Signature Mgmt. Team v. John Doe , 876 F.3d 831 ( 2017 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 17a0270p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
SIGNATURE MANAGEMENT TEAM, LLC, ┐
Plaintiff-Appellant, │
│
> No. 16-2188
v. │
│
│
JOHN DOE, │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Eastern District of Michigan at Ann Arbor.
No. 5:13-cv-14005—Judith E. Levy, District Judge.
Argued: April 27, 2017
Decided and Filed: November 28, 2017
Before: SUHRHEINRICH, WHITE, and STRANCH, Circuit Judges.
_________________
COUNSEL
ARGUED: Michael A. Sneyd, KERR, RUSSELL AND WEBER, PLC, Detroit, Michigan, for
Appellant. Joshua Koltun, JOSHUA KOLTUN, San Francisco, California, for Appellee. ON
BRIEF: Michael A. Sneyd, Joanne Geha Swanson, KERR, RUSSELL AND WEBER, PLC,
Detroit, Michigan, for Appellant. Joshua Koltun, JOSHUA KOLTUN, San Francisco,
California, for Appellee. Aaron Mackey, ELECTRONIC FRONTIER FOUNDATION, San
Francisco, California, for Amicus Curiae.
WHITE, J., delivered the opinion of the court in which STRANCH, J., joined.
SUHRHEINRICH, J. (pp. 11–13), delivered a separate dissenting opinion.
No. 16-2188 Signature Mgmt. Team v. Doe Page 2
_________________
OPINION
_________________
HELENE N. WHITE, Circuit Judge. Plaintiff, Signature Management Team, LLC
(“Team”), prevailed in this action for copyright infringement but appeals the district court’s
refusal to unmask Defendant John Doe, an anonymous blogger. Because the district court failed
to recognize the presumption in favor of open judicial records, we REMAND with instructions
to reconsider unmasking Doe in light of this opinion.
I. Background
Team is a multi-level marketing company that sells materials designed to help individuals
profit in multi-level marketing businesses.1 John Doe anonymously runs a blog titled
“Amthrax,” in which he criticizes multi-level marketing companies. Doe focuses much of his
criticism on Team. On January 18, 2013, Doe posted a hyperlink on his blog to a downloadable
copy of the entirety of the fourth edition of a book copyrighted by Team, “The Team Builder’s
Textbook” (“the Work”). At the time of the infringement, the Work was in its ninth edition.
After Team served Automattic, Inc. (the blog’s host) with a take-down notice under the Digital
Millennium Copyright Act, 17 U.S.C. § 512, Doe quickly removed the hyperlink to the Work.
On September 19, 2013, Team filed this action alleging one count of copyright
infringement against Doe arising from his publication of the Work on his blog. Team sought
only injunctive relief, including a request that the district court identify Doe. Team also
requested an order instructing Doe to destroy all copies of the Work in his possession, and a
permanent injunction ordering Doe to cease all infringing use of the Work. In response, Doe
asserted fair-use and copyright-misuse defenses. Doe also asserted that he has a First
Amendment right to speak anonymously, and that his identity should therefore not be disclosed
to Team.
1
Multi-level marketing is a sales strategy in which distributors have two sources of revenue. First,
distributors receive revenue from making direct sales to customers. Second, distributors receive revenue from sales
made by other distributors they have recruited. This encourages existing distributors to recruit new distributors for
the company.
No. 16-2188 Signature Mgmt. Team v. Doe Page 3
Team then moved to compel discovery of Doe’s identity. In its order granting the motion
in part and denying the motion in part, the district court applied the balancing test from Art of
Living Found. v. Does 1–10, No. 10-CV-05022, 2011 WL 5444622 (N.D. Cal. Nov. 9, 2011), a
case involving an organization seeking to unmask the operators of an anonymously run blog.
This test is designed “to balance ‘the magnitude of the harms that would be caused to the
competing interests by a ruling in favor of plaintiff and by a ruling in favor of defendant,’” id. at
*4 (quoting Highfields Capital Mgmt., L.P. v. Doe, 385 F. Supp. 2d 969, 980 (N.D. Cal. 2005)),
and includes two steps:
(1) [t]he plaintiff must produce competent evidence supporting a finding of each
fact that is essential to a given cause of action; and (2) if the plaintiff makes a
sufficient evidentiary showing, the court must compare the magnitude of the
harms that would be caused to the competing interests by a ruling in favor of the
plaintiff and by a ruling in favor of the defendant.
Id. at *7. Applying this test in the instant case, the district court concluded that unmasking an
anonymous speaker is a significant and irreversible harm and, since there was a chance Doe
would prevail on his fair-use defense, the court declined to unmask Doe at that time. The court
did, however, compel Doe to reveal his identity to the court and to Team’s attorneys, subject to a
protective order preventing Team from learning Doe’s identity.
After discovery, Doe moved for summary judgment on his fair-use and copyright-misuse
defenses, and the court denied his motion. In denying Doe’s motion, the court also stated that it
was inclined to grant summary judgment for Team on its copyright infringement claim, but was
inclined to grant only limited injunctive relief in the form of an order requiring Doe to destroy all
copies of the Work in his possession. The district court offered the parties time to submit
supplemental briefing regarding the entry of summary judgment for Team. See Fed. R. Civ. P.
56(f) (allowing a court to grant summary judgment to a nonmovant after giving notice and a
reasonable opportunity to respond). Instead of filing a supplemental brief, Doe brought a motion
for reconsideration; Team submitted supplemental briefing. The district court denied Doe’s
motion for reconsideration, entered summary judgment for Team, and denied Team’s motion for
further injunctive relief. The court found that unmasking Doe “was unnecessary to ensure that
defendant would not engage in future infringement of the Work” and that “defendant has already
No. 16-2188 Signature Mgmt. Team v. Doe Page 4
declared to the Court that he has complied with the proposed injunctive relief” by destroying the
copies of the Work in his possession such that “no further injunctive relief is necessary.”
Team limits its appeal to the district court’s refusal to unmask Doe. Team argues that
(1) the district court improperly disregarded the strong presumption in favor of openness of
judicial records; (2) since Doe is an adjudicated copyright infringer, his speech is not protected
by the First Amendment; and (3) injunctions must enter in the name of the enjoined party.
II. Analysis
A. Standard of Review
A district court’s decision to seal its records is reviewed for abuse of discretion. Shane
Grp., Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299, 306 (6th Cir. 2016). However, “in
light of the important rights involved, the district court’s decision is not accorded the deference
that standard normally brings.” Id. (internal quotation marks and alterations omitted).
The scope of injunctive relief under the Copyright Act is reviewed for abuse of
discretion. Dig. Filing Sys., L.L.C. v. Aditya Int’l, 323 F. App’x 407, 411 (6th Cir. 2009); see
also S. Cent. Power Co. v. IBEW, Local Union 2359, 186 F.3d 733, 737 (6th Cir. 1999). “An
abuse of discretion exists when the district court applies the wrong legal standard, misapplies the
correct legal standard, or relies on clearly erroneous findings of fact.” First Tech. Safety Sys.,
Inc. v. Depinet, 11 F.3d 641, 647 (6th Cir. 1993).
B. Right to Speak Anonymously
An author’s decision to remain anonymous is “an aspect of the freedom of speech
protected by the First Amendment.” McIntyre v. Ohio Elections Comm’n, 514 U.S. 334, 342
(1995). While the right to anonymous speech is paramount to protect the political speech of
persecuted groups, see Talley v. California, 362 U.S. 60, 64 (1960), it also protects advocates
who “may believe [their] ideas will be more persuasive if [their] readers are unaware of [their]
identity.” McIntyre, 514 U.S. at 342. Internet speech receives the same First Amendment
protection as other speech. Reno v. ACLU, 521 U.S. 844, 870 (1997). “As with other forms of
expression, the ability to speak anonymously on the Internet promotes the robust exchange of
No. 16-2188 Signature Mgmt. Team v. Doe Page 5
ideas and allows individuals to express themselves freely without ‘fear of economic or official
retaliation . . . [or] concern about social ostracism.’” In re Anonymous Online Speakers,
661 F.3d 1168, 1173 (9th Cir. 2011) (alteration in original) (quoting McIntyre, 514 U.S. at 341–
42).
With the explosion of anonymous Internet speech, courts have begun to develop
balancing tests weighing the First Amendment right to anonymous speech against a plaintiff’s
interest in unmasking an anonymous defendant. See id. at 1175–76 (compiling balancing tests).
All of these cases, however, have dealt with anonymity rights during the discovery process. No
case has considered the issue presented here—whether and under what circumstances a court can
properly protect a party’s anonymity after judgment. This is an important distinction. The pre-
judgment cases often deal with a plaintiff’s need to unmask a defendant in order to effect service
of process. See, e.g., Sony Music Entm’t, Inc. v. Does 1–40, 326 F. Supp. 2d 556, 566 (S.D.N.Y.
2004). The tests are also designed to safeguard against unmasking potentially nonliable
defendants. See, e.g., Doe v. Cahill, 884 A.2d 451, 457 (Del. 2005) (requiring plaintiffs to
satisfy a summary judgment standard before obtaining the identity of an anonymous defendant
because “[p]laintiffs can often initially plead sufficient facts to meet the good faith test . . . even
if the defamation claim is not very strong”); Columbia Ins. Co. v. seescandy.com, 185 F.R.D.
573, 578 (N.D. Cal. 1999) (“People who have committed no wrong should be able to participate
online without fear that someone who wishes to harass or embarrass them can file a frivolous
lawsuit and thereby gain the power of the court’s order to discover their identity.”).
In contrast, the entry of judgment against a Doe defendant largely eliminates these
concerns because the plaintiff will have established liability. On the other hand, where the
anonymous defendant is determined to have fully complied with the relief granted, there is no
practical need to unmask the defendant.
C. Presumption of Open Judicial Proceedings
A Doe defendant’s post-judgment anonymous speech rights conflict with another
important post-judgment interest: the presumption of openness in judicial proceedings. There is
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a “strong presumption in favor of open[]” judicial records.2 Brown & Williamson Tobacco Corp.
v. FTC, 710 F.2d 1165, 1179 (6th Cir. 1983). Although a district court may enter a protective
order during discovery upon a showing of “good cause,” Fed. R. Civ. P. 26(c)(1), “there is a
stark difference between so-called ‘protective orders’ . . . and orders to seal court records.”
Shane Grp., Inc., 825 F.3d at 305. “Only the most compelling reasons can justify non-disclosure
of judicial records.” In re Knoxville News-Sentinel Co., Inc., 723 F.2d 470, 476 (6th Cir. 1983).
And, where there is a compelling reason not to disclose certain information, the non-disclosure
must be narrowly tailored to serve that reason. Shane Grp., Inc., 825 F.3d at 305.
A district court must set forth specific reasons explaining its decision to keep judicial
records confidential. Id. at 306. “[T]he greater the public interest in the litigation’s subject
matter, the greater the showing necessary to overcome the presumption of access.” Id. at 305.
Although this presumption of openness may be rebutted only when there is a compelling reason
not to disclose the records, the burden on the party seeking non-disclosure is diminished where
there is minimal public interest in learning the non-disclosed information. Id.
The presumption of open records typically implicates information known to the parties
but submitted under seal—courts therefore focus on the public’s interest in learning the sealed
information. In unmasking cases, however, one of the parties, in addition to the public, is
unaware of the defendant’s identity. Unmasking cases thus require a slightly different analysis
than standard unsealing decisions.
D. Presumption in Favor of Unmasking
In this issue of first impression, we hold that like the general presumption of open judicial
records, there is also a presumption in favor of unmasking anonymous defendants when
judgment has been entered for a plaintiff. When deciding whether to unmask an anonymous
defendant, courts must consider both the public interest in open records and the plaintiff’s need
to learn the anonymous defendant’s identity in order to enforce its remedy. The greater a
plaintiff’s or the public’s interest in unmasking a losing Doe defendant’s identity, the more
2
Although this case does not deal with sealed records, concealing a Doe defendant’s identity implicates the
same arguments regarding the public’s interest in open judicial records.
No. 16-2188 Signature Mgmt. Team v. Doe Page 7
difficult it will be for the Doe defendant to overcome the presumption and remain anonymous.
Further, where a Doe defendant’s speech is found to be beyond the protection of the First
Amendment, countering the presumption will require a showing that the Doe defendant
participates in a significant amount of other, non-infringing anonymous speech that would be
chilled if his identity were revealed.
The open records doctrine is premised on allowing the public to inspect judicial records
to increase public confidence in and understanding of the judicial system, and diminish the
possibility of injustice, incompetence, perjury, and fraud. See In re Cendant Corp., 260 F.3d
183, 193 (3d Cir. 2001); see also Brown & Williamson Tobacco Corp., 710 F.2d at 1178. The
presumption in favor of openness is stronger when there is a greater public interest in the subject
matter of the litigation. See Shane Grp., Inc., 825 F.3d at 305. Determining the public interest in
the disclosure of the identity of a Doe defendant is a fact-intensive inquiry. For example, in a
libel case, a district court should consider factors such as the content and subject matter of the
speech, the frequency of the speech, the size of the audience for the speech, and the intent of the
speaker. Intentional libelous speech that was read by a large number of persons, and which
implicates a topic of public concern or a well-known figure, would carry a strong presumption in
favor of unmasking. In contrast, the public interest would be weak where the libelous speech
was negligent, read by few people, and arose from a personal feud. In a copyright case, the court
should consider the reach of the copyrighted material, the economic losses suffered by the
copyright holder, the reach of the infringed version of the copyrighted material, and the intent of
the infringer. For example, the public interest would be stronger when the infringed material is a
bestselling novel rather than a sparsely read instruction manual.
In addition to the public interest in the litigation, the presumption in favor of disclosure is
stronger or weaker depending on the plaintiff’s need to unmask the defendant in order to enforce
its rights. For example, a plaintiff who obtains an ongoing remedy such as a permanent
injunction will have a strong interest in unmasking an anonymous defendant. Conversely, a
plaintiff will have little need to unmask a Doe defendant who has willingly participated in the
litigation and complied with all relief ordered. Further, where the public interest is minimal and
the Doe defendant’s interest in remaining anonymous is substantial, a district court could
No. 16-2188 Signature Mgmt. Team v. Doe Page 8
reasonably enter a judgment that conditions a defendant’s continued anonymity on the
satisfaction of the judgment within a certain timeframe. Such an approach would balance the
plaintiff’s need to enforce the judgment against allowing a defendant to act promptly to protect
his interest in remaining anonymous.
Finally, a Doe defendant may rebut the presumption of openness by showing that he
engages in substantial protected speech that unmasking will chill.3 The court must engage in a
fact-specific analysis that balances the extent to which unmasking would infringe on the exercise
of Doe’s First Amendment rights, against the strength of the presumption in favor of unmasking
and the plaintiff’s interest in unmasking Doe.
E. Balancing the Factors on Remand
The Copyright Act authorizes courts to “grant temporary and final injunctions on such
terms as it may deem reasonable to prevent or restrain infringement of a copyright.” 17 U.S.C.
§ 502. Here, the district court ordered Doe to destroy all copies of the Work in his possession
and provide confirmation to Team that he had done so. The court expressly denied Team’s
request for a permanent injunction, and did so without regard to the anonymity issue. The scope
of this relief is not challenged on appeal.
In denying Team’s request to unmask Doe, the district court reapplied the Art of Living
balancing test that it had previously used in its order declining to compel discovery of Doe’s
identity. The district court properly considered factors such as the non-necessity of a permanent
injunction, Doe’s compliance with all relief ordered, and that the majority of Doe’s anonymous
blogging constitutes protected speech. However, the district court failed to recognize that “very
different considerations apply” at the judgment stage than at the discovery stage, and that there is
a “strong presumption in favor of openness as to court records.” Shane Grp., Inc., 825 F.3d at
305 (internal quotation marks and citations omitted). On remand, the district court should weigh
the factors favoring anonymity against the public’s interest in open proceedings in general and in
this particular copyright-infringement lawsuit, as well as plaintiff’s interest in unmasking Doe.
3
To avoid creating a test for the evolving world of the Internet that quickly becomes obsolete, we do not
address the issue of what other showing, if any, a Doe defendant may make to rebut the presumption in favor of
unmasking.
No. 16-2188 Signature Mgmt. Team v. Doe Page 9
The dissent notes that Doe’s speech is not entitled to First Amendment protection to the
extent that it constitutes copyright infringement. (Dis. Op. at 11.) On this point, we agree. The
dissent goes further, however, and suggests that a determination that copyright infringement has
occurred divests the district court of the discretion to allow Doe to remain anonymous. The
dissent therefore concludes that “no balancing is required” and that the proper course is to
“remand with instructions that the district court reveal Doe’s identity.” (Dis. Op. at 11.) The
dissent also suggests that the question whether unmasking Doe “will harm his ability to exercise
his right to anonymous speech in the future [is] collateral to the issue before us and therefore not
properly considered in this proceeding.” (Dis. Op. at 11 (emphasis omitted).) And, finally, the
dissent takes issue with our suggestion that there may be no practical need to unmask Doe,
arguing that declining to identify the defendant “minimizes the effect of the court’s order,
downplays the significance to Doe, encourages future misconduct, and hinders Team’s ability to
monitor compliance.” (Dis. Op. at 12.)
We do not agree either that the district court lacks discretion to allow Doe to remain
anonymous or that Doe’s legitimate First Amendment right to speak anonymously is collateral to
these proceedings. Although Doe’s infringing speech is not entitled to First Amendment
protection, that speech occurred in the context of anonymous blogging activities that are entitled
to such protection. An order unmasking Doe would therefore unmask him in connection with
both protected and unprotected speech and might hinder his ability to engage in anonymous
speech in the future.
Further, we do not agree that allowing Doe to remain anonymous would necessarily
diminish the impact of the ordered injunctive relief. The dissent’s suggestion that a failure to
unmask Doe would obligate the district court and Team’s attorneys to monitor Doe’s activity is
inapposite because the district court declined to enter any ongoing injunctive relief. Since Doe
has already complied with all aspects of the court’s order, there will be no need for monitoring
regardless whether the district court ultimately decides to unmask Doe. Finally, to the extent that
the concerns identified by the dissent cut in favor of unmasking Doe, the district court should
consider those factors on remand.
No. 16-2188 Signature Mgmt. Team v. Doe Page 10
III. Conclusion
For these reasons, we REMAND to the district court with instructions to apply the
presumption established by this opinion and reconsider whether to amend the judgment and
unmask Doe’s identity.
No. 16-2188 Signature Mgmt. Team v. Doe Page 11
_________________
DISSENT
_________________
SUHRHEINRICH, Circuit Judge, dissenting. In this unusual appeal of a copyright
infringement action, Team, the prevailing party, challenges the form of the judgment in its favor
because the judgment does not identify the defendant. The majority characterizes this as a case
of first impression and also holds that remand is required under Shane because the district court
failed to apply Shane’s “strong presumption in favor of openness as to court records.” See Shane
Grp., Inc. v. Blue Cross Blue Shield of Mich., 825 F.3d 299, 305 (6th Cir. 2016) (internal
quotation marks and citation omitted). Although Shane is instructive, it is not binding because it
deals with the sealing of court records, whereas the issue in this case is concealing the identity of
an adjudged copyright infringer. Copyright infringement is not protected speech—just like
obscenity or fighting words. If Doe’s speech is not protected, then no balancing is required.
To the extent that unmasking him here will harm his ability to exercise his right to anonymous
speech in the future, that is collateral to the issue before us and therefore not properly considered
in this proceeding. I see no need for further analysis and would remand with instructions that the
district court reveal Doe’s identity.
The judgment in this case embodies the district court’s holding that Doe, by his actions in
posting a full copy of Team’s copyrighted Work on the Internet for anyone to download for free,
infringed Team’s copyright in violation of the Copyright Act. The flip side of that finding is that
Doe was not engaging in First Amendment protected speech. As the Second Circuit has
observed: “The First Amendment does not . . . provide a license for copyright infringement. . . .
Thus, to the extent that anonymity is used to mask copyright infringement or to facilitate such
infringement by other persons, it is unprotected by the First Amendment.” Arista Records, LLC
v. Doe 3, 604 F.3d 110, 118 (2d Cir. 2010) (citing Harper & Row, Publishers, Inc. v. Nation
Enters., 471 U.S. 539, 555–57 (1985) and Cable/Home Commc’n Corp. v. Network Prods., Inc.,
902 F.2d 829, 849 (11th Cir.1990)). The fact that Doe used his anonymous blog to commit the
infringement does not alter the conclusion, expressed in the judgment, that Doe committed
No. 16-2188 Signature Mgmt. Team v. Doe Page 12
copyright infringement, and by implication, was not engaging in free speech when he posted that
hyperlink.
Doe’s identity was entitled to limited protection at the discovery stage because, at that
point, it was not clear whether he had committed any wrong, and disclosure of his identity would
cause irreparable harm in the event it was determined that he was innocent of copyright
infringement and properly engaging in protected anonymous speech. For this reason, the Art of
Living balancing test was properly applied during the discovery phase. But it is a temporal and
temporary measure, created to facilitate discovery and to protect innocent defendants. It should
not be extended to shield an adjudicated copyright infringer from the ramifications of the
judgment against him. Having rejected Doe’s fair use and copyright misuse defenses, having
determined that Doe was liable for copyright infringement, and having ordered injunctive relief,
there was no legal basis for entering a judgment that did not identify Doe. Thus, the district
court erred in reapplying the Art of Living test after it had determined that Doe (by his own
admission) was liable for copyright infringement and placing the burden on Team to establish
why unmasking Doe’s identity was necessary.
The majority acknowledges that “the entry of judgment against a Doe defendant largely
eliminates” the need to protect a potentially nonliable defendant during the discovery phase, slip
op. at 6, but then inexplicably concludes, without reasoning or support, that “where the
anonymous defendant is determined to have fully complied with the relief granted, there is no
practical need to unmask the defendant,” id. Properly translated, this means that a copyright
infringer retains the right to remain anonymous if he committed the copyright violation in some
sort of proximity to protected anonymous speech. No one has cited, nor can I find, any legal
authority allowing an adjudicated copyright infringer to remain anonymous after entry of
judgment against him. Thus, Doe has no First Amendment right to be balanced.
More fundamentally, I simply do not understand how an injured plaintiff has “no
practical need” to know who caused that injury. A judgment in an in personam action is meant
to bind the parties to the court’s order. Ordering injunctive relief against Doe without identifying
him minimizes the effect of the court’s order, downplays the significance to Doe, encourages
future misconduct, and hinders Team’s ability to monitor compliance. The first three concerns
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are substantiated by Doe’s motion for attorney’s fees. In the motion, Doe asserts that “Doe
prevailed,” R. 65, ID# 1834, since the district court “neither granted an injunction against future
infringement of the Work, nor did it strip Doe of his anonymity.” R. 65, ID# 1834 (emphasis
added). Thus, according to Doe, Team obtained “only a technical or de minimis victory.” Id. In
Doe’s eyes—an adjudged copyright infringer—he won this case because the district court did not
unmask him. Leaving him masked gives him a blueprint to do this all over again.
The district court’s solution as to the fourth factor—monitoring compliance—is
problematic. The district court knows Doe’s real name, but monitoring blog sites on the internet
is not a proper task for the judiciary. Team’s attorneys know his name too, but this requires
Team to pay its attorneys to monitor Doe indefinitely. Such an approach also interferes with the
attorney-client privilege. The majority posits that future monitoring is unnecessary, because Doe
has already complied with all aspects of the court’s order. But if I were Team, I would want to
keep an eye on Doe’s future behavior. As it currently stands, Team lacks that ability, and neither
the district court nor Team’s attorneys have any legal responsibility to do so either.
The majority’s concern here is like that of an overprotective parent. Doe should not be
shielded from the consequences of his own actions, since he could have preserved his right to
speak freely and anonymously by simply refraining from copyright infringement.