Raging Stallion Faces Cloud Service Oron in Ninth Circuit Appeal

SAN FRANCISCO—Oron.com, the Hong Kong-based cloud storage service that was sued last year by adult company Corbin Fisher in a case that was eventually settled by the parties, has been grappling with another gay adult company, Raging Stallion parent Datatech Enterprises, which last August also sued Oron for copyright infringement. Datatech attorney D. Gill Sperlein went up against a basketball team of Oron lawyers in federal court before Judge Charles R. Breyer, and essentially kicked butt.

In his 21-page complaint, Sperlein argued, as Corbin Fisher had previously charged, that Oron “financially motivated and induced its users to upload content that users would want to download in massive quantities. This is not a business model to share home movies, but a business model by which [Oron parent] FF Magnat Ltd. Could earn revenue from copyrighted material without paying royalties or licensing fees to copyright owners.”

Judge Breyer issues a temporary restraining order the same day the complaint was filed, freezing Oron’s assets. He granted partial relief from the TRO on Sept. 9, but on Sept. 14 issued a preliminary injunction against Oron, extending "the terms of the asset-freeze TRO through trial.”

In his ruling, Breyer also wrote, “To prevail on its motion for a preliminary injunction, Datatech must establish that (1) it is likely to succeed on the merits; (2) it faces irreparable harm in the absence of preliminary relief; (3) the balance of equities tips in its favor; and (4) an injunction is in the public interest.”

Through the rest of 2012 and into 2013, Oron continued to make jurisdictional arguments to the court, to no avail, and on Jan. 16, 2013, sought relief from the 9th Circuit Court of Appeals. After several months of filings and notices, the parties met yesterday for a hearing before a three judge panel comprised of Justices M. Margeret McKeown, Paul J. Watford and Algenon L. Marbley.  

According to The Asian Lawyer, the “panel sounded inclined to uphold a preliminary injunction against Oron but suggested that U.S. District Judge Charles Breyer may have overreached — or ‘overseized,’ as one judge put it — by freezing all of Oron's assets, rather than just some.”

The case is significant, explained Scott Graham for the news site, because "it could make law on jurisdiction in international IP cases and on asset seizure."

The arguments are basically the same as those argued in the Corbin Fisher case and also the Raging Stallion case, reported Graham. “Oron.com, which is owned by FF Magnat, claims it's a legitimate cloud storage company that makes good faith efforts to police the illegal activities of a few users. DataTech, however, says Oron is part of a growing offshore piracy industry, skimming profits from ‘numerous small U.S.-based businesses’ and ignoring regulations imposed by the Digital Millennium Copyright Act.”

Datatech's Sperlein further argued that Oron's service is nothing like Dropbox, where “strangers come to look at the content.” Instead, he told the panel, Oron gives “a kickback to the person that uploaded it. That extra act of inducement, that little bit of ... volition makes it actually direct copyright infringement."

When Judge McKeown “questioned whether there's any evidence that DataTech's movies specifically were used for inducement,” Sperlein was forced to admit, ‘Unfortunately, in the discovery process, they've been very reluctant to provide it.’ McKeown and Judge Paul Watford suggested that could be tough luck for DataTech, since it is the party that moved for the injunction.”

Oron's counsel, Evan Fray-Witzer of Boston law firm Ciampa Fray-Witzer, countered that the case itself represents "the nuclear bomb of litigation," and argued, "Litigation against an alien defendant creates a higher jurisdictional barrier."

However, in response to his additional claim that, contrary to assertions made in court, the U.S. only represents 12 percent of Oron's global market, visiting Judge Marbley responded, "Well, compared to the rest of the world, that's not insignificant, is it? That's your largest market, isn't it?"

In the end, Graham suggests the court seemed inclined to split the difference, writing, “Fray-Witzer said injunctive relief was inappropriate because the only dispute is over money damages under the Copyright Act, and that Breyer unfairly put the burden on Oron to prove how much of its profits did not come from DataTech content. He compared Breyer's order to shutting down General Motors Co. over the use of a copyrighted photo in an annual report.

“While appearing to agree that Breyer may have gone a little too far,” Graham concluded, “McKeown didn't sound completely sold. ‘Like it or not,’ she said, ‘your case lands in a different world than some of the prior cases about extraterritoriality.’”