Thеse actions arise from the litigation involving alleged copyright infringement by Napster, Inc. (“Napster”) before this court and the Ninth Circuit in 2000 and 2001. Plaintiffs UMG Recordings, Inc. et al. (“UMG”), Capitol Records, Inc. et al. (“Capitol”), and Jerry Lieber et al. (“Lieber”) have brought suit against Bertelsmann AG et al. (“Bertelsmann”) and Hummer Winblad Venture Partners et al. (“Hummer”),
BACKGROUND
The facts and events surrounding the operation of Napster and giving rise to this action
The above-captioned lawsuits naming Bertelsmann as a defendant were originally filed in the Sоuthern District of New York, and UMG brought its lawsuit against Hummer Winblad in the Central District of California in the first instance. These cases were then transferred to this court by the Judicial Panel on Multidistrict Litigation by reason of this court’s involvement in the underlying Napster litigation. Defendants have filed motions to dismiss under Fed.R.Civ.P. 12(b)(6) against all plaintiffs’ claims, and briefing on these motions has been somewhat consolidated due to the inter-relatedness of the issues presented. The court further consоlidates these separate motions and decides them here.
In 2003, Bridgeport filed a motion to intervene in UMG’s action against Bertelsmann while that case was still pending in the Southern District of New York. Plaintiff UMG opposed Bridgeport’s motion on the ground that intervention would prejudice UMG’s rights in that action, as Bridgeport and UMG were themselves at loggerheads over a number of issues, not least of which was the question of whether Bridgeport owned partial rights tо numerous UMG works whose copyrights Bertelsmann had allegedly infringed. On December 1, 2003, the Southern District of New York denied Bridgeport’s motion to intervene, see UMG Recordings, Inc. v. Bertelsmann AG,
LEGAL STANDARD
I. Motion to Dismiss
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) “tests the legal sufficiency of a claim.” Navarro v. Block,
II. Vicarious and Contributory Infringement
Although the Copyright Act, 17 U.S.C. §§ 101 et seq., does not expressly impose liability оn anyone other than direct infringers, courts have long recognized that in certain circumstances, vicarious or contributory liability will be imposed. See, e.g., Fonovisa, Inc. v. Cherry Auction, Inc.,
Even in the absence of an employment relationship, a defendant incurs liability for vicаrious copyright infringement if he “has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities.” Fonovisa,
III. Intervention
Federal Rule of Civil Procedure Rule 24 has long been “liberal[ly] constru[ed] in favor of applicants for intervention.” Arakaki v. Cayetano,
DISCUSSION
I. Defendants’ Motions to Dismiss
Defendants’ motions to dismiss are premised on the theory that plaintiffs have accused them only of what might be considered “aiding and abetting” Napster’s copyright violations, viz., providing Napster with additional funding that allowed it to continue operating. See, e.g., Def. Bertelsmann Mot., at 1. According to-defendants, plaintiffs thus state claims for what this court has termed “tertiary infringement” — vicarious or contributory assistance to a vicarious or contributory infringer, here Napster — and towards which this court has previously expressed disfavor. See Katz v. Napster, C 00-4725 MHP, Mem. & Order (N.D.C.A.2001) (Patel, C.J.).
Defendants have not properly characterized plaintiffs’ complaints. Rather than alleging that defendants merely supрlied Napster with necessary funding (serving as a “but for” cause of Napster’s subsequent activities) — or accusing defendants of contributory and vicarious infringement in purely conclu-sory fashion — plaintiffs have specifically accused defendants of assuming control over Napster’s operations and directing the infringing activities that gave rise to the original Napster litigation. Plaintiff Lieber’s complaint is exemplary:
41. As Napster’s only available source of funding, Bertelsmann held significant power and control over Napster’s operations. But Bertelsmann chose not to exercise its position to stop the rampant infringement by requiring that Napster immediately discontinue its infringing service until such time as it could operate lawfully. Rather, pursuing its strategy to build a digital media empire around the Napster brand, Bertelsmann convened a secret “task force” of company executives to consider how best to protect Bertelsmann’s investment in the Napster service. After deliberating whether to shut the Napster service until it could be operated in a non-infringing manner, Bertelsmann’s “task force” determined that, in order to realize Bertelsmann’s objective to make Napster its internet distribution network, it was necessary to keep the infringing Napster service in operation to preserve the Napster customer base.
42. Senior Bertelsmаnn management endorsed the decision of its “task force” to keep the infringing Napster service operating, and directed Napster to proceed accordingly.
Lieber Compl. ¶¶ 41-42 (emphasis in original). UMG’s complaint contains similar statements:
25. ... By at least October 2000, the Napster system was firmly under the control of Bertelsmann. Bertelsmann contin*413 ued to operate the Napster system and to allow its users to copy millions of proteсted recordings, despite the District Court’s finding that this activity was unlawful.
26. In February 2001, the Ninth Circuit affirmed the District Court’s ruling that plaintiffs were entitled to a preliminary injunction and remanded the case for certain modifications to the injunction’s terms. A & M Records, Inc. v. Napster, Inc.,239 F.3d 1004 (9th Cir.2001). Bertelsmann nevertheless chose to keep its Napster system open for business.
27. On March 5, 2001, the District Court in the Napster Litigation modified the preliminary injunction in accordance with the Ninth Circuit’s instructions. Bertelsmann still kept Napster оnline, and the users of the Napster system continued to copy Plaintiff’s protected works unlawfully.
UMG Compl ¶25-27. Capitol Records’s complaint alleges essentially identical facts:
At least as early as September 2000, Bertelsmann began preparing to operate the Napster system, and by at least as early as October 2000, the Napster system was firmly under the control of Bertelsmann. Bertelsmann continued to operate the Napster system and to allow its users to copy millions of protected recordings, despite the District Court’s finding that this activity was unlawful. Bertelsmann could have stopped the ongoing infringement, including by shutting Napster down, withholding money from the unlawful business activities, and/or requiring Napster to exercise its power to block the accounts of users engaged in piracy, but Bertelsmann intentionally did none of these things.
Capitol Records Compl. ¶37.
UMG’s complaint against Hummer Win-blad, while not a replica of the complaints against Bertelsmann, rests upon functionally similar claims:
34. On July 26, 2000, the District Court in the Napster Litigation granted the plaintiffs’ motion for a preliminary injunction. A & M Records, Inc. v. Napster, Inc.,114 F.Supp.2d 896 (N.D.Ca.2000). The United States Court of Appeals for the Ninth Circuit stayed the preliminary injunction pending appeal. Napster, by now firmly under the control of the Defendants, continued to operate and to allow its users to copy millions of protected recordings despite the District Court’s finding that this activity was unlawful.
38. By the time it was shut down, the Napster system had aided, facilitated, and enabled billions of separate acts of infringement. The overwhelming majority of sound recordings that were available on Napster during the almost two years it was operative (including the period of time that Hummer Winblad controlled the Napster system) were copied and distributed in violation of the Copyright Act and other laws. Napster had full knowledge of this fact when it launched its service. Hummer Winblad had full knowledge of this fact, and all of the facts averred herein, when it made its decision to acquire and control Napster, and during its operation of Napster.
UMG Compl. against Hummer Winblad ¶¶ 34 & 38 (emphasis added).
Plaintiffs’ allegations that defendants exercised essentially full operational control over Napster during periods in which Napster remained a conduit for infringing activity may be wholly unfounded; indeed, they may be mutually exclusive, as plaintiffs variously claim that both Hummer Winblad and Bertelsmann were managing the same cоrporate enterprise at approximately the same time. Regardless, such questions must be left for resolution upon motions for summary judgment or at trial, as this court is obligated — in the context of a Rule 12(b)(6) motion to dismiss — to accept the facts and allegations plead in plaintiffs’ complaints as true. Cahill,
For the purposes of this motion, plaintiffs have thus stated a claim that Bertelsmann and Hummer Winblad — as entities exercising full control over Napster’s operations — were directly responsible for the infringing activity perpetrated by Napster’s online users; more than merely knowing of and contributing to the infringing activity, they are alleged to have specifically ordered that such activity take place. Cf. Napster II,
II. Bridgeport’s Motion to Intervene
Applicant Bridgeport (hereinafter “applicant”) has asserted no claim to a right of intervention under Rule 24(a), relying instead upon Rule 24(b) and the argument that its own claims against Hummer will involve many of the same issues of law and fact implicated in UMG’s lawsuit. For their part, plaintiff UMG and defendant Hummer, both of whom oppose applicant’s attempt to intervene, do not dispute that applicant fulfills the Ninth Circuit’s thrеe requirements for intervention: an independent ground for jurisdiction, timely filing of the motion to intervene, and a claim or defense shared between the main and the intervenor’s suit. See Koote-nai,
Allowing Bridgeport to intervene in UMG’s suit against Hummer Winblad would undoubtedly further the interests of judicial economy in at least some respects. Bridgeport’s complaint in intervention for contributory and vicarious infringement against Hummer incorporates many of the same allegations of Hummer’s effective control over Napster and its operations that undergird UMG’s complaint. See, e.g., Bridgeport Compl. 128 (“Hummer Winblad assumed control of Napster subsequent to the commencement of the Napster Litigation, and with full knowledge that it was alleged that Napster was liable for unprecedented, massive contributory and vicarious copyright infringement.”). Bridgeport’s suit against Hummer will thus necessarily involve many of the same questions of law and fact raised by UMG’s own claims, and wholesale consideration of these questions in one single lawsuit would save time and judicial resources. This promotion of judicial economy is “a relevant consideration in deciding a motion for permissive intervention.” Venegas v. Skaggs,
Yet inclusion of Bridgeport in UMG’s litigation will also necessitate the consideration of extraneous legal and factual issues that UMG’s lawsuit would not otherwise invoke. As Hummer itself notes, applicant was not a party to the original Napster litigation, and consequently that litigation cannot serve as the means by which Bridgeport provided Napster with notice that Bridgeport’s copyrighted works were being shared by users of the Napster system. See Napster II,
When deciding a motion to intervene, a district court must take into consideration the prejudice to the original parties that will result if the applicant in intervention is permitted to join the action. See Donnelly,
Finally, it is worth noting that Bridgeport retains the option of bringing a separate action against Hummer Winblad (just as it has brought a separate case against Bertelsmann), or even of litigating against UMG. While hardly dispositive, Bridgeport’s ability to pursue its claims through an alternative mechanism without any prejudice to its own rights is significant in the context of a motion to intervene brought by that party. See 7C Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1913 (2nd ed.2003) (existence of another adequate remedy to protect applicant’s rights is relevant to court’s determination regarding whether to grant leave to intervene). Moreover, if Bridgeport were to bring a separate action against Hummer Winblad, that case would likely be consolidated in this court alongside the other Napster-related litigation, just as Bridgepоrt’s litigation against Bertelsmann has already been consolidated here. The parties — and the court — will thus likely realize the same gains in efficiency and judicial economy that might have been obtained through Bridgeport’s intervention without placing UMG in the uncomfortable position of litigating alongside a party whose interests might oppose its own in substantial respect. The uncommon circumstances of this ease thus favor denial of Bridgeport’s mоtion to intervene.
CONCLUSION
For the foregoing reasons, defendants’ motions to dismiss are DENIED. Applicant’s motion to intervene is DENIED.
IT IS SO ORDERED.
Notes
. Hummer Winblad has been sued only by UMG, while all three plaintiffs have filed suit against Bertelsmann.
. All facts have been gleaned from the parties' moving papers, unless otherwise noted. For the purposes of this motion to dismiss, all material allegations in the parties' complaints are to be
. No motions related to this action are currently pending before this court.
. The parties expend a great deal of time and energy discussing Bridgeport's behavior in several other litigations, including one instance in which it found itself adverse towards UMG. Because there exists a sufficient basis otherwise within the record to decide Bridgeport's motion to intervene, the court need not address what impact Bridgeport's prior acts might have upon the determination of prejudice that UMG would incur from Bridgeport's introduction into this action.