US Court: When IPTV Pirates Reap Profit, CDN Attracts Pirates & Profits

UK-based CDN company DataCamp has failed in its bid to have a $32.5 million lawsuit dismissed in the United States. According to a memorandum and opinion published July 14, plaintiff DISH Network has established a causal relationship between infringing IPTV services and the company's profits. When the IPTV services profited, that attracted more pirates to DataCamp, the court found.

Attachment 66738

In February 2022, U.S. broadcaster DISH Network filed a $32.5m lawsuit against DataCamp, claiming that the UK-based CDN company failed to take action against copyright-infringing customers.

The complaint, filed in an Illinois district court, alleged that pirate IPTV services Banjo TV, Bollywood IPTV, Comstar TV, Express IPTV, Gennie TV, Gold TV, IPGuys, Istar, Red IPTV, Sky IPTV, and Zumm TV, were all customers of DataCamp.

DISH informed the court that despite sending “hundreds of notices” requesting the removal of content under the DMCA, plus copies of lawsuits and judgments relating to pirate IPTV services, DataCamp failed to “adopt and reasonably implement” a repeat infringer policy.

In an August 2022 motion to dismiss, DataCamp countered that it forwarded takedown notices to the relevant customers while encryption meant it had zero knowledge of its customers’ activities.

New Motion to Dismiss

The parties later confirmed that DISH had served requests for production on DataCamp, which included copies of invoices and support tickets for the pirate IPTV services named in the complaint. Amid ongoing settlement discussions, the Court dismissed DataCamp’s motion to dismiss late March 2023, without prejudice to later refiling.

Fact discovery deadlines were extended but with no settlement reached, DataCamp again filed a motion to dismiss, leading to further extensions of time being granted by the Court. On July 12, 2023, DISH was granted permission to depose Tomas Bacik, DataCamp’s Head of Sales & Client Solutions, DataCamp director Simon Rybisar, and DataCamp chief Zdenek Cendra. Two days later, the Court ruled on DataCamp’s motion to dismiss.

Memorandum Opinion and Order

DataCamp’s motion argued that allegations in the complaint of contributory and vicarious copyright infringement under 17 U.S.C. § 501 failed to state a claim.

DISH alleged that DataCamp ignored or turned a blind eye to its pirate IPTV customers’ “willful and repeated infringement” despite “having knowledge” of the infringement and the ability to prevent it. DISH believes that DataCamp is therefore both contributorily and vicariously liable since it profited from infringement while having the ability to prevent it.

Knowledge of Infringement, Failure to Prevent

A defendant like DataCamp can be held liable for contributory infringement when it has knowledge of the infringing activities of a third party, and induces, causes, or materially contributes to it.

According to DISH, 400 DMCA notices detailing the name of the pirate IPTV services, the channels allegedly infringed, plus the IP addresses, domain names, URLs used to transmit the works, and packet capture logs, were sufficient to establish knowledge.

DataCamp said the infringement notices provided “at most” a “general knowledge” that future infringement is likely, meaning that it had no duty to prevent it.

In his memorandum opinion and order dated July 12, 2023, United States District Judge John F. Kness says the hundreds of notices sent by DISH contained “ample information” that would have allowed DataCamp to prevent infringement.

“The notices named the Pirate Service, the infringing Works being broadcasted, and the IP addresses, URLs, and domain names being used to transmit the infringing works. This information provided Defendant with sufficient knowledge to act against the infringing Pirate Services—in other words, with knowledge of specific infringing uses,” the order reads.

Judge Kness also rejects the argument that encryption prevented DataCamp from viewing the infringing materials; the infringement notices themselves provided DataCamp with knowledge of the infringement. The Judge also notes additional evidence to support the allegation that DataCamp knew about the infringement.

In its complaint, DISH alleged that it had previously served DataCamp with a court order requiring it to disable IP addresses associated with pirate IPTV services, yet DataCamp failed to do so promptly. The Judge also cites comments from DataCamp’s CEO in 2019, which appeared to acknowledge that the company needed to be “more strict” with its customers.

Coupled with DISH’s allegations that DataCamp only forwarded some of the infringement notices, and in any event, the pirate IPTV services continued to infringe, DataCamp’s motion to dismiss the contributory infringement claims was denied.

Vicarious Infringement

A defendant like DataCamp can be held liable for vicarious infringement when it has the right and ability to supervise infringing activity and has a direct financial interest in it. In its motion to dismiss, DataCamp claimed that the allegations in the complaint fail to meet that standard.

Highlighting terms in DataCamp’s service agreement, DISH said that DataCamp could have terminated its business with the pirate IPTV providers for any reason. Alternative options could have seen DataCamp verify the services’ rights to distribute the copyrighted works, ensure compliance with the infringement notices, implement a repeat infringer policy, or implement a geo-blocking system to prevent access to the streams in the United States.

DataCamp did not argue that it lacked the right to supervise the infringing activity. The company said it lacked the ability and the plaintiff’s proposals to prevent infringement were either “impossible” or “far too overbroad.” Judge Kness found no need to consider any of the alternatives proposed by DISH.

“Defendant could directly stop the infringement by terminating access to the CDN,” the Judge writes.

“None of the authorities cited by Defendant support the proposition that terminating access is an overbroad remedy. Accordingly, the Court need not consider Plaintiff’s alternative proposed remedies. The complaint adequately alleges that Defendant had the ability to stop the infringement.”

Direct Financial Interest

DISH’s complaint alleges that the pirate IPTV services offer its channels at an artificially low price, which encourages end users to subscribe to the services. In turn, this increases the bandwidth consumed at DataCamp and the scale of the payments received by the CDN company. Due to DataCamp’s “lax policy” towards infringement, pirate IPTV services are motivated to sign up and continue to do business with DataCamp, meaning that bandwidth consumption increases, while payments for that bandwidth increase too.

DataCamp’s position is that “attracting users” and “increasing the value of its business” are “too far removed from the alleged infringement to be considered a ‘direct’ financial interest.” According to Judge Ness, everything boils down to whether there is “a causal relationship between the infringing activity and any financial benefit a defendant reaps, regardless of how substantial that benefit is.”

Noting that DataCamp is paid directly by the pirate IPTV services and that payments received are related to the amount of bandwidth consumed by the pirate services’ customers, the infringing activity induces end users to consume more bandwidth, Judge Ness notes. He, therefore, concludes that DataCamp obtained a direct financial benefit and that the allegations in the complaint establish a causal relationship between infringement and profit.

“The profits reaped from infringement also attracts new Pirate Services to Defendant’s CDN and incentives current Pirate Services to remain with the CDN, meaning more profit for Defendant. Accordingly, Defendant’s motion to dismiss Plaintiff’s claim for vicarious infringement is denied,” Judge Kness concludes.

With that, DataCamp’s motion to dismiss was denied in full.

The memorandum opinion and order is available here (pdf)