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Michael Robertson Challenges Ruling That Says He Has To Pay Over $40 Million For Copyright Infringement

from the red-flags-indeed dept

Wed, Jun 4th 2014 8:43pm — Mike Masnick

Earlier this year, we wrote about the troubling ruling against MP3Tunes.com, in which it was found to be "willfully blind" to infringement on its music locker service -- raising serious questions for basically any cloud service provider. EMI, the record label suing, used an incredibly low standard for what it considered to be willful blindness, but the jury bought it. On top of that, it found MP3Tunes founder Michael Robertson not just personally liable for certain infringement, but said he'd have to pay somewhere around $41 million for it.

In response, Robertson is fighting back, asking the judge to basically overrule the jury on a number of different matters. There's a lot in the filing that's worth reading, but it highlights just how crazy some of the details are in this case. The biggest issue is the whole "willful blindness" issue or "red flag knowledge." As other courts have noted, this has to be in reference to specific instances of infringement -- but that wasn't shown for many of the files in this case. Rather, the jury was only told of general infringement. This was the issue at the center of the big YouTube/Viacom case, in which YouTube won the argument that Viacom had to show red flag knowledge of specific infringement, rather than just arguing general knowledge of infringement. Yet, in this case, the issue seems to have been flipped.

There's also the troubling aspect of how the jury found Robertson guilty of not just direct infringement (of 22 files), but also "vicarious and contributory liability" on a list of over 2000 additional works. But, as Robertson notes, for that to be the case, EMI would have to have shown Robertson receiving a direct financial benefit from that infringing activity, and, in fact, Robertson received nothing from the infringement, or the company -- instead, he lost millions.

The trial record is devoid of evidence that Robertson received any such direct financial benefit. In fact, not only did Robertson not receive any direct financial benefit from MP3tunes’ and its users’ infringing activity, he personally invested and lost over $6.8 million. Moreover, uncontroverted trial testimony shows that Robertson has (a) never taken a salary or a bonus from MP3tunes... and (b) never received any dividends or any distribution, even directly or indirectly through any of the trusts, from MP3tunes...

Tellingly, Plaintiffs do not dispute these facts. Instead, they argued that Robertson could have made money, if his plan had been a success.... But the Liability Charge rejected such hypothetical conjecture; rather, it requires that “Robertson received a financial benefit directly attributable to the infringing activity of MP3tunes.” .... Indeed, the very conjecture Plaintiffs assert is itself an implicit admission that Robertson did not receive a financial benefit. ... (“Had he succeeded and signed up millions of users, he could have taken the company public, gotten investors or sold the company”) (emphasis added)). Such speculative conjecture is too remote to support vicarious copyright liability

Furthermore, it notes how the jury appears to have confused benefit for the company with benefit for Robertson directly. Furthermore, he argues that some of the arguments seem entirely based on a made up concept of tertiary liability. Basically, the jury argued that MP3Tunes has secondary liability for the actions of its users (already a questionable statement, given its compliance with the DMCA's safe harbors), and beyond that Robertson thus has tertiary liability for MP3Tunes' secondary liability. Anyone who believes in the nature of a limited liability corporation, and separating the liability of the company from its staff, might want to pay attention to that issue.

Under the charge, Robertson may be liable for MP3tunes’ secondary liability without any proof of his knowledge of, benefit from, or contribution in, the users’ direct infringement; and without any direct infringement by MP3tunes. That simply is not the law, and is contrary to the fundamental limits of secondary liability.

On the willful blindness/red flag issue, Robertson notes the made up and artificial standard that EMI uses, that if they had recieved DMCA notices with 10 or more links to a particular website, they had red flag knowledge that all links from that website must be infringing.

Plaintiffs simply counted the number of occurrences of domains in their takedown notices, and when the count reached 10, assigned to MP3tunes willful blindness or red flag knowledge that all sideloads from such domain were infringing. That is insufficient. MP3tunes could not discern any specific instances of infringement merely from the fact that any particular domain was present more than 10 times on takedown notices. In fact, counting the number of occurrences on takedown notices does not even rise to a showing of “a high probability of general infringement” or “a generalized awareness of infringement,” which are not enough to establish willful blindness or red flag knowledge.

In addition, the number “10” was plucked from thin air. Why not three? Why not 15 or 20? Where was the evidence showing the significance of 10 occurrences? Moreover, the lack of notice of specifically infringed works means MP3tunes had to conduct an investigation to determine which works were infringed: (i) which domains met the threshold of 10; (ii) which works were owned by Plaintiffs; and (iii) which works were sideloaded without authorization.

He further presents proof that EMI itself miscounted. Five out of thirteen domains they listed had errors. On top of that, he points out that EMI itself authorized free MP3s on many of those domains. In other words, there were authorized works on those same sites, which EMI insists Robertson must have known were infringing.

There are other issues raised in the filing as well, which you can read below, including questions about liability on cover art images. The specific legal issues in the case concerning secondary liability and red flag knowledge are quite important, because it will absolutely be cited as precedent in other cases as well. Unfortunately, as we've noted for a while there's sometimes a difference between "real law" and "file sharing law" in which courts decide if something feels like infringement and then twists itself to make it so. This case has all the indications of a court feeling like Robertson did something wrong, even if it doesn't seem to actually fit under the law. Thus, the effort here may be quite a long shot. Unfortunately, the ramifications of that will be felt by tons of other services, especially those in the cloud computing space.

2014 05 01 [612] Robertson JMOL Brief (1) (PDF)2014 05 01 [612] Robertson JMOL Brief (1) (Text)

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Filed Under: contributory infringement, copyright, dmca, michael robertson, red flag knowledge, safe harbors, secondary liability, tertiary liability
Companies: emi, mp3tunes

33 Comments

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Groaker (profile), 4 Jun 2014 @ 10:13pm

Few judges are qualified to sit on such cases, and jurors seem to be incapable of understanding the issues at hand. This seems to be true not just for the average person, but the professionals (in other fields) who I interact with.

Calling someone a hacker or a pirate in today's milieu, is not unlike calling a person a witch in Salem during 1692.
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Anonymous Coward, 4 Jun 2014 @ 10:48pm

Response to: Groaker on Jun 4th, 2014 @ 10:13pm
Thy shall not suffer a hacker to live
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PaulT (profile), 5 Jun 2014 @ 12:26am

" he'd have to pay somewhere around $41 million for it.

In response, Robertson is fighting back"

Well, yeah... When you're talking about that sort of money you might as well fight to the bitter end. Whether you owe the money to the cartels or the lawyers, you're screwed anyway so why let them get it easily?

" Five out of thirteen domains they listed had errors. On top of that, he points out that EMI itself authorized free MP3s on many of those domains."

...and before the usual chorus of morons join in - this is the problem. The copyright holders themselves can't even work out which works are infringing with any degree of accuracy, even as they're selecting the pool to use as evidence in front of a court of law. As with Viacom, when presenting evidence to a jury, they can't even work out which ones they authorised directly. How, therefore, can any third party possibly know the difference, especially as part of a "simple algorithm" or whatever voodoo they assume Google can cook up?

Does anyone have a real answer to this, or do they just accept that third parties have to do the impossible, with guaranteed lawsuits whether they succeed or not? If so, do you honestly not see the problem here?
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Anonymous Coward, 5 Jun 2014 @ 12:31am

Re: Response to: Groaker on Jun 4th, 2014 @ 10:13pm
What was that quote?

"Sufficiently advanced technology is indistinguishable from magic?"

BURN THE WITCH!!!!

/s
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Whatever, 5 Jun 2014 @ 12:47am

If he is lucky
Is he is lucky, the will cut the award in half! Seriously, this is one case where there is no choice but to fight it, even if you really know you screwed the pooch.

The arguments are a bit light. Arguing the magic number of 10 is pretty funny actually, it's like asking someone "if I hit you in the face, how many times do I have to do it before you decide to stop me?". 10 would be a pretty high number if the guy hitting you was Georges St Pierre. I don't tolerate having to tell my son the same thing 10 times before he is in trouble for not paying attention, I think the courts can see that level as not only reasonable, but even lenient in giving this guy plenty of chance to stop what he was doing.

Moreover, as soon as they were able to attribute even a little bit of the piracy to him personally, the game was over. He cannot be pirating stuff and also claiming not to know.

It will be interesting to watch the appeal, but I am thinking that much of it will be tilting at windmills.
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Anonymous Coward, 5 Jun 2014 @ 12:50am

He did not make money he lost money
"Tellingly, Plaintiffs do not dispute these facts. Instead, they argued that Robertson could have made money, if his plan had been a success"

Seriously , with this statment the judge should have condemmed the jury and found out who the mpaa mole was in the jury.
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Anonymous Coward, 5 Jun 2014 @ 12:57am

Re: If he is lucky
yes exactly, sometimes, if it looks like a duck, it quacks like a duck, then its a duck.
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PaulT (profile), 5 Jun 2014 @ 1:07am

Re: If he is lucky
...and another post where you not only miss the point, but have to distort the actual arguments made to attack them. I know you're one of the beginner level trolls here, but is this not boring?

" it's like asking someone "if I hit you in the face, how many times do I have to do it before you decide to stop me?"."

No, it's asking me if I can stop the guy next to you from hitting you, but I have my back turned doing something else and it takes a few times to get my attention. Do you still not understand the fact that the services aren't pirating anything themselves, that the question is only whether they encouraged or directly profited?

"He cannot be pirating stuff and also claiming not to know."

Perhaps. But, if it's so clear-cut, why did the evidence against him include things that he had been given permission to distribute? if they can't even identify the content correctly, why should we trust claims of actions, especially since those apparently contain instances of tertiary liability - that is, NOTHING like him "pirating stuff" personally.

"I am thinking that much of it will be tilting at windmills."

Well, you'd know what that's like, I suppose.
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PaulT (profile), 5 Jun 2014 @ 1:09am

Re: Re: If he is lucky
Yet, you ACs always complain when people flag your trollish posts as being troll posts. Hmmm...
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That One Guy (profile), 5 Jun 2014 @ 1:57am

Re: If he is lucky
Regarding the 'magic number', it helps if you read the article to understand what the issue actually was.

'Plaintiffs simply counted the number of occurrences of domains in their takedown notices, and when the count reached 10, assigned to MP3tunes willful blindness or red flag knowledge that all sideloads from such domain were infringing. That is insufficient. MP3tunes could not discern any specific instances of infringement merely from the fact that any particular domain was present more than 10 times on takedown notices. In fact, counting the number of occurrences on takedown notices does not even rise to a showing of �a high probability of general infringement� or �a generalized awareness of infringement,� which are not enough to establish willful blindness or red flag knowledge. '

The argument they were making basically boiled down to 'Once the number of DMCA claims concerning a particular web-site/IP address reaches 10, then all future uploads from the site/IP address should be treated, by default, as infringing, and refusal to treat them as such constitutes 'willful infringement'/red flag knowledge of infringement.'

And if you think that's a reasonable, and more to the point legal argument, I invite you to point out where in the law it states such a thing.
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Kaemaril (profile), 5 Jun 2014 @ 4:44am

Re: Response to: Groaker on Jun 4th, 2014 @ 10:13pm
"Thou shalt not", surely? :)
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Anonymous Coward, 5 Jun 2014 @ 5:39am

The trial record is devoid of evidence that Robertson received any such direct financial benefit. In fact, not only did Robertson not receive any direct financial benefit from MP3tunes� and its users� infringing activity, he personally invested and lost over $6.8 million. Moreover, uncontroverted trial testimony shows that Robertson has (a) never taken a salary or a bonus from MP3tunes... and (b) never received any dividends or any distribution, even directly or indirectly through any of the trusts, from MP3tunes...

It seems that if the company derived any income from infringing material, that'd constitute "direct financial benefit" The benefit in this case is that the defendant would've lost more than $6.8 million.

I don't think you need to show a profit or receive a disbursement to be considered to have received "direct financial benefit"- only income derived from infringing activity.
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Anonymous Coward, 5 Jun 2014 @ 5:57am

Re: He did not make money he lost money
But he could have made money. And he could have paid EMI $40M with the money he could have made. And EMI could have been happy with that and he wouldn't have had to appeal.

I like it: Hypothetical profits used to pay for a violation of imaginary property ordered by a jury deciding using made-up law.
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PaulT (profile), 5 Jun 2014 @ 6:16am

Re: Re: He did not make money he lost money
Don't forget the part where many (most?) of the users of the service were merely sideloading content they had already paid for. That is, even if they infringed, they were merely using an unauthorised method to access content they otherwise had every right to access, and for which EMI had already collected their fee. That's even without starting on the claim that EMI themselves authorised many of the files to those users to begin with.

" he could have paid EMI $40M... EMI could have been happy with that"

Yeah, right... If he made a cent of profit, you can guarantee they'd be asking for billions, not millions.
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Geno0wl (profile), 5 Jun 2014 @ 6:29am

Re: Anonymous Coward, Jun 5th, 2014 @ 5:39am
The point was to argue against him personally being held liable. Not that the company would have "lost even more"
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Dan G Difino, 5 Jun 2014 @ 7:11am

Secondary liability
Without any knowledge? Let's call that what it is.. HORSECRAP AND a@t the tune of $41 Million..

BULLSHIT/HORSEPUCKY
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Anonymous Coward, 5 Jun 2014 @ 7:29am

Re:
Judges love to be on the cutting edge of any precidential law. Its good for their esteem.
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Michael Donnelly (profile), 5 Jun 2014 @ 7:32am

When did Troy Aikman join EMI's legal team?
Yeah, that would have been a touchdown pass if Romo had made a better throw, too.

He didn't.
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Anonymous Coward, 5 Jun 2014 @ 8:25am

Re: Secondary liability
Worse yet is going after the founder for being a major stock holder for 'law breaking' by the business.

Does that mean that the US government can personally sue everyone who owns BP stock for the BP oil spill, because it must be their fault as an owner for the law breaking in cutting back on safety that caused the accident.
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Anonymous Coward, 5 Jun 2014 @ 8:46am

Mike Masnick (and rational people everywhere) just hates it when non-existent copyright laws are enforced.
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This comment has been flagged by the community. Click here to show it

Anonymous Coward, 5 Jun 2014 @ 9:17am

Mike Masnick just hates it when copyright law is enforced.
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Anonymous Coward, 5 Jun 2014 @ 9:21am

Re: Re: Re: If he is lucky
Douchebag Paul's definition of trollish: any comment that doesn't agree with Techdirt's pro-piracy stance.
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Wruce Bayne, 5 Jun 2014 @ 3:23pm

Re:
Not everyone takes jury duty seriously and I know this from first hand experience. For some (perhaps many?) it's all a big hassle. He probably got one that just wanted to get it over with as quickly as possible so they could get back to their lives.
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John Fenderson (profile), 5 Jun 2014 @ 3:33pm

Re: Re:
*sigh*

I've long wanted to serve on a jury, but have never been called up (and I'm past middle age). Ironically, every single one of my friends and family have been called up (most multiple times) and most of them view it as a huge pain in the ass.
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Anonymous Coward, 5 Jun 2014 @ 10:00pm

Re: Re: Re: Re: If he is lucky
Techdirt isn't pro piracy. It's more pro understanding piracy and how to deal with it instead of just assuming law enforcement and drm are silver bullets that will magically make everything better
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SK, 5 Jun 2014 @ 11:48pm

Robertson is out for himself, as usual
I have had the misfortune of working for Robertson at both MP3.com and Linspire. I found him to have no regard for copyright law, developers or musicians. He's always in it for himself. I've know him for years. See what others who have worked with him have to say about him as well at http://freespire.com.
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PaulT (profile), 6 Jun 2014 @ 1:05am

Re:
Funniest part of this? The usual idiot still posted his repetitive lie, even as you had already mocked it. How pathetic is he?
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PaulT (profile), 6 Jun 2014 @ 1:07am

Re: Re: Re: Re: If he is lucky
Ah, the usual maturity and truth I've come to expect. Why do you feel the need to lie and act like a child? Even if people were likely to believe your bullshit, the way you choose to express it would never convince anyone to do so.
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PaulT (profile), 6 Jun 2014 @ 1:15am

Re: Re: Re: Re: Re: If he is lucky
In these idiots' minds: "pro-piracy" = daring to suggest that piracy is not the biggest problem these companies are facing. God forbid you actually suggest that their own preferred "fixes" are counter-productive and designed to attack their own paying customers...
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PaulT (profile), 6 Jun 2014 @ 1:17am

Re: Robertson is out for himself, as usual
...and what does his personal attitude have to do with the issues outline in the article (e.g. that EMI included files they had authorised in the infringement complaint)?

As with Kim Dotcom, I'm sure the man has many flaws and isn't necessarily the best person to deal with on a personal level. This, however, has nothing to do with the criticisms of those attacking him.
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Anonymous Coward, 6 Jun 2014 @ 5:08am

Re: Re: Robertson is out for himself, as usual
If you can't beat them in a court of Law, tarnish their reputation to try and beat them in the court of public opinion (it obviously backfired with KDC).
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Kevin (profile), 6 Jun 2014 @ 8:54am

From The future
The year is 2028. Joe is discussing history with his 16 year old son.
"When you were born The USA had several policing regimes. The CAI, FBI, Rangers, County Sheriff, City Police, The IRS and the most feared of all, the RIAA. They were part of the record companies and were ruthless and determine to take down every music lover they could" said Joe.
His son replied : "What is the RIAA and what is a record company?"
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Anonymous Coward, 9 Jun 2014 @ 11:46am

Re:
don't forget terrorist. that's another big word that doubles as witch currently
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