Magistrate Judge Says Grande Shouldn't Be Able To Use The DMCA Safe Harbors Because It Didn't Really Terminate Infringers

from the one-piece-of-the-puzzle dept

We've written a few times about a key DMCA case in Texas, involving the ISP Grande Communications and Universal Music Group (and, by proxy, the copyright trolling operation Rightscorp). The case has had a lot of up and downs, with the judge tossing UMG's "vicarious infringement" claims, while letting the "contributory infringement" claims move forward. In October, the court rejected UMG's attempt to bring back the vicarious infringement claims which had already been dismissed, with some fairly harsh words directed at UMG for attempting that.

The latest, as first noted by Torrentfreak, is that the magistrate judge has recommended rejecting Grande's use of the DMCA safe harbor defense. I still have general issues with the idea that the "repeat infringer" part of the DMCA is being accurately described in these cases (specifically: the courts are now applying it to accusations of infringement, rather than actual infringers, which requires a court adjudication). However, the magistrate basically points out that Grande can't make use of the safe harbors because... it had no repeat infringer policy at all. Or, rather, it did, but in 2010 it stopped using it, and then never had a policy through 2016.

So, without a policy, they couldn't have reasonably implemented it... and thus, no safe harbors. Given the facts of the case, that's perhaps not that surprising. The DMCA requires you to have a reasonably implemented policy (Cox lost its similar lawsuit not because it didn't have a policy, but because it didn't follow its own policy).

Of course, that doesn't necessarily mean that UMG is going to win the case. Not having the safe harbor makes it harder for Grande, but not fatal. UMG will still need to prove contributory infringement, which is going to be fairly difficult to show. Earlier in the case, the court had noted "that this is not yet a well-defined area of law, and that there are good arguments on both sides of this issue." Effectively, UMG will need to show that Grande "induced" infringement by its actions, and Grande will claim it did no such thing. But it can't just use the DMCA safe harbors to get the case dismissed, rather it will need to focus specifically on the question of whether it induced people to infringe.

Filed Under: contributory infringement, copyright, dmca, repeat infringer policy, safe harbors
Companies: grande, grande communications, riaa, rightscorp, universal music group

Court Shoots Down Record Label's Attempt To Expand The Definition Of 'Vicarious' Infringement

from the that's-not-how-it-works dept

While there has been plenty of attention paid to the BMG v. Cox case, in which Cox was found not to be protected by the DMCA's safe harbors in dealing with repeat infringers, it's increasingly looking like the ruling in that case (which eventually led to a "substantial" settlement) was fairly unique to Cox's situation. Specifically, while much was made of Cox's "13 strikes" repeat infringer policy, in the end the nature of the policy wasn't what sunk Cox: it was the fact that Cox didn't follow its own policy. In other cases, courts seem willing to grant much more latitude to the ISPs to make their own calls. We wrote about the 9th Circuit and its ruling in the Motherless case, which made it clear that a platform gets to set its own policy, and that policy need not be perfect.

Meanwhile, down in Texas, there's the UMG v. Grande Communications case, which many had seen as a parallel case to the BMG v. Cox case. This was another case that involved an ISP being bombarded with shakedown (not takedown) notices from Rightscorp, in which Righscorp and its clients felt that ISP was not willing to pass on those notices (thus denying Rightscorp and its clients the ability to collect money in exchange for a promise not to sue). As we noted back in April, while still in the district court, the Grande case wasn't going nearly as smoothly as the Cox case for those wishing to copyright troll. The magistrate judge was quite skeptical, and had tossed out entirely the claims of vicarious infringement (while somewhat skeptically allowing the claims of contributory infringement to move forward).

Vicarious and contributory infringement are often lumped together, but they are different. For there to be vicarious infringement, you have to show that the party being sued both had the right and ability to supervise the activity, and that it would directly financially benefit from the infringement. The court rejected that in the case of Grande, noting that just because Grande makes money from its subscribers, that's not enough to show that it was profiting from the infringement.

Universal Music tried to amend the complaint to show that it had "more evidence" that Grande and its management company, Patriot, were still vicariously liable -- but the magistrate judge says it's just trying to re-litigate what it lost last time. The recommendation makes fairly quick work of UMG's arguments:

The new evidence Plaintiffs rely on is: (1) Grande tracks its infringing customers; (2) these customers are “a la carte” internet customers; (3) Grande’s profit margins on a la carte customers are its highest of any business lines; and (4) Grande never terminated any user regardless of how many notices of infringement it received... Plaintiffs contend that these facts make a difference, and are enough to suggest that Grande’s failure to terminate infringers is a draw.... The Court disagrees. First, the original Complaint alleged essentially the same or similar facts. Second, the new allegations still fail to say anything about the motivations of Grande’s subscribers when they sign up with Grande. That is, Plaintiffs still fail to plead facts showing Grande gained or lost customers because of its failure to terminate infringers. Instead, the proposed amended complaint states that, “the evidence demonstrates that Plaintiffs’ Copyrighted Sound Recordings were a draw to Grande’s infringing customers, including customers Grande had identified as repeat infringers.” ... But as has been noted in prior orders, the means by which Plaintiffs contend the infringing subscribers infringed the Copyrighted Sound Recordings by use of the internet and the BitTorrent protocol, which one can access through any ISP. Again, the draw must be something more than this to state a vicarious infringement claim. The allegedly “new” facts are insufficient to overcome the deficiencies of the original Complaint.

This is important. For years, the legacy copyright players have continually tried to expand what third parties could be liable for when it came to infringement. It's always been a stretch to use both vicarious and contributory infringement claims in these ways, and it's good to see courts pushing back (though, in this case, the contributory infringement claims still have a chance...). The court directly pointing out that just because a company makes money from a client, that doesn't mean the money is from infringement is an important point that many among the copyright legacy world would like to ignore.

Filed Under: contributory liability, copyright, copyright trolling, dmca, dmca 512, vicarious liability
Companies: grande communications, patriot, rightscorp, universal music

How The Supreme Court's Recent Free Speech Ruling May Destroy Hollywood's Plans To Kick People Off The Internet

from the about-that... dept

Earlier this week, we wrote about the details of the Supreme Court's ruling in Packingham v. North Carolina -- the case that said a North Carolina law that barred convicted sex offenders from using social media was unconstitutional. There were some good lines in the ruling, but this may be the most important:

Even with these assumptions about the scope of the law and the State’s interest, the statute here enacts a prohibition unprecedented in the scope of First Amendment speech it burdens. Social media allows users to gain access to information and communicate with one another about it on any subject that might come to mind.... By prohibiting sex offenders from using those websites, North Carolina with one broad stroke bars access to what for many are the principal sources for knowing current events, checking ads for employment, speaking and listening in the modern public square, and otherwise exploring the vast realms of human thought and knowledge. These websites can provide perhaps the most powerful mechanisms available to a private citizen to make his or her voice heard. They allow a person with anInternet connection to “become a town crier with a voice that resonates farther than it could from any soapbox."...

In sum, to foreclose access to social media altogether is to prevent the user from engaging in the legitimate exercise of First Amendment rights. It is unsettling to suggest that only a limited set of websites can be used even by persons who have completed their sentences. Even convicted criminals—and in some instances especially convicted criminals—might receive legitimate benefits from these means for access to the world of ideas, in particular if they seek to reform and to pursue lawful and rewarding lives.

As we noted in our original post, I expect that to be quoted in many other cases -- and a big one may be the ongoing attempts right now by the legacy entertainment industry to force ISPs to kick people off of their service based on accusations (not convictions) of infringement. Those cases, like this Packingham case, involve using a law to claim that people should be blocked from using the internet. And based on the quotes above, it seems quite likely that parts of the DMCA are clearly unconstitutional. The lawsuits -- mainly the BMG v. Cox ruling which is currently on appeal, and the more recent UMG v. Grande Communications (which follows the same basic outlines of the Cox case) -- involve arguing that 512(i) of the DMCA requires ISPs to kick users off their service entirely based on accusations of infringement. As we've explained, this already appears to be a twisted interpretation of 512(i), but now it appears there's a very reasonable chance that the Supreme Court could find 512(i) outright unconstitutional under the First Amendment for broadly blocking internet access in a way that harms free speech rights.

As noted by copyright professor Annemarie Bridy, this clearly could impact those other cases following this ruling:

Packingham is relevant to this conversation because it stands quite clearly for the proposition that broadly defined state-mandated limits on access to the Internet raise serious First Amendment issues. Packingham challenged the constitutionality of a North Carolina criminal statute prohibiting registered sex offenders from accessing “commercial social networking sites” on the Internet. In striking down the statute on First Amendment grounds, the Court emphasized the critical importance of the Internet in general, and social media platforms in particular, to everyday life in the “Cyber Age.” While the Court recognized a significant governmental interest in preventing use of the Internet for criminal activity, it held that North Carolina’s ban on social media access swept too broadly. Interestingly, the Court elected not to decide with precision how much of the Internet the challenged statute put off limits. It declined to say—because it didn’t think it had to—whether the statute’s prohibition reached sites like Amazon.com, Washingtonpost.com, and WebMD.com in addition to “commonly understood” social networking sites like Facebook, LinkedIn, and Twitter. The Court concluded that the statute couldn’t survive First Amendment scrutiny even if it were narrowly construed to cover only the social media platforms that everyone can agree are social media platforms. To put it another way, the statute’s prohibition was broad enough to offend the First Amendment even when narrowly construed to cover only parts of the Web.

Bridy doesn't go so far as to argue that Packingham means 512(i) is unconstitutional -- in fact, she notes that it's more limited than the North Carolina law that was struck down. But, she notes:

Packingham’s holding should serve as a reminder to lower courts interpreting section 512(i) that termination of access to the Internet implicates core First Amendment values: “While in the past there may have been difficulty in identifying the most important places (in the spatial sense) for the exchange of views, today the answer is clear. It is cyberspace.” Consequently, courts should consider it reasonable, and within the bounds of the DMCA safe harbor, for broadband providers to determine that “appropriate circumstances” for terminating a user’s access to the whole Internet for infringing copyright are very rare.

Harold Feld, from Public Knowledge, goes a bit further in his own analysis, arguing that when it comes to internet access providers, it seems clear that parts of 512(i) requiring termination, should be seen as unconstitutional, while also pointing out that to argue against this might mean Hollywood arguing that copyright infringement is somehow worse that child molestation.

Granted, Hollywood lobbyists and their wholly owned subsidiaries in Congress are capable of arguing with a straight face that copyright infringement is actually worse than child molestation and therefore the government purpose is sufficiently compelling to override all First Amendment concerns. And some judges, like the district court judge in the BMG v. Cox decision, would probably agree. (Read his opinion here to see if you agree.) But I’m doubtful that the majority of appeals court judges will agree. Whether or not one treats the majority opinion’s public forum analysis of social networks as “dicta” (which is legalese for “stuff in an opinion I don’t like so I don’t consider binding”), all 8 Supreme Court justices agreed that subscribers have a First Amendment right to access information and speak online, and that the government cannot prohibit a person from accessing content that has nothing to do with preventing repeat offenses — even when the repeat offense is child molestation, and the evidence arguably supported that child molesters were particularly prone to repetition.

Sorry, if molesting minors doesn’t justify permanently kicking you off the Internet, downloading 3 advance copies of Transformers: The Last Knight shouldn’t either. Congress cannot require ISPs to terminate subscribers accused of downloading pirating material (which is what Section 512(i) amounts to) anymore than it can criminalize accessing the Internet after being accused of downloading pirated material. Nor do I expect Big Content to prevail by arguing that getting you thrown off your ISP isn’t blocking you from accessing the Internet, because of all the amazing broadband options you have to replace your loss of service. While America boasted thousands of dial-up ISPs in 1998 when the DMCA was passed, most folks are lucky to have a choice of two landline providers capable of providing reliable, always on broadband of sufficient quality to allow me to engage in all my protected First Amendment online activity.

There is the separate question of whether or not this ruling would also kill off 512(i) as it applies to service providers on the network (e.g., Facebook, Twitter, Techdirt, etc...) rather than internet access providers, such as Comcast, AT&T, etc. Feld thinks there is an argument that the opinion could be read to block such rulings as well:

Whether Packingham makes Section 512(i)’s requirement that all social media sites and other “covered entities” have termination policies for “repeat infringers” is somewhat less clear. Taking the majority analysis as actual opinion rather than “undisciplined dicta,” then the answer is clearly yes for major social network sites and platforms including — wait for it — Youtube. It’s kind of hard to argue that the largest online video platform, whose videos include some of the most important raw footage of critical events and which has become a central location for debate, doesn’t qualify as the kind of online public forum Kennedy described. Nor does it make much sense to say access to Facebook and Twitter are protected under the First Amendment while access to Youtube isn’t.

OTOH, I’m not sure the same analysis applies to cloud storage or other services that don’t share the attributes of a general public forum. And, of course, websites or services that are set up expressly to facilitate the exchange of infringing material don’t qualify for safe harbor protection anyway, so the hypothetical Doctor Evil Sing Along Piracy Exchange is already subject to liability.

Of course, none of this should apply to the platforms making decisions themselves over removing content or users from their own platforms (for which the platforms have their own First Amendment protections). Yet, I would not be at all surprised to see someone raise this issue in court, and argue that Packingham means that major social networks (Facebook, especially, but likely Twitter and YouTube as well) have no right to bar users. I think that would be a bad result, but the language in the Packingham ruling at least makes such a ruling a lot more plausible than it was last week.

The Packingham ruling is likely to have quite a lot of impact, and as predicted yesterday, I expect it to be quoted frequently in cases involving the internet over the next few years.

Filed Under: 512i, copyright, copyright trolling, dmca, first amendment, free speech, supreme court, three strikes
Companies: bmg, cox, grande communications, rightscorp