Courts in Canada, Germany and U.S. Order Website Blocking, Internet Fails to Spontaneously Self-Destruct

Stephen Carlisle July 9, 2015

A series of curious events happened in June. Courts across the globe started to take action against those web business that actively service pirate websites. Amongst these actions were:

• On June 11, 2015, the Court of Appeal for British Columbia ruled that Google had to block a rogue website offering counterfeit goods from its search results on a worldwide basis. ¹
• On June 3, 2015, the District Court for the Southern District of New York held that CloudFlare, a reverse-proxy service, had violated a preliminary injunction by directing people to pirate websites using the word “grooveshark.” ²
• On June 1, 2015, a German appellate Court affirmed a ruling that Google, once on notice of infringing material appearing on YouTube, had an affirmative duty to prevent the material from being reposted. ³
• In late June, an Australian law requiring ISP to block pirate websites went into effect. ⁴

I say these events are curious because the various tech entities and tech shills like the Electronic Frontier Foundation all predicted that this would be the end of the internet (and the world) as we know it. ⁵ And what has happened? Nothing. The sun continues to rise in the east, and the internet has not disintegrated into shambles. Finally, the Courts and the legislatures of the world are getting wise to the sneaky ways in which companies like Google profit from intellectual property piracy, while hiding behind the flag of free speech.

In the Canadian action, the Plaintiff found that the Defendant, a former distributor of Plaintiff’s, was making counterfeit copies of its industrial network interface hardware. ⁶ During the course of the litigation, the Defendants stopped responding to the Court’s Orders, closed up their Canadian location, and continued to sell the counterfeit goods through a variety of internet portals ⁷ in a twist on the old “whack-a-mole” strategy in which faithful readers of this blog will be familiar. ⁸ The Plaintiffs applied for, and were granted, an order against Google requiring it to remove the Defendant’s websites from their search results on a worldwide basis.

Google appealed, arguing that the order was beyond the jurisdiction of the Court, that it improperly burdened a non-party to the lawsuit and had an impermissible extraterritorial reach. ⁹

The Court rejected all of these arguments. First off, even though Google does not have any physical presence in Canada, it is far more than just a passive conductor of information (an argument which is total baloney, but Google frequently makes anyway ¹⁰). The Court noted that when a user logs onto Google from Canada, it automatically redirects them from google.com to google.ca where searches return information (and ads, of course) highlighting Canadian businesses. ¹¹ As recounted before on this blog, Google suggests search results and actively blacklists certain sites from appearing in search results, meaning they are more than just a “passive conductor” of information. ¹²

And here’s the kicker: Google sold advertising for the Defendants, right up to the time of the hearing before the Court of Appeals, in violation of the prior order. ¹³ Oops. Having once again been caught with their hands in the cookie jar by making money off of pirated goods, Google scrambled to claim to the Court their failure to suspend the account as “inadvertent.” ¹⁴ Needless to say, given Google’s prior shenanigans, this is not worthy of belief. The Court didn’t buy it either, and held that,

“the business carried on in British Columbia is an integral part of Google’s overall operations. Its success as a search engine depends on collecting data from websites throughout the world (including British Columbia) and providing search results (accompanied by targeted advertising) throughout the world (including British Columbia). The business conducted in British Columbia, in short, is the same business as is targeted by the injunction.” ¹⁵

As to the extraterritorial nature of the Order, the Court basically placed the burden back on Google, namely that Google seeking to do business world-wide was their choice, and the problems that result are theirs alone.

“Google raises the specter of it being subjected to restrictive orders from courts in all parts of the world, each concerned with its own domestic law. I agree with the chambers judge that it is the world-wide nature of Google’s business and not any defect in the law that gives rise to that possibility. As well, however, the threat of multi-jurisdictional control over Google’s operations is, in my opinion, overstated.”

Further, once again Google is talking out of both sides of its mouth. This blog has detailed before how Google willingly submits to the censorship regimes of various countries if it finds it profitable to do so. ¹⁶

And finally, as to Google’s objections on free speech grounds,

“There has, in the course of argument, been some reference to the possibility that the defendants (or others) might wish to use their websites for legitimate free speech, rather than for unlawfully marketing the [counterfeit product]. That possibility, it seems to me, is entirely speculative. There is no evidence that the websites in question have ever been used for lawful purposes, nor is there any reason to believe that the domain names are in any way uniquely suitable for any sort of expression other than the marketing of the illegal product. Of course, if the character of the websites changes, it is always open to the defendants or others to seek a variation of the injunction.” ¹⁷

Meanwhile, back in the USA, another tech company got caught with its hand in the cookie jar just like Google did: actively assisting a pirate company to do business, while claiming it is merely an innocent “passive conductor.”

This case is an extension of the settlement between the major record companies and Grooveshark, the subject of a previous blog post. ¹⁸ As a result of that settlement, the trademark in the name “Grooveshark” was transferred to the Plaintiff record companies. Soon pirate sites sprung up to take advantage of the well-known Grooveshark designation to draw attention to their illegal services. The Plaintiff record companies applied for and received a preliminary injunction against those wishing to register domain names using the “Grooveshark” designation. ¹⁹

This led to the all too familiar game of “whack-a-mole” where the Defendants, after being shut down, shift the domain name and registration to a new location. ²⁰ So, once the registration for “grooveshark.io” (British Indian Ocean) is disabled, it moves to “grooveshark.pw” (Republic of Palau). And then to “grooveshark.vc” (St, Vincent and Grenadines). And then to “grooveshark.li” (Lichtenstein), using a Swiss based domain registrar. ²¹ Understandably, having had enough, the Plaintiffs turned to the service being used to direct users to the site: CloudFlare.

Once the domain names had been disabled, the purveyors of the” psuedo-grooveshark” websites used CloudFlare as a workaround to get to the sites. ²² “In laymen’s terms, this … mean[s] that when someone types a domain name such as “grooveshark.li” into a web browser, the Defendants have engaged CloudFlare to convert the domain name into the IP address for the website associated with that domain name so that the user can connect to the website they are trying to reach. Without CloudFlare, a user could still get to “grooveshark.li” if the user had the actual IP address for the website associated with that domain name.” ²³

In other words, CloudFlare was pointing the way to pirated material.

The domains grooveshark.pw, grooveshark.io and grooveshark.vc were all registered with CloudFare by anonymous users using different email and IP addresses. CloudFare received a copy of the restraining order on May 15, 2015, and despite actual notice of the TRO, nevertheless processed another anonymous request to redirect grooveshark.li using CloudFlare services.

CloudFlare contended “that it should not be bound by the injunction because its service is “passive” and not necessary for the operation of the Grooveshark sites.” ²⁴ The Court ruled its passivity is not the point.

“The problem for CloudFlare is the equally venerable proposition that ‘a person who knowingly assists a defendant in violating an injunction subjects himself to civil as well as criminal proceedings for contempt.’

“There is no real dispute that CloudFlare had knowledge of the TRO at least as of May 14, 2015 and that it subsequently permitted an anonymous user to establish a free account that configured the domain name grooveshark.li to use CloudFlare’s services. CloudFlare’s authoritative domain name server translates grooveshark.li as entered in a search browser into the correct IP address associated with that site, thus allowing the user to connect to the site. Connecting internet users to grooveshark.li in this manner benefits Defendants and quite fundamentally assists them in violating the injunction because, without it, users would not be able to connect to Defendants’ site unless they knew the specific IP address for the site. Beyond the authoritative domain name server, CloudFlare also provides additional services that it describes as improving the performance of the grooveshark.li site.” ²⁵

And finally,

“CloudFlare’s second, or “futility,” argument is equally unpersuasive. In essence, CloudFlare contends that Plaintiffs will obtain a short-lived victory if it complies with the temporary restraining order because another third-party service provider could provide the same service or Defendants could provide that service on their own… But just because another third party could aid and abet the Defendants in violating the injunction does not mean that CloudFlare is not doing so. Similarly, the Court is unaware of any principle requiring Plaintiffs to show that Defendants’ site would be inaccessible but for CloudFlare’s services; they need only show that CloudFlare is in active concert or participation with Defendants.” ²⁶

“Going forward, however, CloudFlare is now aware that it is bound by the injunction so any future failure to comply might expose it to a contempt finding that could result in the award of attorney’s fees or other consequences.” ²⁷

Your move, CloudFlare.

Meanwhile, over in Germany, the appellate court there ruled that Google had to adopt what this blog has long advocated, namely that “takedown” needs to become “take down and stay down.” ²⁸ This was a suit brought by GEMA, the German musical performing rights society that is the equivalent of ASCAP and BMI in the USA. The decision of the appellate court was a split decision. As reported by Reuters:

“The Hamburg regional court rejected an appeal by German performing rights association GEMA, upholding a lower court ruling that said sites such as YouTube do not actively have to search for illegal activity by their users.

“The appeals court rebuffed a Google appeal on a secondary issue in the case, finding that YouTube had failed to act promptly enough to take down infringing videos in seven of 12 cases brought before the court.” ²⁹

Google also had an affirmative duty to prevent re-posting.

“‘If such a service provider has been made aware of a clear violation of the law, it must not only remove the content, but also must take precautions to avoid further infringements of copyrights,’ the court said in its ruling.” ³⁰

Meanwhile, over in Australia, a bill providing rights of copyright holders to obtain orders to block websites that traffic in pirate material, is now law. ³¹ As reported by the Australian Digital Alliance:

“Expanding on why website blocking was an appropriate response, Parliamentary Secretary to the Minister for Communication Paul Fletcher,

“‘there are a number of foreign based websites that disseminate large amounts of infringing content to Australian internet users, and presently they are able to operate, in practical terms, without disruption, and their operators can secure a profit from facilitating the streaming and downloading by end users of infringing copies of audiovisual material.’” ³²

Predictably, the tech companies howled and writhed like a soccer player trying to draw a foul from the referee.

“The order Wednesday by U.S. District Judge Alison Nathan in Manhattan widening a preliminary injunction against the operators of the cloned Grooveshark to now include CloudFlare, Inc, ‘makes CloudFlare and other Internet Service Providers the copyright and trademark police for other rights holders,’ the company’s general counsel, Kenneth Carter, said in an interview.” ³³

No, the point for you CloudFare, and you Google, is that you continued to assist, on a for profit basis, people engaged in infringing activities, even after you were aware of the injunctions that were issued. If you’re going to profit from knowingly aiding and abetting illegal activity, then you should expect to be put in the dock for it. You should also expect that artists, tired of “whack-a-mole,” will start to use the Courts and Legislatures to get protection of their rights. It a question of what’s right, not just what’s profitable.

And Google well knows this. It recently did the right thing by announcing it was going to delist URL’s that were engaging in “revenge porn,” that is the posting of nude or sexually explicit photos of persons without their consent, usually by a jilted lover, for purposes of public shaming or in some cases extortion. ³⁴ Google went so far as promising to put up an easy-to-use web form to report the offending URL’s. ³⁵

Doing the right thing. Hmmm. Now that wasn’t so hard, was it?