Capital Punishment? EMI Wins the Battle, but May Lose War

Federal district judge William Pauley found online music locker service MP3tunes and its founder Michael Robertson liable for copyright infringement.  For those of us old enough to remember Robertson’s first company MP3.com, which was shut down by the labels a decade ago, these results aren’t too surprising.  Robertson’s latest venture MP3tunes has a number of innovative features, including a search engine called sideload.com that allows users to find music on the Web and transfer it directly to their lockers.  The record labels sued MP3tunes and Robertson personally and won several of their claims on summary judgment.  As explained below, however, this may prove to be a pyrrhic victory.

Judge Pauley found that music locker services such as MP3tunes are eligible for the safe harbor provisions of the DMCA.  Under the DMCA, websites are immune from copyright liability if they promptly take down infringing material when notified by copyright holders.  Capital Records argued that MP3tunes could not take advantage of the DMCA’s safe harbor provisions because it should have known that many of the songs users “sideloaded” from websites such as rapidshare were infringing.  Judge Pauley disagreed, finding that the DMCA imposes no obligation to investigate potentially infringing activity, except where links are to sites with URLs containing “red flag” words like “pirate” or “bootleg.”  As Judge Pauley explained, “For instance, the websites rapidshare.com, fileden.com, and filefactory.com, as well as the other sites used by MP3tunes executives to sideload songs do not use the words ‘pirate’ or ‘bootleg’ or other slang to indicate their illegal purpose and they are not otherwise clearly infringing.”  This strikes me as a fairly ridiculous standard to meet; it cannot possibly be the case that a site called “piratedmusic.com” is a redflag site one day but when it changes its URL to “nopiratedmusichere.com” it is ok.

There is also a curious section where the court discusses the “intent” of the users of MP3tunes.  Judge Pauley finds “The record reveals that MP3tunes’ users do not upload content to the internet, but copy songs from third-party sites for their personal entertainment.  There is a difference between users who know they lack authorization and nevertheless upload content to the internet for the world to experience or copy, and users who download content for their personal use and are otherwise oblivious to the copyrights of others.  The former are blatant infringers that internet service providers are obligated to ban from their websites.  The latter, like MP3tunes users who sideload content to their lockers for personal use, do not know for certain whether the material they are downloading violates the copyrights of others.”  Judge Pauley provides no record cites for this finding.  I recall scant–if any–evidence in the parties summary judgment briefs regarding how knowledgeable of copyright the users of MP3tunes or Sideload are.  It strikes me as odd that Judge Pauley would conclude that those sharing music files on the Internet through Sideload.com and MP3tunes are all oblivious to the fact that those shared files are unauthorized copies.

Judge Pauley did find that MP3tunes could not enjoy the DMCA’s safe harbor provision, however, because it failed to delete unauthorized copies of songs from user’s personal lockers that they had “sideloaded” from infringing sites.  Judge Pauley found that “Where service providers such as MP3tunes allow users to search for copyrighted works posted to the internet and to store those works in private accounts, to qualify for DMCA protection, those service providers must (1) keep track of the source and web address of stored copyrighted material, and (2) take content down when copyright  owners identify the infringing sources in otherwise compliant notices.”  Because MP3tunes did not remove such unauthorized songs from user’s lockers, “MP3tunes does not qualify for safe harbor protection for songs stored in users lockers that were sideloaded from the unauthorized websites identified in the [record label] takedown notices.”  If this decision is upheld on appeal, music locker services will have little trouble qualifying for the DMCA’s safe harbor by simply removing unauthorized copies from individual user’s lockers.

Judge Pauley also found MP3tunes founder Michael Robertson personally liable for “sideloading” some of Capital Records’ copyrighted music to his own music locker from infringing websites.

An interesting portion of Judge Pauley’s decision regards his conclusion that MP3tunes use of a single copy to serve multiple users.  The Second Circuit’s decision in Cartoon Network, LP v. CSC Holdings, Inc., 536 F.3d 121, 138 (2d Cir. 2008) seemed to suggest that the use of a single copy by multiple users gave rise to a public performance of the underlying copyrighted musical composition.  In that case, Cablevision made individual copies of television shows for each customer, such that a customer could only watch the particular copy made by him or her and stored on Cablevision’s “locker” service.  Here, MP3tunes used deduplication technology to save hard drive space.  Judge Pauley declined to follow the reasoning in Cartoon Network and found that “MP3tunes does not use a ‘master copy’ to store or play back songs stored in its lockers.  Instead, MP3tunes uses a standard data compression algorithm that eliminates redundant digital data.”

The final chapter in this story is far from written.  Both sides will appeal.  Other cloud-based services, such as Google and Amazon, may be wise not to read too much into this district court opinion and wait for more guidance from the Second CircuitJudge Pauley makes a curious finding when he states

The Memorandum and Order is here
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Capital’s Motion for Summary Judgment is here
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MP3tunes Motion for Summary Judgment is here
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Capital’s Response to Mp3tunes MSJ is here
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MP3tunes Response to Capital’s MSJ is here
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