Advanced Access Content Sys. Licensing Adm'r, LLC v. Tao
16-2057-cv
2d Cir.May 3, 2017Background
- AACS LA sued Feng Tao (operator of DVDFab) for creating and distributing software that circumvents AACS encryption protecting Blu‑ray/DVD content.
- The District Court entered a preliminary injunction and later granted AACS LA’s motion to amend that injunction to address continued distribution and third‑party assistance.
- The amended injunction notifies foreign registries and payment processors that they could be liable if they assist Tao in violating the court’s orders and binds those who receive actual notice.
- Tao moved to amend the injunction, to vacate the entry of default, and argued service was improper; the District Court denied those motions in part.
- Tao appealed, challenging (1) the showing of irreparable harm and (2) the injunction’s extraterritorial reach and prohibition on foreign third‑party assistance.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Irreparable harm required for amended preliminary injunction | AACS LA: Tao’s software undermines its encryption and business model; future violations likely, so irreparable harm exists | Tao: AACS LA failed to show irreparable harm | Court: District Court did not abuse discretion; declarations showed undermining of AACS LA’s business and likelihood of future violations, justifying injunction (affirmed) |
| Extraterritorial reach / enjoining foreign third parties | AACS LA: Injunction may reach process and foreign actors who facilitate access to U.S. market and can be liable if they assist violations | Tao: Injunction unlawfully reaches beyond U.S. and binds foreign third parties | Court: Permissible to notify and bind foreign parties who receive actual notice because courts may enjoin conduct having substantial U.S. effect; injunction limited to assisting violations (affirmed) |
| Validity of service / default entry | AACS LA: Service and default were proper (implicit in enforcement posture) | Tao: Service was improper and thus injunction/default should be vacated | Court: Tao arguably forfeited the argument; the fact‑intensive service challenge was not properly before the appellate court and was not considered (affirmed below) |
| Motion to amend / vacate injunction | AACS LA: Amendment necessary to address continued distribution via foreign intermediaries | Tao: Move to amend/vacate injunction should be granted | Court: Denial of Tao’s motions and grant of AACS LA’s amendment was within district court’s discretion (affirmed) |
Key Cases Cited
- WPIX, Inc. v. ivi, Inc., 691 F.3d 275 (2d Cir. 2012) (standard for irreparable harm and injunctions in copyright/broadcast contexts)
- Kapps v. Wing, 404 F.3d 105 (2d Cir. 2005) (irreparable harm analysis for preliminary injunctions)
- NML Capital, Ltd. v. Republic of Argentina, 727 F.3d 230 (2d Cir. 2013) (federal courts may enjoin conduct that has or is intended to have substantial effect within the U.S.; limits on extraterritorial reach)
- United States v. Davis, 767 F.2d 1025 (2d Cir. 1985) (enjoining conduct with substantial U.S. effects)
- Datskow v. Teledyne, Inc., 899 F.2d 1298 (2d Cir. 1990) (forfeiture of arguments not raised below)
- Harrison v. Republic of Sudan, 838 F.3d 86 (2d Cir. 2016) (appellate courts generally decline to consider fact‑intensive challenges raised first on appeal)