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UNITED STATES OF AMERICA UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA WESTERN DIVISION - - HONORABLE MANUEL L. REAL UNITED STATES DISTRICT JUDGE PRESIDING - - MASTERFILE CORP, ) ) PLAINTIFF, ) ) VS. ) ) CHAGA INTERNATIONAL, et ) al., ) ) DEFENDANTS. ) ______________________________)

CERTIFIED COPY CV 12-850 R

REPORTER'S TRANSCRIPT OF PROCEEDINGS MONDAY, JUNE 18, 2012 A.M. SESSION LOS ANGELES, CALIFORNIA

SHERI S. KLEEGER, CSR 10340 FEDERAL OFFICIAL COURT REPORTER 312 NORTH SPRING STREET, ROOM 402 LOS ANGELES, CALIFORNIA 90012 PH: (213)894-6604

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ON BEHALF OF DEFENDANT: (NO APPEARANCE) APPEARANCES OF COUNSEL: ON BEHALF OF PLAINTIFF: STEVEN WEINBERG, ESQUIRE

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LOS ANGELES, CALIFORNIA; MONDAY, JUNE 18, 2012 A.M. SESSION - - -

THE CLERK:

Calling item No. 10, CV-12-850:

Masterfile Corporation versus Chaga International, et al. Counsel, please state your appearances. MR. WEINBERG: Good morning, Your Honor.

Steven Weinberg for the plaintiff Masterfile Corporation. And I believe I'm unopposed this morning. THE COURT: the defendant? MR. WEINBERG: THE COURT: I have not, Your Honor. He is not present. Have you heard from counsel for

All right.

He has had notice of this. You have not heard from either Mr. Blakely or Mr. Michelen? MR. WEINBERG: THE COURT: I have not. Anything to add to

All right.

the documents which have been filed? MR. WEINBERG: Yes, Your Honor.

We had originally asked, or mentioned to Your Honor, that a stay might be possible because of a pending Ninth Circuit case. And we learned after we

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filed our opposition to this motion that the Alaska Stock case is now on hold because Alaska Stock filed bankruptcy, a notice of bankruptcy on May 23rd, which was about a week after we filed our papers. So, to the extent that we had asked for a stay on that ground, since it now looks like the holdup in the Ninth Circuit may be indefinite, we would ask that we not stay the motion because of the Ninth Circuit pending appeal in Alaska Stock. What we would ask Your Honor to do, if you are so inclined, is to deny the motion because there are genuine disputed material facts and there are many of them, or because consistent, I guess, with the defendant's behavior, they did not file a Local Rule 56-1 statement and then tried to file it with a reply that was filed about two weeks after it was due. So under Local Rule 7-12 and chief judge -the chief judge of the case in Motorola, which was decided in 2004, you do have the authority to dismiss the motion on that basis alone. And if you're not so inclined, then just on the substance I would refer Your Honor to a Ninth Circuit case that we mentioned in our briefs but did not discuss as much as perhaps we might have, and that's the case of United Fabrics International at 630 F.3rd 1255,

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which was decided just last year in the Ninth Circuit in 2011, which is in our brief at page 18. That is the most recent in a line of cases by the Ninth Circuit that we believe is controlling here which essentially says, and actually specifically says, that once a party a plaintiff has registered its copyright, it satisfies 17 USC 411(a), which is the part of the statute that requires one to register before bringing a case. And then after that, the only way that

one can dismiss or invalidate the registration or dismiss the case is if in fact the plaintiff was engaged in fraud on the copyright office in the procurement of the registration. That's not possible in this case because in each one of the registrations that was obtained, they were all done with the copyright office assisting and, therefore, the copyright office approved each one the 17 registrations. I might add also that the big difference between this case and the others is that here, unlike a situation where a party who is a photographer had given a license to a publisher, we have a second time defendant, so to speak, Chaga, had engaged in this kind of unauthorized copyright infringement back in 2009. A settlement agreement was reached. There

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were 22 images in that case. This time around, a year later, they have taken 20 -- it turns out it was 29. 18 is cited in the

declaration -- 20 of those very same images and used them again and added to that an additional 14. So we really have a recidivist copyright infringer here, which is very different than any of the other cases. And, of course, the Ninth Circuit in

United Fabrics and the cases that came before it we believe as I said earlier -- and that's all I have to add. THE COURT: All right. The copyright

requires copyright holders to register their works before suing for copyright infringement. Reed Elsevier,

Inc. versus Muchnick, 130 Supreme Court at 1237 (2010). To register a copyright Section 409 of the act requires an application on the Register of Copyrights prescribed form, including, among other information, the name of the author of the work being registered and the title of the work. The process by which an applicant may register his copyright for an individual work or a compilation is governed by Section 409 and requires that any copyright registration include the name of the author or authors, the title of the work, and certain

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other information. More detailed requirements and conditions for the registration of copyrights are set out in 37 C.F.R. 202.3. If an applicant seeks to register a compilation, the applicant must follow the rules set out in Section 409 and in 37 C.F.R. 202.3(b)(5), which governs group registrations. If an applicant seeks to register an individual work, the applicant must follow the rules set out in Rule 409 and in 37 C.F.R. 202.3(b)(4), which governs the registration of individual works. Plaintiff submitted registrations for its collective work or image libraries. Defendants argue

that those registrations did not comply with the requirements of Section 409 and 411 of the copyright act and, as such, that they cannot serve as valid registrations of the individual images at issue. The Court agrees with that reasoning in Alaska Stock versus Houghton Mifflin, 2010 W.L. 3785720 (District of Alaska 2010) and Bean versus Houghton Mifflin, 2010 W.L. 3168624 (District of Arizona 2010), and concludes that the registration of the collective work does not have the effect of registering the individual works that comprise the collective work.

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This result means that each author is not permitted to sue for copyright infringement of the individual works. Here, the registration fails to comply with The registrations have multiple

deficiencies, including failure to name the authors or their nationalities or domiciles in certain instances. Further, they failed to name the titles of the individual works, the years in which the works were completed or the dates and nations of each work's first publication. Plaintiff notes that it followed the procedures developed by the U.S. Copyright Office. When

reviewing agency action, if Congress has clearly spoken on an issue that is the end the matter and an agency must give effect to unambiguously expressed intent of Congress. Chevron U.S.A. versus National Resources

Defense Council, 767 -- 467 U.S. 837 (1984). An agency's interpretation is entitled to no deference if it conflicts with the clear intent of Congress. Here, Congress has clearly identified the

registration requirements of Section 409, and thus the individual office's decision to develop procedures in conflict with those requirements is entitled to no defense.

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Therefore, defendants' motion for summary judgment is granted. Counsel to prepare the judgment

and the undisputed facts for the Court to sign. And it is different, Counsel, and therefore, I am granting the summary judgment. It has differences

as to what's on appeal and should be resolved by the Court of Appeals with reference to the individual works as well as the works in toto. It may be that the registration for the in toto work is valid, but the individual matters are not pursuant to the copyright act. All right.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ___________________________________________ SHERI S. KLEEGER, CSR FEDERAL OFFICIAL COURT REPORTER DATE: JULY 5, 2012 I, SHERI S. KLEEGER, OFFICIAL COURT REPORTER, IN AND FOR THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, DO HEREBY CERTIFY THAT PURSUANT TO SECTION 753, TITLE 28, UNITED STATES CODE, THE FOREGOING IS A TRUE AND CORRECT TRANSCRIPT OF THE STENOGRAPHICALLY REPORTED PROCEEDINGS HELD IN THE ABOVE-ENTITLED MATTER AND THAT THE TRANSCRIPT PAGE FORMAT IS IN CONFORMANCE WITH THE REGULATIONS OF THE JUDICIAL CONFERENCE OF THE UNITED STATES. STATE OF CALIFORNIA COUNTY OF LOS ANGELES ) ) ) SS CERTIFICATE OF REPORTER