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LLC v. Doe

United States District Court, D. New Jersey, Camden Vicinage

October 24, 2019



          Joel Schneider United States Magistrate Judge.

         This Opinion addresses whether to grant Strike 3 Holdings, LLC (“Strike 3”) leave to conduct expedited discovery in its uniform “John Doe” copyright infringement cases. Strike 3 owns the copyrights to its adult entertainment movies, i.e., pornography. In contravention of the normal course of discovery, Strike 3 seeks leave to serve subpoenas before a Fed.R.Civ.P.26(f) conference in order to identify alleged “John Doe” copyright infringers of its movies. Strike 3 argues that unless its motions are granted it is not able to identify infringers and stop infringement. This Opinion adds to the mountain of case law on the issue.

         After a deep dive into Strike 3's practices, including two evidentiary hearings and extensive briefing, the Court concludes that Strike 3's requests for expedited discovery are DENIED. The Court finds that Strike 3 has not established good cause to take the requested discovery and the discovery is unreasonable under the present circumstances.[1]

         The most fundamental basis of the Court's decision is its conclusion that, as pleaded, Strike 3's complaints are futile. The Court denies Strike 3 the right to bootstrap discovery based on a complaint that does not pass muster under Fed.R.Civ.P.12(b)(6). Further, even if Strike 3 pleads a cognizable copyright infringement claim, the Court would still deny its requests for expedited discovery. Good cause does not exist because: (1) Strike 3 bases its complaints on unequivocal affirmative representations of alleged facts that it does not know to be true; (2) Strike 3's subpoenas are misleading and create too great of an opportunity for misidentification; (3) the linchpin of Strike 3's good cause argument, that expedited discovery is the only way to stop infringement of its works, is wrong; (4) Strike 3 has other available means to stop infringement besides suing individual subscribers in thousands of John Doe complaints; (5) the deterrent effect of Strike 3's lawsuits is questionable; (6) substantial prejudice may inure to subscribers who are misidentified; and (7) Strike 3 underestimates the substantial interest subscribers have in the constitutionally protected privacy of their subscription information. On balance, therefore, the Court finds that the overall administration of justice and the prejudice to subscriber defendants outweighs Strike 3's interest in expedited discovery.

         It is not lost on the Court that its ruling may make it more difficult for Strike 3 to enforce its copyrights against potential infringers. However, as the Third Circuit recently stated, “[c]ourts must enforce the law even when the results seem inequitable.” Diabate v. Attorney General of U.S.A., No. 18-3397, 2019 WL 5061399, at *1 (3d Cir. Oct. 9, 2019). The Court is aware that it has granted expedited discovery in past cases filed by Strike 3 and other copyright frequent filers.[2] However, as was famously said, the Court “see[s] no reason why it should be consciously wrong today because [it] was unconsciously wrong yesterday.” Massachusetts v. United States, 333 U.S. 611, 639-40 (1948) (J. Jackson, dissenting opinion). Since its previous Orders were entered, new relevant case law has been published and the Court has learned new material information that was not previously presented, all of which is discussed in this Opinion.[3]


         1. General Background

         Strike 3 was formed in 2015 and is the intellectual property holding company of General Media Systems (“GMS”). GMS was founded in 2014 and produces and distributes adult entertainment on its websites. According to GMS's Chief Creative Officer, it is the most pirated adult content in the world. Decl. of Greg Lansky ¶25, Doc. No. 4-2. Strike 3 started filing its copyright complaints in October 2017 (id. 10-11) and has filed over 3, 000 complaints to date. As of June 2019, Strike 3 filed 311 cases in New Jersey. More than half of the cases (161) have been dismissed without prejudice for various reasons. Strike 3 Letter Brief (“LB”) at 2-5 (June 11, 2019). Like many of its colleagues in this and other jurisdictions, the Court has managed many of Strike 3's cases. Strike 3's modus operandi is essentially the same in all of its cases. Strike 3 files “John Doe” complaints naming unidentified assigned subscribers to an Internet Protocol (“IP”) address who have been identified by its contractor as an infringer on the BitTorrent (“BT”) network. BT is a software protocol that allows users to distribute data through peer-to-peer networks. The BT network permits users to download, copy and distribute Strike 3's movies. The only pleaded connection in Strike 3's complaints between the “John Doe” defendant and the alleged infringement is that the “John Doe” is the subscriber to the listed IP address. Strike 3 acknowledges it does not know if the subscriber or someone else downloaded its works.

         After filing its complaint, Strike 3 files ex parte motions for expedited discovery requesting leave to serve a subpoena on the John Doe's Internet Service Provider (“ISP”), i.e., Comcast, Yahoo, Verizon, etc. Although multiple infringements are listed in its complaints, Strike 3's subpoenas only ask for the name of the IP subscriber for one infringement. Thus, as to the exemplar complaint, even though the alleged infringement occurred on 31 occasions from December 3, 2017 to August 16, 2018, Strike 3's subpoena only asks for the subscriber's name on July 27, 2018. Due to dynamic IP addresses, however, the subscriber identified in response to Strike 3's November 13, 2018 subpoena, may or may not be the same person who subscribed to the IP address on July 27, 2018. After Strike 3's motion for expedited discovery is granted and its subpoena is served and responded to, the ISP identifies the current subscriber to the listed IP address. Importantly, this is not necessarily the same person who subscribed to the IP address on July 27, 2018. Strike 3 then conducts an additional investigation and either settles, dismisses, or amends its complaint to specifically name the IP subscriber. In the past, the Court has granted Strike 3's motions requesting expedited discovery. Recently, however, numerous courts have delved deeper into Strike 3's complaints, discovery requests, and practices, leading the Court to reexamine the propriety of granting Strike 3's motions. The effort has been long and arduous but enlightening and worthwhile.

         The genesis of this Opinion is the November 6, 2018 Opinion of the Honorable Royce L. Lamberth, U.S.D.J. Strike 3 Holdings, LLC v. John Doe, 351 F.Supp.3d 160 (D.D.C. 2018), on appeal, No. 18-7188 (Dec. 19, 2018). In a blistering Opinion, Judge Lamberth denied Strike 3's ex parte request for expedited discovery akin to the motions at issue herein. Judge Lamberth accused Strike 3 of being a “copyright troll, ” of using technology that is “famously flawed, ” of preying on “low-hanging fruit, ” of not caring whether the “defendant actually did the infringing, ” and flooding the courthouse “with lawsuits smacking of extortion.” The Opinion raised red flags regarding Strike 3's lawsuits that caused this Court to explore the issue further.

         In Order to get to the bottom of the matter, the Court issued an Order to Show Cause (“OSC”) to Strike 3 directing it to show cause why the Court should not adopt and follow Judge Lamberth's Opinion and Order and deny Strike 3's discovery motions.[4] Since that time, the Court has received extensive briefs and background materials and held two evidentiary hearings.[5] The Court will summarize what it has learned and explain in detail why Strike 3's requests for expedited discovery are denied.

         2. Strike 3's Investigation and John Doe Complaints

         Strike 3's infringement investigation starts with IPP International UG (“IPP”) located in Germany. Strike 3 hired IPP to track the infringement of its copyrights across the BT network. TR115:5-19. IPP does this by crawling the BT file distribution network and establishing a direct connection with the alleged infringer's IP address.

         An IP address is a unique number used by a computer to access the internet. In order to interact with other computers attached to the internet, a computer must be assigned an internet protocol or IP address. An IP address is a string of up to twelve numbers separated by dots - for example State v. Reid, 194 N.J. 386, 390 (2008). “IP addresses can be dynamic (the number changes each time the computer accesses the Internet) or static (the number remains the same each time the computer accesses the Internet).”. United States v. Norris, 938 F.3d 1114, 1116 n. 2 (9th Cir. 2019). After IPP identifies an IP address that is used by an infringer to distribute Strike 3's copyrighted works, it downloads pieces of Strike 3's works from the alleged infringer. IPP records the infringer's IP address, the version of the BT software used, and the date and time of the infringement. In addition to identifying Strike 3's works that are downloaded, IPP identifies the ISP and other content downloaded using the subscriber's IP address. TR112:1-10. IPP records everything in a PCAP, which stands for “packet capture” and is a forensically sound interface for recording network traffic. TR117:1-22. Decl. of Tobias Fisher at ¶8, Doc. No. 4-3. IPP sends this data to Strike 3 on a monthly basis. TR115:24 to 16:25.

         According to Strike 3, it only trys to “stop the worst infringers.”[6] TR118:4-11. This accounts for why Strike 3 may be aware that a particular IP address is being used to infringe its works for a significant period of time before a complaint is filed. For example, although the exemplar complaint was filed on September 20, 2018, the subscriber's infringement allegedly occurred on 31 separate occasions from December 3, 2017 to August 16, 2018. Thus, Strike 3 was aware of the ongoing infringement of its movies for at least nine (9) months before it filed its complaint.

         After Strike 3's data analytics contractor identifies a serial infringer, Strike 3 runs the IP address through Maxmind, a geolocation technology. Maxmind gives Strike 3 an approximate location of where the IP address is located.[7] Id. 49:6-1; 75:11- 20. Strike 3 uses the Maxmind result to identify the appropriate jurisdiction in which to file suit. In sum, therefore, the only information Strike 3 has when it files its John Doe complaints is the infringing IP address, the identity of the ISP, the date and time of the infringement, the approximate location of the infringer, the number of works infringed, and other content downloaded.

         Although Strike 3's John Doe complaints name as the defendant the unidentified IP subscriber, Strike 3 acknowledges it does not know who infringed its works. Strike 3 also acknowledges it only has a “fairly good reason to believe that it is the subscriber or someone in the [household].” TR1 20:21-22. Strike 3 does not know who or how many people live in the household (TR1 22:7-22) and it “[h]as no idea if there's anyone else in the house.” TR2 92:13-19. In addition, Strike 3 is not sure whether the subscriber lives at the location associated with the IP address. TR2 29:3-4. Also, because of dynamic IP addresses, Strike 3 does not know for sure if the subscriber identified in response to its subpoena is the same subscriber at the time of the alleged infringement which occurred months earlier.

         Despite its admitted lack of knowledge of who downloaded its works, whether the subscriber lives at the identified address, and who lives at the address, Strike 3's complaints unequivocally aver in conclusory fashion that the listed subscriber to the identified IP address directly infringed its copyrights. This is evidenced by the following averments in the exemplar complaint which named the defendant as “John Doe subscriber assigned IP Address”:

1. “Defendant used the BitTorrent file network to illegally download and distribute plaintiff's copyrighted motion pictures.” ¶ 23.
2. “While Defendant was infringing, . . . .” ¶ 25.
3. “Defendant downloaded, copied, and distributed a complete copy of each of plaintiff's works without authorization.” ¶ 27.
4. “Defendant's infringement is continuous and ongoing.” ¶ 30.
5. “Defendant copied and distributed the constituent elements of plaintiff's works using the BitTorrent protocol.” ¶ 36.

         Strike 3 makes these unequivocal averments even though it recognizes the subscriber may not have downloaded its works. TR1 20:23-25 to 21:1; 21:8-16, 21-22. After Strike 3 files its complaint, it files a motion for expedited discovery asking for leave to serve a subpoena on the identified ISP. Strike 3 argues this is necessary since only the ISP can match the name of the customer to an IP address. After Strike 3 receives the name of the currently listed subscriber to the IP address in question, it conducts an additional investigation and decides whether to amend the complaint to name the subscriber or dismiss the complaint.[8]

         In the interim, Strike 3 may also settle with the subscriber or someone else.


         1. The Standard to Obtain Expedited Discovery

         Critical to the Court's ruling is the standard to use when deciding if expedited discovery is appropriate. Importantly, the fact that the requested discovery is relevant is not determinative. Instead, in order to decide if good cause exists to grant expedited discovery the Court examines all relevant considerations. Stated another way, the “totality of the circumstances.” Pursuant to Fed.R.Civ.P. 26(b)(1), “[p]arties may obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense.” However, “[a] party may not seek discovery from any source before the parties have conferred as required by Rule 26(f).” Fed.R.Civ.P. 26(d)(1). District courts possess broad discretion in the management of the discovery process and can expedite or otherwise alter its timing or sequence. See id. Unlike most other discovery provisions in the Federal Rules, Rule 26(d) does not give any guidance as to the standard to use to determine if expedited discovery is appropriate. Techtronic Indus. N. Am., Inc. v. Inventek Colloidal Cleaners LLC, C.A. No. 13-4255 (NLH/JS), 2013 WL 4080648, at *1 (D.N.J. Aug. 13, 2013).[9]

         Courts in this District have applied one of two standards to assess whether expedited discovery is appropriate. See Sawhorse Enterprises, Inc. v. Church & Dwight Co., C.A. No. 12-6811 (FLW), 2013 WL 1343608, at *2 (D.N.J. Apr. 3, 2013). The first is a more stringent standard, “akin to that of a preliminary injunction, ” known as the Notaro test.[10] Id.; see also Gucci America Inc. v. Daffy's, Inc., C.A. No. 00-4463, 2000 WL 1720738, *5-6 (D.N.J. Nov. 14, 2000) (citing Notaro, 95 F.R.D. at 405). The second is the less stringent standard of “good cause” or “reasonableness, ” often referred to as the “good cause” test. See, e.g., Manny Film LLC v. Doe Subscriber Assigned IP Address, 98 F.Supp.3d 693 (D.N.J. 2015); Techtronic, 2013 WL 4080648, at *1. Courts in this District routinely apply the “good cause” test. See Strike 3 Holdings, LLC v. Doe, C.A. No. 19-16182(MCA)(MAH), 2019 WL 3985628, at *2 (D.N.J. Aug. 23, 2019). In a previous case, this Court adopted the so-called “reasonableness” or “good cause” standard. Techtronic, at *1. In other words, in order to decide if expedited discovery is appropriate, the Court looks at the totality of the circumstances and the balancing of the interests of the plaintiff and defendant. Better Packages, Inc. v. Zheng, C.A. No. 05-4477(SRO), 2006 WL 1373055, at *3 (D.N.J. May 17, 2006) (the good cause test “weighs the need for expedited discovery by considering the overall administration of justice against the prejudice to the responding party.”). The Court will apply this standard here.

         Not surprisingly, the burden is on the moving party to show that expedited discovery is appropriate. Techtronic, at *2. Good cause exists where the “need for expedited discovery, in consideration of the administration of justice, outweighs the prejudice to the responding party.” Malibu Media, LLC v. John Doe, C.A. No. 16-942 (KM/MAH), 2016 WL 952340, *1 (D.N.J. Mar. 14, 2016) (citation omitted). A non-exclusive list of factors Courts typically examine are: (1) the timing of the request in light of the formal start to discovery; (2) whether the request is narrowly tailored; (3) the purpose of the requested discovery; (4) whether the discovery burdens the defendant; and (5) whether the defendant can respond to the request in an expedited manner. See Better Packages, 2006 WL 1373055, at *3. In ruling on a motion for expedited discovery, courts consider “the entirety of the record . . . and the reasonableness of the request in light of all of the surrounding circumstances[.]”.[11] Better Packages, Inc., 2006 WL 1373055, at 3 (citation and quotation omitted).

         For good reason, Courts apply “careful scrutiny when plaintiffs make [discovery] requests ex parte.” Strike 3 Holdings, LLC v. Doe, 331 F.R.D. 14, 16 (E.D.N.Y. 2019) (citation and quotation omitted). This is understandable since expedited discovery is the exception rather than the norm. Techtronic, at *2; Columbine Ins. Co. v., 185 F.R.D. 573, 577 (N.D. Cal. 19999) (expedited discovery is “rare”). Further, this Court noted in Techtronic: “[s]ince expedited discovery upsets the normal orderly progression of discovery, there should be a good reason to order it to occur. Otherwise, parties will expect expedited discovery in every case.”; see also Leone v. Towanda Borough, C.A. No. 3:12-0429, 2012 WL 1123958, at *3 (M.D.Pa. Apr. 4, 2012) (“[E]x parte motions are so inherently unfair that such relief should be granted only in the rarest of circumstances.”). In addition, if not policed properly, ex parte expedited discovery may create an irresistible temptation for trickery and gamesmanship.

         Plaintiff asks the Court to analyze its request for expedited discovery using the Second Circuit's five-factor test found in Arista Records, LLC v. Doe 3, 604 F.3d 110, 119 (2nd. Cir. 2010).[12] Id. at 3. The Court declines Strike 3's request to pigeonhole the Court's discretion. The Arista standard has not been adopted by the Court and is not typically used in this District. Further, as has been noted by at least one court, the utility of the Arista standard is limited. Strike 3 Holdings, LLC, 331 F.R.D. at 17. In any event, the Court's ruling would be the same even if the Court followed Arista.

         For the reasons to be explained in detail, the Court finds that Strike 3 fails to establish good cause for expedited discovery under the “good cause” or Arista standard. The Court's prior Orders were founded upon material misconceptions concerning Strike 3's allegations and the underlying technological proof submitted in support of Strike 3's motions. Further, new relevant information has been elicited that the Court was not aware of at the time it issued its previous Orders. In addition, new persuasive case law has been published. Ultimately, the Court agrees with Judge Lamberth that Strike 3's expedited discovery requests should be denied, but its reasoning is a bit different.

         2. Underlyi ...

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