As one of the leading CDN and DDoS protection services, Cloudflare is used by millions of websites across the globe.

This includes thousands of “pirate” sites, including the likes of The Pirate Bay, which rely on the U.S.-based company to keep server loads down.

Many rightsholders have complained about Cloudflare’s involvement with these sites and in 2016 adult entertainment publisher ALS Scan took it a step further by dragging the company to court.

ALS accused the CDN service of various types of copyright infringement, noting that several customers used Cloudflare’s servers to distribute pirated content. While Cloudflare managed to have several counts dismissed, the accusation of contributory copyright infringement remains.

With the case heading to trial, both sides have submitted motions for partial summary judgment on this contributory infringement claim. This week California District Court Judge George Wu ruled on the matter, denying the CDN provider’s motion in its entirety.

One of Cloudflare’s arguments was that it did not substantially assist copyright infringements because the sites would remain online even if they were terminated from the service. It can’t end the infringements entirely on its own, the company argued.

The Court disagreed with this assessment, noting that Cloudflare’s cache can be seen as a substantial infringement by itself, which is something the company has control over.

“First of all, as to the infringements that are the cache copies, Cloudflare does appear to have the master switch,” Judge Wu writes.

“Second of all, just because the infringing images will remain online, does not mean the assistance is insubstantial. If that were true, then liability based on server space would rely on whether or not an infringing site had, or could acquire a backup server.”

Cloudflare also stressed that there are no simple measures it could take in response to alleged copyright infringements. Removing a cached copy based on a takedown notice is not an option, the company argued, as that leaves sites and their users vulnerable to malicious attacks.

Judge Wu didn’t deny that terminating service to sites such as ‘bestofsexpics.com and cumonmy.com’ could cause security issues but added that this doesn’t mean that it’s okay for Cloudflare to support illegal activity.

“[I]f Cloudflare’s logic were accepted, there would be no web content too illegal, or dangerous, to justify termination of its services. While Cloudflare may do amazing things for internet security, the Court would have a hard time accepting that Cloudflare’s security features give it license to assist in any online activity,” Judge Wu writes.

From the order

Moving on to ALS’ motion, which was also denied in part, the Court brings more bad news for Cloudflare. While the CDN provider keeps its safe harbor defense at trial, the Court ruled that the existence of cache copies can be sufficient to prove that Cloudflare assisted in the alleged copyright infringements.

“The Court would find that, as a legal matter, Cloudflare’s CDN Network, to the extent it is shown to have created, stored, and delivered cache copies of infringing images, substantially assisted in infringement,” the order reads.

“The reason is straightforward: without Cloudflare’s services those cache copies would not have been created and served to end users,’ a footnote clarifies.

The order doesn’t draw any conclusions about actual infringements. However, if ALS can prove to the jury that specific images were in Cloudflare’s cache, without permission, the “substantial assistance” element required for contributory liability is established.

If that happens, the only remaining element at trial is whether Cloudflare was aware of these infringements, which is where the takedown notices would come in.

The case will soon be in the hands of the jury and can still go in either direction. However, the order puts Cloudflare at a disadvantage as it can no longer argue that cached copies of infringing content by themselves are non-infringing. This will obviously be a concerns to other CDN providers as well, which makes this a landmark case.

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A copy of Judge Wu’s ruling, obtained by TorrentFreak, is available here (pdf).

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Adobe has some of the most recognized software products on the market today, including Photoshop which has become a household name.

While the company has been subjected to more than its fair share of piracy over the years, a new lawsuit accuses the software giant itself of infringement.

Dolby Laboratories is best known as a company specializing in noise reduction and audio encoding and compression technologies. Its reversed double ‘D’ logo is widely recognized after appearing on millions of home hi-fi systems and film end credits.

In a complaint filed this week at a federal court in California, Dolby Labs alleges that after supplying its products to Adobe for 15 years, the latter has failed to live up to its licensing obligations and is guilty of copyright infringement and breach of contract.

“Between 2002 and 2017, Adobe designed and sold its audio-video content creation and editing software with Dolby’s industry-leading audio processing technologies,” Dolby’s complaint reads.

“The basic terms of Adobe’s licenses for products containing Dolby technologies are clear; when Adobe granted its customer a license to any Adobe product that contained Dolby technology, Adobe was contractually obligated to report the sale to Dolby and pay the agreed-upon royalty.”

Dolby says that Adobe promised it wouldn’t sell its any of its products (such as Audition, After Effects, Encore, Lightroom, and Premiere Pro) outside the scope of its licenses with Dolby. Those licenses included clauses which grant Dolby the right to inspect Adobe’s records through a third-party audit, in order to verify the accuracy of Adobe’s sales reporting and associated payment of royalties.

Over the past several years, however, things didn’t go to plan. The lawsuit claims that when Dolby tried to audit Adobe’s books, Adobe refused to “engage in even basic auditing and information sharing practices,” a rather ironic situation given the demands that Adobe places on its own licensees.

Dolby’s assessment is that Adobe spent years withholding this information in an effort to hide the full scale of its non-compliance.

“The limited information that Dolby has reviewed to-date demonstrates that Adobe included Dolby technologies in numerous Adobe software products and collections of products, but refused to report each sale or pay the agreed-upon royalties owed to Dolby,” the lawsuit claims.

Due to the lack of information in Dolby’s possession, the company says it cannot determine the full scope of Adobe’s infringement. However, Dolby accuses Adobe of multiple breaches including bundling licensed products together but only reporting one sale, selling multiple products to one customer but only paying a single license, failing to pay licenses on product upgrades, and even selling products containing Dolby technology without paying a license at all.

Dolby entered into licensing agreements with Adobe in 2003, 2012 and 2013, with each agreement detailing payment of royalties by Adobe to Dolby for each product licensed to Adobe’s customers containing Dolby technology. In the early days when the relationship between the companies first began, Adobe sold either a physical product in “shrink-wrap” form or downloads from its website, a position which made reporting very easy.

In late 2011, however, Adobe began its transition to offering its Creative Cloud (SaaS model) under which customers purchase a subscription to access Adobe software, some of which contains Dolby technology. Depending on how much the customer pays, users can select up to thirty Adobe products. At this point, things appear to have become much more complex.

On January 15, 2015, Dolby tried to inspect Adobe’s books for the period 2012-2014 via a third-party auditing firm. But, according to Dolby, over the next three years “Adobe employed various tactics to frustrate Dolby’s right to audit Adobe’s inclusion of Dolby Technologies in Adobe’s products.”

Dolby points out that under Adobe’s own licensing conditions, businesses must allow Adobe’s auditors to allow the company to inspect their records on seven days’ notice to confirm they are not in breach of Adobe licensing terms. Any discovered shortfalls in licensing must then be paid for, at a rate higher than the original license. This, Dolby says, shows that Adobe is clearly aware of why and how auditing takes place.

“After more than three years of attempting to audit Adobe’s Sales of products containing Dolby Technologies, Dolby still has not received the information required to complete an audit for the full time period,” Dolby explains.

But during this period, Adobe didn’t stand still. According to Dolby, Adobe tried to obtain new licensing from Dolby at a lower price. Dolby stood its ground and insisted on an audit first but despite an official demand, Adobe didn’t provide the complete set of books and records requested.

Eventually, Adobe concluded that Adobe had “no intention to fully comply with its audit obligations” so called in its lawyers to deal with the matter.

“Adobe’s direct and induced infringements of Dolby Licensing’s copyrights in the Asserted Dolby Works are and have been knowing, deliberate, and willful. By its unauthorized copying, use, and distribution of the Asserted Dolby Works and the Adobe Infringing Products, Adobe has violated Dolby Licensing’s exclusive rights..,” the lawsuit reads.

Noting that Adobe has profited and gained a commercial advantage as a result of its alleged infringement, Dolby demands injunctive relief restraining the company from any further breaches in violation of US copyright law.

“Dolby now brings this action to protect its intellectual property, maintain fairness across its licensing partnerships, and to fund the next generations of technology that empower the creative community which Dolby serves,” the company concludes.

Dolby’s full complaint can be found here (pdf).

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Late last year Playboy filed a copyright lawsuit against the popular blog Boing Boing.

The site had previously published an article linking to an archive of Playboy centerfold images, which the adult magazine saw as problematic.

Boing Boing’s parent company Happy Mutants was accused of various counts of copyright infringement, with Playboy claiming that it exploited their playmates’ images for commercial purposes.

The California district court was not convinced, however. In an order last month, Judge Fernando Olguin noted that it is not sufficient to argue that Boing Boing merely ‘provided the means’ to carry out copyright-infringing activity. There also has to be a personal action that ‘assists’ the infringing activity.

“For example, the court is skeptical that plaintiff has sufficiently alleged facts to support either its inducement or material contribution theories of copyright infringement,” Judge Olguin wrote.

Playboy was given the option to file a new complaint before the end of February, or else the case would be dismissed. The magazine publisher decided to let the matter go, for now, and didn’t file a new complaint.

That doesn’t mean that they’ll completely pass on the issue though. Instead of only going after Boing Boing, Playboy is now digging up information on the people who posted the infringing content on Imgur and YouTube.

Last week the California Court asked why PlayBoy hadn’t responded after the latest order. The company replied that it thought no response was needed and that the case would be dismissed automatically, but it included another interesting note.

“Plaintiff has elected to pursue third party subpoenas under, inter alia, the Digital Millennium Copyright Act Section 512(h) in order to obtain further facts before determining how to proceed on its claims against Happy Mutants,” Playboy writes.

Looking through the court dockets, we observed that Playboy requested DMCA subpoenas against both Imgur and YouTube. In both cases, the company demands information that can identify the uploaders, including email addresses, phone numbers, and other documents or information.

With Imgur, it goes even further. Here, Playboy also requests information on people “who downloaded any photos” from the Imgur gallery in question. That could be quite a long list as anyone would have to download the images in order to see them. This could include millions of people.

Playboy subpoena against Imgur

A broad request like this goes further than we’ve ever seen. However, soon after the requests came in, the clerk granted both subpoenas.

At this point, it’s unclear whether Playboy also intends to go after the uploaders directly. It informed the California District Court that these “further facts” will help to determine whether it will pursue its claims against Boing Boing, which means that it must file a new complaint.

It’s worth mentioning, however, that the subpoenas were obtained early last month before the case was dismissed.

Alternatively, Playboy can pursue the Imgur and YouTube uploaders directly, which is more likely to succeed than the infringement claims against Boing Boing. That’s only an option if Imgur and YouTube have sufficient information to identify the infringers in question, of course.

The allegedly infringing centerfold video is no longer listed on YouTube. The Imgur gallery, which was viewed more than two million times, is no longer available either.

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Playboy’s latest filing mentioning the DMCA subpoenas can be found here (pdf). We also obtained copies of the Youtube (pdf + attachment) and Imgur (pdf + attachment) subpoenas themselves.

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After being founded in 2009, French site Liberty Land (LL) made its home in Canada. At the time listed among France’s top 200 sites, Liberty Land carried an estimated 30,000 links to a broad range of unlicensed content.

Like many other indexes of its type, LL carried no content itself but hosted links to content hosted elsewhere, on sites like Megaupload and Rapidshare, for example. This didn’t save the operation from an investigation carried out by rightsholder groups SACEM and ALPA, which filed a complaint against Liberty Land with the French authorities in 2010.

Liberty Land

In May 2011 and alongside complaints from police that the people behind Liberty Land had taken extreme measures to hide themselves away, authorities arrested several men linked to the site in Marseille, near Le Havre, and in the Paris suburb of Montreuil.

Despite the men facing a possible five years in jail and fines of up to $700,000, the inquiry dragged on for nearly seven years. The trial of its alleged operators, now aged between 29 and 36-years-old, finally went ahead January 30 in Rennes.

The men faced charges that they unlawfully helped to distribute movies, TV series, games, software, music albums and e-books without permission from rightsholders. In court, one defended the site as being just like Google.

“For me, we had the same role as Google,” he said. “We were an SEO site. There is a difference between what we were doing and the distribution of pirated copies on the street.”

According to the prosecution, the site made considerable revenues from advertising, estimated at more than 300,000 euros between January 2009 and May 2011. The site’s two main administrators reportedly established an offshore company in the British Virgin Islands and a bank account in Latvia where they deposited between 100,000 and 150,000 euros each.

The prosecutor demanded fines for the former site admins and sentences of between six and 12 months in prison. Last week the Rennes Criminal Court rendered its decision, sentencing the four men to suspended sentences of between two and three months. More than 176,000 euros generated by the site was also confiscated by the Court.

While the men will no doubt be relieved that this extremely long case has reached a conclusion of sorts, it’s not over yet. 20minutes reports that the claims for damages filed by copyright groups including SACEM won’t be decided until September and they are significant, totaling 60 million euros.

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In 2011 and 2012, the US Navy began using BS Contact Geo, a 3D virtual reality application developed by German company Bitmanagement.

The Navy reportedly agreed to purchase licenses for use on 38 computers, but things began to escalate.

While Bitmanagement was hopeful that it could sell additional licenses to the Navy, the software vendor soon discovered the US Government had already installed it on 100,000 computers without extra compensation.

In a Federal Claims Court complaint filed by Bitmanagement two years ago, that figure later increased to hundreds of thousands of computers. Because of the alleged infringement, Bitmanagement demanded damages totaling hundreds of millions of dollars.

In the months that followed both parties conducted discovery and a few days ago the software company filed a motion for partial summary judgment, asking the court to rule that the US Government is liable for copyright infringement.

According to the software company, it’s clear that the US Government crossed a line.

“The Navy admits that it began installing the software onto hundreds of thousands of machines in the summer of 2013, and that it ultimately installed the software onto at least 429,604 computers. When it learned of this mass installation, Bitmanagement was surprised, but confident that it would be compensated for the numerous copies the Government had made,” the motion reads.

“Over time, however, it became clear that the Navy had no intention to pay Bitmanagement for the software it had copied without authorization, as it declined to execute any license on a scale commensurate with what it took,” Bitmanagement adds.

In its defense, the US Government had argued that it bought concurrent-use licenses, which permitted the software to be installed across the Navy network. However, Bitmanagement argues that it is impossible as the reseller that sold the software was only authorized to sell PC licenses.

In addition, the software company points out that the word “concurrent” doesn’t appear in the contracts, nor was there any mention of mass installations.

The Government also argued that Bitmanagement impliedly authorized it to install the software on hundreds of thousands of computers. This defense also makes little sense, the software company counters.

The Navy licensed an earlier version of the software for $30,000, which could be used on 100 computers, so it would seem odd that it could use the later version on hundreds of thousands of computers for only $5,490, the company argues.

“To establish that it had an implied license, the Government must show that Bitmanagement — despite having licensed a less advanced copy of its software to the Government in 2008 on a PC basis that allowed for installation on a total of 100 computers in exchange for $30,000 — later authorized the Government to make an unlimited number of installations of its advanced software product for $5,490.”

The full motion brings up a wide range of other arguments as well which, according to Bitmanagement, make it clear that the US Government is liable for copyright infringement. It, therefore, asks the court for a partial summary judgment.

“Bitmanagement respectfully requests that this Court grant summary judgment as to the Government’s liability for copyright infringement and hold that the Government copied BS Contact Geo beyond the limits of its license, on a scale equal to the hundreds of thousands of unauthorized copies of BS Contact Geo that the Government either installed or made available for installation,” the company concludes.

If the Government is indeed liable the scale of the damages will be decided at a later stage. The software company previously noted that this could be as high as $600 million.

This is not the first time that the U.S. military has been ‘caught’ pirating software. A few years ago it was accused of operating unlicensed logistics software, a case the Obama administration eventually settled for $50 million.

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A copy of the motion for partial summary judgment is available here (pdf).

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