The Silver Lining On The Grooveshark Ruling: At Least It Didn't Screw Up The DMCA Safe Harbors

from the it's-something dept

Earlier this week, we wrote about the easy summary judgment issued against Grooveshark, in which the actions of the company's founders completely doomed the company in the ruling. As we noted, there were some interesting legal arguments for an operation like Grooveshark, but they were all completely undermined by the founders' actions. Jon Healey, over at the LA Times has a good take on all of this noting that the silver lining in all of this is that, at the very least, nothing in this ruling screws up the DMCA safe harbors. There were legitimate concerns -- as with many such cases -- that a court would get somewhat blinded by the "but piracy!" claims and twist things around to rule in a way that would screw up the DMCA safe harbors. However, by having founders whose activity was damning in its own right, the court didn't even have to get into a discussion of the DMCA at all. It wasn't even an issue.

...from the standpoint of other tech companies, at least the pain is going to be confined to Grooveshark and its founders, not to other companies that operate online platforms. Griesa's ruling is just the latest reminder that such companies can't hope to be protected by the DMCA if their own staff infringes.

This was a very serious concern. As law professor Eric Goldman has pointed out repeatedly, there's real copyright law and file sharing copyright law, and the two aren't always related. Basically, because what many companies are doing feels wrong to some judges, they'll often twist and contort the law to call what's happening illegal, even if a straightforward reading of the statute would suggest otherwise. See the Supreme Court's ruling in the Aereo case as just one example.

And there was a real risk here that the same sort of thing would happen. If Grooveshark's founders and employees weren't uploading a ton of music themselves, there was a fairly legitimate argument that the same sort of DMCA safe harbors that protect YouTube would also protect Grooveshark. But there was certainly a difference in feel. Many people just instinctively felt that Grooveshark's activities must be bad, without understanding the full legal arguments behind them. So, in some ways, while it's going to hurt Grooveshark's founders financially (big time) in this case, the fact that they were so over the top in their activities might actually be a good thing for the law.

And, it might have some carry over benefits as well. If Grooveshark had prevailed, and the DMCA safe harbors held that the company was not directly liable for infringement done by its users, it would become Exhibit A from the legacy recording industry for why the DMCA safe harbors would need to be gutted by the upcoming attempt at copyright reform. So, in some ways, it appears that the ruling this week might actually be innovators and the DMCA safe harbors dodging a bullet.

Filed Under: copyright, dmca, safe harbors
Companies: escape media, grooveshark

Major Labels Easily Win Lawsuit Against Grooveshark

from the as-expected dept

This isn't a huge surprise given how similar lawsuits have gone, but the various major record labels (including Universal Music, Sony Music and Warner Music) more or less won all of their arguments against Grooveshark in a ruling yesterday. As the ruling makes clear, Grooveshark's founders more or less sunk themselves into a deep, deep hole early on by effectively admitting that their plan was to encourage lots and lots of infringement to grow really big -- and then hope that the labels would eventually do licensing deals based on their size (which actually worked, ever so briefly, with EMI). The piles of evidence supporting the early actions of the company and its execs is pretty damning, and more or less undermines the company's later claims that it was really no different from YouTube. Just the fact that company execs specifically went and reuploaded songs that were taken down by DMCA notices is incredibly damning.

Basically, Grooveshark didn't even do anything to hide its attempts to infringe. There are cases where the evidence can be read in multiple ways -- including the Megaupload situation, where many of the charges against the company seem to involve taking statements out of context. But with Grooveshark, the evidence is pretty damning that the company and its execs not only knew that what they were doing was illegal, but actively sought to do more infringing things without regard to the legal impact of those decisions. Hell, the company's own DMCA alert system sent notices to tons of the company's own employees -- including top execs -- for uploading infringing works. On top of that, there was some suggestion that Grooveshark then sought to delete or hide the evidence of those uploads.

Basically, almost everything Grooveshark did was incredibly stupid under the law. And they got caught for it, and will now have to pay up.

Take, for example, this internal forum post one of the company's co-founders posted to everyone at the company:

Please share as much music as possible from outside the office, and leave your computers on whenever you can. This initial content is what will help to get our network started—it’s very important that we all help out! If you have available hard drive space on your computer, I strongly encourage you to fill it with any music you can find. Download as many MP3’s as possible, and add them to the folders you’re sharing on Grooveshark. Some of us are setting up special “seed points” to house tens or even hundreds of thousands of files, but we can’t do this alone… There is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday… IF I DON’T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU’RE ON MY OFFICIAL SHIT LIST.

And there's this:

In 2009, Escape received numerous Digital Millennium Copyright Act (“DMCA”) takedown notifications from copyright holders demanding that it remove infringing copies of popular copyrighted songs from Grooveshark.... These ‘takedown’ notices threatened to diminish the Grooveshark music library.... As a result, Escape considered various methods so that users would not be denied access to any songs because specific infringing files were removed.... As part of this process, Escape’s senior officers searched for infringing songs that had removed in response to DMCA takedown notices and re-uploaded infringing copies of those songs to Grooveshark to ensure that the music catalog remained complete.

And then this one, on one of the co-founders (and the company's CTO) not just getting a bunch of DMCA notices (the ruling doesn't even get into the fact that it's obvious that the company's repeat infringer policy wasn't working, even if it was in place), but then having evidence disappear:

Greenberg received over thirty-nine DMCA notification letters from Escape for uploading 687 files to Grooveshark.... This means that Greenberg uploaded at least 687 sound recordings onto Grooveshark and that the UsersFiles should reflect these uploads....

[....]

Plaintiffs requested that Escape produce any archived copies of Greenberg’s uploading records and explain why his data was missing.... Defendants confirmed that no archived copies of Greenberg’s records exist.... Given Escape’s practices with respect to the creation and storage of upload data on the UsersFiles, Dr. Horowitz, plaintiffs’ expert, concluded that defendants deleted the uploading records associated with Greenberg’s account.

In most other cases like this, there are often important legal issues, and frequent attempts at distorting what actually happened. But in this case, it honestly looks like Grooveshark just flat out did everything possible to infringe on copyrights at every turn, directly encouraging employees to do so, and having a stated policy of trying to infringe as much as possible to get as big an audience as possible in the belief that the labels would then license. It didn't work and the company and its founders are going down because of it.

Filed Under: copyright, dmca
Companies: escape media, grooveshark, sony music, universal music, warner music

California Court: We Won't Issue A Subpoena To Identify Someone Just To Prove 'Someone Is Wrong On The Internet'

from the anonymous-speech-is-important dept

Two years ago, we wrote about a bizarre legal fight in which Escape Media, the company behind Grooveshark, was trying to force the blog Digital Music News to unveil an anonymous commenter who had commented on Grooveshark's ongoing lawsuit with Universal Music. The comment claimed to be from a Grooveshark employee, though it seemed like the typical unsourced, improbable junk you'll often find in certain anonymous comments -- difficult to take seriously. And yet Escape Media issued a subpoena demanding Digital Music News reveal the commenter's information. While I actually thought that Escape Media had a reasonable legal argument against the labels, we found this particular effort to unveil an anonymous commenter quite troubling. Similarly, while I often disagree with the opinions written on Digital Music News, I respect Paul Resnikoff, who runs the site, and actually helped put him in touch with Paul Levy from Public Citizen to respond to the subpoena.

A year ago, we were disappointed to see a trial court side with Grooveshark and order DMN "preserve" logs that had long ago been deleted in the regular course of DMN running its business. Even worse, the court wanted DMN to hand over its server hard drives for Grooveshark to try to do a forensic analysis of the deleted data to see if it could identify the deleted information about the commenter. DMN appealed the ruling and a California state appeals court has overturned the original ruling -- but did so for reasons other than Levy and DMN had suggested.

Levy and DMN had argued, quite reasonably, that the First Amendment barred revealing the anonymous commenter and also that since the data had already been deleted in the regular course of business, that it cannot be required to preserve servers that might possibly have that data hidden somewhere. Instead, the court ruled in a different manner, saying that the commenter's identity could be protected, but because of California's constitutional privacy protections:

Even if Visitor’s identifying information was reasonably calculated to lead to admissible evidence, his or her right to privacy under the California Constitution would outweigh Escape’s need for the information. “The right to speak anonymously draws its strength from two separate constitutional wellsprings: the First Amendment’s freedom of speech and the right of privacy in article I, section 1 of the California Constitution.” .... The California Constitution provides that all people have a right of privacy.... This express right is broader than the implied federal right to privacy.... The California privacy right “protects the speech and privacy rights of individuals who wish to promulgate their information and ideas in a public forum while keeping their identities secret,” and “limits what courts can compel through civil discovery.”

Perhaps even more interesting is that Justice Victoria Chaney appears to channel XKCD in pointing out that we can't just go around willy-nilly identifying people online just because you don't like what they say:

Visitor has done nothing more than provide commentary about an ongoing public dispute in a forum that could hardly be more obscure—the busy online comments section of a digital trade newspaper. Such commentary has become ubiquitous on the Internet and is widely perceived to carry no indicium of reliability and little weight. We will not lightly lend the subpoena power of the courts to prove, in essence, that Someone Is Wrong On The Internet.

Well said.

Filed Under: anonymity, california, constitution, digital music news, grooveshark, paul resnikoff, privacy, someone is wrong on the internet
Companies: digital music news, escape media, grooveshark

Grooveshark Loses Latest Round In Court, In A Ruling That Could Gut The DMCA's Safe Harbors

from the letter-and-spirit dept

The last big news in the ongoing fight between Universal Music Group and Grooveshark (and its parent company Escape Media) came back in July, when a New York court rejected UMG's argument that the DMCA's safe harbors didn't apply to pre-1972 sound recordings, because, technically, those recordings are not covered by federal copyright law. This was in keeping with the ruling in the fight between EMI and MP3Tunes, and seemed most consistent with the intent of DMCA safe harbors.

Naturally, UMG appealed, and in doing so made some compelling arguments about the wording of the law. The appellate court agreed, and has now issued pretty much the opposite decision: pre-1972 sound recordings are not covered by the DMCA (pdf and embedded below) and thus Grooveshark has no DMCA safe harbors for such songs.

There are a few different parts to the ruling, but the core argument is straightforward: section 301(c) of the Copyright Act explicitly states that no "rights or remedies" under common law copyright on pre-1972 recordings shall be "annulled or limited" until 2067, and it's pretty hard to argue that the DMCA doesn't do that:

Initially, it is clear to us that the DMCA, if interpreted in the manner favored by defendant, would directly violate section 301(c) of the Copyright Act. Had the DMCA never been enacted, there would be no question that UMG could sue defendant in New York state courts to enforce its copyright in the pre-1972 recordings, as soon as it learned that one of the recordings had been posted on Grooveshark. However, were the DMCA to apply as defendant believes, that right to immediately commence an action would be eliminated. Indeed, the only remedy available to UMG would be service of a takedown notice on defendant. This is, at best, a limitation on UMG’s rights, and an implicit modification of the plain language of section 301(c). The word “limit” in 301(c) is unqualified, so defendant’s argument that the DMCA does not contradict that section because UMG still retains the right to exploit its copyrights, to license them and to create derivative works, is without merit. Any material limitation, especially the elimination of the right to assert a common-law infringement claim, is violative of section 301(c) of the Copyright Act.

For defendant to prevail, we would have to conclude that Congress intended to modify section 301(c) when it enacted the DMCA. However, applying the rules of construction set forth above, there is no reason to conclude that Congress recognized a limitation on common-law copyrights posed by the DMCA but intended to implicitly dilute section 301(c) nonetheless.

...

Under such circumstances, it would be far more appropriate for Congress, if necessary, to amend the DMCA to clarify its intent, than for this Court to do so by fiat.

Take note of that last bit, because this ruling has made it more true than ever. And that's where the problems come in. It seems pretty clear that there is some sloppy drafting in how the DMCA is written (which isn't a surprise), in that what you have is wording that can be read this way, even though it clearly goes against the intent and purpose of the DMCA. If the DMCA's safe harbors don't apply to pre-1972 recordings, then the DMCA's safe harbors no longer apply at all to any service that includes music. That can't be what Congress intended, even if the wording of the law can be read that way.

Thus, if you go strictly by the wording, while ignoring the intent, the logic of the decision is sound, but the implications are disturbing: as Grooveshark pointed out in their defense, this interpretation would gut the DMCA. One of the key purposes of safe harbors was to prevent online services from needing to proactively scan for infringing works, since that would drastically and unfairly limit their growth, and we wouldn't have things like YouTube today if that were the case. But if pre-1972 recordings (which is plenty of material) are not included, then user-generated content sites do have to scan everything. And while it might be somewhat easier to identify pre-1972 recordings than it is to identify infringing uploads, it would still be insanely prohibitive — not to mention the massive loss to our culture from having a huge chunk of music history mostly vanish from the internet.

It's a little unclear just how far-reaching this ruling will be (it's at the state level, and it is in itself explicitly contradicting the earlier MP3Tunes ruling, which it declares to be "wrongly decided") but the potential implications are huge. Exempting all pre-1972 recordings from the DMCA would impact all corners of the internet in a bad, bad way. The only optimistic thought is that perhaps it would force congress to revisit the law, and we could finally push for a Digital Millennium Copyright Act that actually works in the digital millennium.

Filed Under: dmca
Companies: emi, escape media, grooveshark, mp3tunes, umg

Judge Rejects Key Universal Music Argument In Legal Fight With Grooveshark

from the overreach... dept

Two and a half years ago, Universal Music (UMG) sued Grooveshark (or, really, its parent company Escape Media). The case has had a few twists and turns since then, but the judge has issued a ruling (embedded below) that is pretty clear in suggesting that Universal Music's key argument -- the the DMCA does not apply to pre-1972 songs -- was a massive overreach, and the court will not accept it. Separately, the court flat-out rejected UMG's attempts to have Grooveshark's counterclaims of tortious interference dismissed. There's no way to look at this other than a pretty big win for Grooveshark and a big loss for Universal, though the case is far from over.

On the key point, Grooveshark has long argued that what it does is really no different than what YouTube does, in that it allows individuals to upload content, and if it receives a takedown notice, it proactively follows the DMCA's takedown process and removes that content. Realizing that getting around the DMCA's safe harbors was a longshot, Universal Music instead reverted to a somewhat twisted argument, saying that pre-1972 sound recordings are not covered by the DMCA, and thus there are no safe harbor protections. To understand why they'd make this argument, you can read up on the history of pre-1972 copyrights for sound recordings -- a huge mess that the US Copyright Office is still trying to figure out how to fix. But, the short version is that, currently, sound recordings from before 1972 are not technically under US federal copyright law, but various (and often crazy) state laws. Since the DMCA refers to works under federal copyright law, Universal Music's arguments is that the DMCA doesn't apply, thus the safe harbors don't apply, and Grooveshark can't rely on its safe harbor compliance to avoid liability.

If this argument sounds somewhat familiar, that's because it's the same one EMI tried to use against MP3Tunes, which failed spectacularly. The NY state court in this case appears to be well aware of that, citing the MP3Tunes case at length.

An internet service provider which seeks to benefit from the safe harbor provisions of the DMCA is required, as a condition of receiving such protection, "expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity." .... Certainly the thrust of the DMCA is to relieve internet service providers of the initial need to ascertain the copyright status of the sound recordings that they make available, to place the burden of asserting copyright ownership on the owners of such copyrights, and to require the internet service providers to "take down" infringing material, upon receipt of a valid notice of infringement. There is no textual, or other reason, to think that Congress intended to limit that distribution of responsibilities to only post-1972 recordings.

Moreover, the phrase "copyright owners,".... is applicable to the owner of a common law copyright, no less than to the owner of a copyright under the Copyright Act....

End result? Sorry, UMG, but you can't just use this loophole to get around the clear and stated purpose of the DMCA's safe harbors.

This Court is not attempting to extend the Copyright Act to pre-1972 Recordings, but, nonetheless, does find, based on the relevant language of the statutes and the analysis discuss above, that the safe harbor provision codified by section 512(c)(1) of the DMCA is applicable to Pre-1972 Recordings.

That shoots a pretty big hole in UMG's case, as it's now going to have to show that Grooveshark's activities cause them to lose DMCA safe harbors, which is a much bigger hill to climb.

Separately, UMG failed in trying to get various counterclaims dismissed. The focus here was on claims that UMG contacted two companies -- HP and INgrooves -- to get them to back out of deals with Grooveshark. There are a bunch of different arguments (most pretty technical) that UMG makes to assert that these counterclaims should be dismissed, but the court isn't buying most of them. For each precedent UMG brings up, the court highlights that the facts are different here and UMG's reliance on particular caselaw "is misplaced."

UMG had a couple of relatively minor victories: having one of the counterclaims dismissed (one having to do with antitrust activity, because Grooveshark only showed harm to itself, rather than competition in general) and also a rejection of an attempt to use Section 230 safe harbors, which explicitly carve out intellectual property. Grooveshark/Escape Media tried a rather convoluted argument (sort of the reverse of UMG's pre-1972 DMCA argument, claiming that Section 230 safe harbors could apply to works covered under state copyright law). The court rejects this as silly, but it's effectively meaningless since it still grants the DMCA's safe harbors (which, admittedly are not quite as strong as the Section 230 safe harbors, but this is definitely the more reasonable result).

All in all, there's still a long way to go in this case, but today's ruling is clearly a pretty big loss for UMG and a win for Grooveshark.

Filed Under: common law copyright, copyright act, dmca, safe harbors
Companies: escape media, grooveshark, hp, ingrooves, universal music