10-55946, was a United States Court of Appeals for the Ninth Circuit case in which seven film studios including Columbia Pictures Industries, Inc., Disney and Twentieth Century Fox sued Gary Fung, the owner of isoHunt Web Technologies, Inc., for contributory infringement of their copyrighted works.

Ultimately, Fung had "red flag knowledge" of the infringing activity on his systems, and therefore IsoHunt was held ineligible for the Digital Millennium Copyright Act § 512(c) safe harbor.

The court also held that Fung was not entitled to protection from damages liability under any of the safe harbor provisions of the Digital Millennium Copyright Act, 17 U.S.C.

Furthermore, the court entered a permanent injunction that prohibited Fung from engaging in any activity that would infringe Columbia's copyrighted works.

[1] Fung appealed, contesting the district court's ruling of copyright infringement as well as his ineligibility for safe harbor protection under the DMCA.

This element of inducement liability, the court held, requires only that defendant engaged in a process leading to the unauthorized reproduction of a plaintiff's copyrighted expression, and there was no question that Fung had done at least that much.

Fung posted several messages, encouraging isoHunt users to upload torrent files of copyrighted materials that could be then available for download.

(4) Causation: Fung argued that the plaintiffs could not demonstrate all of the allegedly infringing downloads by third parties could be traced to services provided by isoHunt.

The court accepted Columbia's argument, finding the disputed causal links to be relevant to damages (to be determined later in the proceedings) rather than liability.

The district court had rejected protection under DMCA 512(a) since the provision only applied to "transitory" networks, which was not applicable because isoHunt never actually touched any of the copyrighted content.

Thus, a solid connection between the infringing activity and the revenue generation was established, and Fung was declared ineligible for protection under the § 512 (c)(1)(b) safe harbor.

The court also affirmed summary judgment to Columbia in dismissing Fung's claims of being eligible for protection under the DMCA safe harbor provisions.

[2][5] Columbia v. Fung was one of the few cases since Grokster where a court applied an "inducement" theory of copyright, rather than one of contributory or vicarious infringement.

[4][7] A further implication to be taken from Fung is that courts will find any file-sharing technology to be legally indistinguishable regardless of their technical specifications, e.g. whether servers are hosted centrally or peer-to-peer.

A website operator that utilizes a user interface feature that organizes user activity but that may also come to "highlight infringing activity" (e.g. a "Top Downloaded" list that happens to consist of copyrighted content) can potentially be inferred to fall under copyright inducement liability [3][4] Fung also introduced a new "loose causation" theory, on which DMCA safe harbor disqualification can be based on lack of evidence of substantial cause for third-party infringements.

[3] More generally speaking, Grokster and its related cases, including Fung, have been criticized for its stifling of innovation and competition by increasing the threat of litigation for file-sharing technology.

As Harvard Law Professor Lawrence Lessig put it: By making it a process that goes through the courts, you've just increased the legal uncertainty around innovation substantially and created great opportunities to defeat legitimate competition.