicated a strong likelihood of future violations.

Scope of the injunction

The plaintiff sought an injunction covering all activities involving technology capable of circumventing AACS technology, as well as any websites, domain names, and social-media accounts used for those activities or for marketing, distributing, offering, or selling the products. Tao argued that Federal Rule of Civil Procedure 54(c) barred relief involving products, websites, accounts, or registrars not specifically listed in the complaint. Rule 54(c) generally provides that a default judgment cannot differ in kind from, or exceed in amount, the relief demanded in the pleadings.

The court rejected that argument. It found that the complaint had requested an injunction against trafficking in any technology capable of circumventing AACS technology and against conducting those activities through any website, social-media service, online service, or offline means. The court concluded that the proposed permanent injunction was not different in kind or scope from the relief requested in the complaint or from the earlier preliminary injunction. It reasoned that limiting the order to specifically named websites and accounts would allow the defendants to continue the same conduct through new domains or accounts.

Service and complaint-service issues

Tao asked the court to require service of the permanent injunction under the Hague Convention on service abroad. The court denied that request, citing Federal Rule of Civil Procedure 65(d), which provides that an injunction binds persons who receive actual notice through personal service or otherwise. The court found that Tao was represented by counsel and had received actual notice of filings through the court’s electronic filing system.

Tao also asked the court to consider supplemental briefing about whether the complaint had been properly served. The court declined to consider that briefing because it had already ruled that service was proper. The court additionally noted Tao’s admitted receipt of the summons and complaint by email and his extensive participation in the case before raising the service issue.

Order

The court granted the plaintiff’s request for a permanent injunction. The order permanently enjoins the defendants, their officers, agents, attorneys, employees, and persons acting in concert with them from manufacturing, importing, offering, providing, or otherwise trafficking in technology, products, services, devices, components, or parts capable of circumventing AACS technology. It also prohibits related disposal or destruction of products, assets, domain-related materials, computer files, business records, and documents.

The order requires the defendants to stop conducting circumvention activities through websites, social-media services, other online platforms, or offline means. It requires them to disable and stop using specified domain names, websites, and associated online accounts. Certain third-party service providers that receive the order must stop providing services connected to the circumvention products, websites, or accounts within three days. Affiliates who receive actual notice must also stop offering, promoting, selling, or trafficking in the products within three days.

The order treats service by electronic filing on Feng Tao as sufficient notice, requires the defendants to provide the injunction to covered people acting for them, warns that violations may result in contempt penalties, and requires a written, sworn compliance report within 14 days. The court directed immediate entry of the injunction and retained jurisdiction to implement and enforce it.