Insanity (AKA Copyright Statutory Damages) Rules: Cox Hit With $1 Billion (With A B) Jury Verdict For Failing To Magically Stop Piracy

from the oh-come-on dept

We've highlighted the many problems with the various lawsuits against Cox Communications arguing that the company should be held liable for failing to wave a magic wand and stop all piracy from occurring on its service. The internet access provider was originally sued by music publisher BMG, and they got a judge who made it clear that he was not a fan of the internet, and didn't see why it should be a problem for anyone to be kicked off the internet at all. Cox lost the case mostly because the company didn't really follow its own internal repeat infringer policy. That ruling was upheld on appeal, leading the company to settle the case for $25 million.

Sensing an opportunity to cash in, all of the RIAA major record labels jumped in to sue Cox as well -- and got the same exact judge, Liam O'Grady. After a trial earlier this month, a jury has now awarded an absolutely astounding $1 billion damages verdict. The verdict is so preposterous and so disconnected from reality, that the math is wrong. The jury verdict document said that each infringed work should lead to statutory damages to the tune of $99,830.29. And there were 10,017 works infringed. And thus, the total was $1 billion on the dot:

Except that if you multiply those two numbers, the total would actually be $1,000,000,014.93. The jury's bad math saved Cox just about $15. Small favors.

Anyway, Cox has already made it clear that it will appeal, and I'd be stunned of such an amount held up. Everything about this is (1) crazy and (2) demonstrative of just how messed up and broken the "statutory damages" set up is for copyright. We've long wondered why statutory damages are even a thing in copyright, because they really don't make any sense. But the fact that statutory damages can go as high as $150k per work infringed -- even if there were literally no actual damages, raises significant 5th Amendment issues about due process (specifically, the wholly arbitrary nature of the jury award) and whether or not the award is "obviously unreasonable."

In a Supreme Court ruling almost exactly 100 years ago (St. Louis v. Williams), the Supreme Court ruled about obviously unreasonable awards, noting that there's a problem when "the penalty is 'arbitrary and unreasonable, and not proportionate to the actual damages sustained.'" That certainly seems to be the case here. After all, a basic recounting of the facts seems important here. Yes, Cox did not adequately follow its own repeat infringer policy, which may have lost it its DMCA safe harbors, but a jury verdict of over $30,000 per work infringed requires the jury to say that each and every infringement was willful by Cox. And that's crazy. Fucking up your own policies doesn't mean that you willfully infringed on every single work that someone shared via your network. Indeed, Cox was actually one of the more aggressive internet access providers in kicking people off for infringing.

Just to put this in perspective, the entire RIAA made just under $10 billion in 2018 in the US. IFPI reported that the total globally was $19.1 billion. And they want to now say that piracy of 10,000 songs on one ISP should grant them $1 billion? Honestly, the award is so insane, and so out of touch with reality, I actually wonder if the RIAA might come to regret it, as it makes the strongest case I've seen yet for the sheer unconstitutional nature of statutory damages, without any evidence of actual damages, for copyright infringement.

Filed Under: contributory liability, copyright, internet access provider, jury verdict, statutory damages, vicarious liability, willful infringement
Companies: cox, cox communications, riaa, sony music, universal music, warner music

Universal Music Claims Copyright Over Newly Public Domain 'Yes! We Have No Bananas'

from the yes,-we-have-no-public-domain dept

As you're probably aware, on January 1st of this year, we actually had a public domain day in the US for the first time in over two decades. Prior to that Congress (with the help of Hollywood lobbyists) had worked to continually extend copyright law whenever new works were due to go into the public domain. These extensions still seem to violate the spirit of the copyright clause in the Constitution, given that it is granting Congress permission to create such monopolies only so much as those monopoly rights "promote the progress." Any reasonable interpretation of that clause means that copyright law should be allowed in cases where it creates the incentive to create. But it's difficult to see how extending copyright law decades after the work has been created does anything to incentivize that work in the first place.

Nonetheless, this year, Hollywood finally realized that it was probably too much to ask to get another copyright term extension and finally let works from 1923 enter the public domain. One of the signature works of the public domain class of 1923 was the song Yes! We Have No Bananas by composers Irving Cohn and Frank Silver. As of January 1st, anyone was free to make use of that song. Indeed, in our own Public Domain Game Jam competition, we actually had not one, but two separate game entries based on "Yes! We Have No Bananas."

But, of course, even if Hollywood wasn't going to push for term extension, that doesn't mean it won't do what it always does, and pull other levers. Glenn Fleishman had posted a video of the song to YouTube in celebration of it entering the public domain earlier this year. He even titled it "Yes! We Have No Bananas, now in the public domain." The video is of him and friends/family singing it at a New Year's Eve Party:

However, that video has now been "claimed" by Universal Music and various subsidiaries, meaning that they could "monetize" it or force it offline, despite them literally having no rights to speak of.

YouTube's statement is fairly vague in its own right:

Dear Glenn Fleishman,

Your video "Yes! We Have No Bananas, now in the public domain", may have content that is owned or licensed by UMPG Publishing, Shapiro Bernstein, EMI Music Publishing, and UMPI, but it's still available on YouTube! In some cases, ads may appear next to it.

If this is your performance of a 3rd party song then you can still make money from this video. Click here to change your monetization settings.

This claim is not penalizing your account status. Visit your Copyright Notice page for more details on the policy applied to your video.

- The YouTube Team

From that, it appears to be the publishing arms of Universal Music, meaning that it's a claim on the underlying composition itself. And that is, definitively, in the public domain. At first I thought maybe they'd be claiming the specific sound recording, which might have been made at a later date, but since this is Glenn's own recording, and all of the listed companies are from the publishing (composition) side of things, it appears that it's just possible (if not likely) that Universal never took this work off its own books (perhaps it has no method of removing public domain material).

What's possibly troubling is that YouTube doesn't even seem to offer up an option for you to point out that the work is in the public domain, and even if these entities might have once had a claim on the song, a few months back the "for limited times" part of the Constitution finally kicked in and they have no legitimate claim any more.

Filed Under: copyright, copyright claim, ownership society, public domain, yes we have no bananas, youtube
Companies: universal music, youtube

Music Groups Waste No Time Using Australia's New Copyright Law To Shut Down Stream Ripping Sites

from the intended-consequence dept

Late last year, after Australia proposed amending its copyright laws, which included some subtle language changes, the country approved the amendments and we immediately warned that this would be abused, feature-creeped, and otherwise utilized by the content industries to restrict access to the internet in favor of their own bottom lines. One of the subtle language changes mentioned above consisted of going from allowing site-blocking of sites where their "primary purpose" was infringing activity to allowing blocking of sites where their "primary effect" was infringing activity. This change was an important one, because it puts the onus for whether a site can be blocked on how users use the tool, rather than how it was intended to be used. And, of course, there is simply more subjectivity in "primary effect" than there is in "primary purpose", leading us to warn that this would be abused.

And, a mere few months later, the music industry is in court citing the new law to get approval to have ISPs block stream-ripping sites.

The Federal Court action is being coordinated by Music Rights Australia, with the support of the Australasian Performing Right Association (APRA) as well as Sony Music Entertainment Australia Pty Ltd, Universal Music Australia Pty Limited and Warner Music Australia Pty Limited.

Stream-ripping sites allow users to record and save the audio streamed from a service such as Spotify or YouTube. The services have not previously been the subject of legal action in Australia. (In November, Sony Music emerged victoriousfrom a fight against stream-ripping service MusicMonster.fm in a German court, with the service being declared illegal.)

Now, as we've discussed in the past, the problem here is that there are a ton of legitimate uses for stream-ripping sites. I personally use them all the time to get audio-only for videos made public by educational institutions, by people that do how-to videos, lectures, etc. The primary purpose of stream-ripping sites is not infringement; it's to rip streams, not all of which are infringing. But the primary effect? Well, that's open to interpretation and the Australian government has bent over backwards to give the content industries the benefit of every doubt. Plenty of infringement happens with stream-ripping sites, because that's how users choose to use them. But it's not their purpose.

And yet, because of this poorly amended law, these sites are now staring down the censorship barrel.

Filed Under: australia, censorship, copyright, isps, site blocking, stream ripping
Companies: music rights australia, sony music, universal music, warner music

It Is Both Ridiculous And Dangerous To Make Domain Registrars Liable For Content On Domains

from the terrible-terrible-ruling dept

Going back more than five years, we've been warning about the dangers of moving copyright enforcement down the stack, away from the actual hosting companies deeper and deeper into infrastructure. This was, of course, part of the goal of SOPA -- to make infrastructure companies liable for infringement, and to force them to shut down entire sites. But that's exactly a key part of our concern. Infrastructure players have only a single remedy: shut down an entire site, including anything that's not infringing, to deal with claims (never adjudications) of infringing content. And yet, legacy copyright companies have been going after domain registrars for years.

We were particularly troubled by a ruling in Germany back in 2014 saying that a registrar could be liable for infringement on a site using a domain from that registrar. And while it's taken years, it appears that that ruling has now been upheld by a higher court.

The quick details: Universal Music went after a domain registrar, Key-Systems, in Germany because it had registered the domain name for a torrent site H33t.com. The court forced the registrar to kill the domain, and on appeal that ruling has been upheld, with a specific ruling that a domain registrar can be liable for infringement on a site:

The Higher Regional Court of Saarbrücken concluded Key-Systems can be held secondarily liable for the infringing actions of a customer if it fails to take action if rightsholders point out “obvious” copyright infringing activity online.

This means that, if a site owner is unresponsive to takedown requests, Key-Systems and other registrars can be required to take a domain name offline, even when the infringing activity is limited to a single page.

Some may argue that the impact of this is limited, as the ruling notes two things: first, that liability only applies to a registrar that does nothing in response to notices of infringement, and second, that it applies to "obvious" copyright infringing activity. And that may limit some of the damage of such a ruling, but it opens up a ton of other questions. Are domain registrars now expected to police the content on domains they register? Because that's often way outside of their areas of expertise, and like most such companies when put in that position, they will default to shutting down (or threatening to shut down) websites, rather than actually taking the time to understand the details and nuances (is it fair use? is most activity on the site non-infringing? etc).

Second, while many people seem to think that copyright infringement is always "obvious," it is rarely the case. Yes, there are some cases where it could be described as "obvious," but copyright is very specific and often very much dependent on context. And given how frequently we see people claim copyright infringement where none actually exists, you have to worry about what happens when copyright holders start claiming "obvious" infringement over things that are anything but obvious.

There are two key points here. Somehow, we went from a world in which copyright infringement was something that could only be determined by a court reviewing all of the facts (also known as due process) to one in which all that matters are mere accusations. And, second, by passing off the policing function to infrastructure players rather than the actual (potential) infringers and their hosts, all they have is the nuclear option of completely removing sites from the internet. That's a dangerous combination and one that will undoubtedly lead to significant levels of censorship.

It's pretty incredible that two industries -- the film and recording industries -- who used to pride themselves on their support of free speech, are now two of the leading industries pushing for vast censorship regimes of one of the best engines of free speech ever created.

Filed Under: copyright, domain registrars, germany, infrastructure, intermediary liability, internet
Companies: h33t, key-systems, universal music

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

Sensing Blood In The Water, All Major Labels Sue Cox For 'Ignoring' Their DMCA Notices

from the copyright-trolling-showdown dept

For years, we've noted that the major record labels have been drooling over the idea that the DMCA might allow them to force ISPs to kick people entirely off the internet based on mere accusations of piracy. This is problematic for all sorts of reasons (as you might imagine). However, the record labels feared testing this idea in court, because it might not turn out the way they wanted it to. However, as we covered on Techdirt, a few years back, music publisher BMG, with the assistance of copyright trolling operation Rights Corp. went after ISP Cox, claiming that it had failed to kick people off under the DMCA.

That case was an utter mess, not helped at all by the fact that it was handled by Judge Liam O'Grady, who flat out mocked the idea that the internet was important, and made it clear he didn't see any issue at all with banning people from the internet. Here's how he responded to an attempt by the EFF to file an amicus brief pointing out the problems with kicking people off the internet:

I read the brief. It adds absolutely nothing helpful at all. It is a combination of describing the horrors that one endures from losing the Internet for any length of time. Frankly, it sounded like my son complaining when I took his electronics away when he watched YouTube videos instead of doing homework. And it's completely hysterical.

The whole case was a complete mess -- and it was made worse by some bad choices by Cox, including not really following its own stated DMCA repeat infringer policy. O'Grady's ruling was bad, and unfortunately the appeals court upheld it. However, at least the Appeals Court made it more or less clear that they weren't saying every ISP had to kick people off the internet -- but rather that Cox lost its DMCA safe harbors by not following its own DMCA policy. While much attention was paid to the claim that Cox's policy amounted to a "13 strike" policy before you might lose access, the appeals court notes it's not the number of strikes that matters, so much as whether or not the company follows its own policy -- and Cox did not.

Of course, another part that came out during the trial is that Cox was getting so completely bombarded by Rights Corp takedown notices (which doubled as demands for money), that Cox felt it needed to put in place systems to deal with the spam, which included limiting how many notices it would accept each day. Between the ruling in the original BMG case, and the revelations about Cox's own practices, the RIAA clearly sensed blood in the water, and a chance to prove its point. And, thus, it has a massive lawsuit against Cox. It's basically all of the major labels using the earlier case as evidence of some grand conspiracy to profit off of piracy.

Cox is one of the largest Internet service providers (“ISPs”) in the country. It markets and sells high-speed Internet services to consumers nationwide. Through the provision of those services, however, Cox also has knowingly contributed to, and reaped substantial profits from, massive copyright infringement committed by thousands of its subscribers, causing great harm to Plaintiffs, their recording artists and songwriters, and others whose livelihoods depend upon the lawful acquisition of music. Cox’s contribution to its subscribers’ infringement is both willful and extensive, and renders Cox equally liable. Indeed, for years, Cox deliberately refused to take reasonable measures to curb its customers from using its Internet services to infringe on others’ copyrights—even once Cox became aware of particular customers engaging in specific, repeated acts of infringement. Plaintiffs’ representatives (as well as others) sent hundreds of thousands of statutory infringement notices to Cox, under penalty of perjury, advising Cox of its subscribers’ blatant and systematic use of Cox’s Internet service to illegally download, copy, and distribute Plaintiffs’ copyrighted music through BitTorrent and other online file-sharing services. Rather than working with Plaintiffs to curb this massive infringement, Cox unilaterally imposed an arbitrary cap on the number of infringement notices it would accept from copyright holders, thereby willfully blinding itself to any of its subscribers’ infringements that exceeded its “cap.”

Cox also claimed to have implemented a “thirteen-strike policy” before terminating service of repeat infringers but, in actuality, Cox never permanently terminated any subscribers. Instead, it lobbed “soft terminations” with virtually automatic reinstatement, or it simply did nothing at all. The reason for this is simple: rather than stop its subscribers’ unlawful activity, Cox prioritized its own profits over its legal obligations. Cox’s profits increased dramatically as a result of the massive infringement that it facilitated, yet Cox publicly told copyright holders that it needed to reduce the number of staff it had dedicated to anti-piracy for budget reasons.

Given the mess of how Cox handled DMCA notices and its repeat infringer policy, this case is going to be a tough one for it to fight off. But the actual stakes are huge. The RIAA wants to be able to kick people entirely off the internet based purely on accusations -- even if they're bullshit. We should be very concerned about it.

And to increase the level of concern: this new case has been assigned to... Judge Liam O'Grady. Needless to say we'll be watching it closely.

Filed Under: copyright, dmca, isps, kicking people off the internet, liam o'grady, repeat infringer policy
Companies: cox, emi, sony music, universal music, warner music

Universal Retracts DMCA On Journalist Video Of Prince Fans Singing Purple Rain

from the that-was-quick dept

Well, that was quick. We had just been talking about Universal's insane decision to DMCA a journalist's video of Prince fans singing Purple Rain shortly after his death, made particularly strange as it occurred in the wake of it settling the Dancing Baby DMCA case to avoid being punished for not considering Fair Use. That retreat from a decision which would have provided precedent for whether issuing a DMCA without giving even a modicum of thought to whether Fair Use would apply was irritating to many of us for a number of reasons, but primarily because it would give room for bad actors to DMCA away without the assurance of consequence. For Universal to provide an example of that itself, and to do so immediately after the Dancing Baby case was settled, was particularly frustrating.

But, again, it seems we won't get clarity on the point. Universal appears to have realized how bad this all looked, and could get, and has retracted its takedown claim.

Now, is it ultimately good that Universal backed off this DMCA claim? Of course it is. But it should be obvious that the problem remains that it, and others, can peel off DMCA notices, including on journalists, without real fear of reprisal from the courts and simply run away when there is enough public backlash to warrant it. Again, a key here is that this DMCA notice issued by Universal was against a video that is as blatantly Fair Use as it gets. But Universal will bear no consequence for it.

When the reductio ad absurdum has become the real-life example, it's probably time we had some real codified rules and punishments for this kind of behavior.

Filed Under: 512(f), copyright, dmca, fair use, prince, takedowns
Companies: universal music

Universal Right Back At It Issuing A DMCA For A Reporter's Video Of Prince Fans Singing 'Purple Rain'

from the lessons-unlearned dept

In the Lenz v. Universal case, otherwise known as the Dancing Baby DMCA case, it can hardly be argued otherwise than the whole saga was wildly irritating and painfully lengthy. Years of fighting over a person's child dancing to seconds' worth of Prince music on video resulting in years of litigation would be bad enough. As Cathy Gellis noted in our last post on the case, the fact that the whole thing ended in a settlement before a court could answer whether or not Universal Music should be punished for issuing a DMCA without even considering whether it would be Fair Use or not only supercharged the frustration levels of everyone who realized how stupid this whole thing was. Cathy's point in that post was in part that it was awful that the public couldn't even get the payoff of precedent for Fair Use considerations in this whole stupid thing.

Which brings us to the present, mere weeks later, when Universal Music is right fucking back at it, having DMCA'd a journalist's video of Prince fans in public singing Purple Rain shortly after he died.

Mere hours after the passing of Prince, thousands of fans gathered in downtown Minneapolis to pay homage to the funk icon with a massive “Purple Rain” singalong. As with any event of this magnitude, video footage and photos were immediately shared far and wide via social media by those in attendance celebrating Prince’s life and mourning his death.

Despite these harmless intentions, Universal Music, which owns rights to “Purple Rain”, has taken action against one of these videos, filmed by Star Tribune reporter Aaron Lavinsky. According to Universal, the footage violates the Digital Millennium Copyright Act of 1998 (DMCA).

Rebuttal: no, it damn well doesn't. This video is so obviously protected by Fair Use, likely even more so than the dancing baby video. Wherein that video was protected by its short length and obvious non-competition with Prince's actual music, this particular video has the more clearly defined status as being a product of journalism and public commentary, not to mention its newsworthiness. After Twitter removed the video as well in response to the DMCA, Lavinsky took to the public to explain how laughable Universal's claim is.

“This is very disturbing: Universal Music filed a DCMA takedown on a video I shot of thousands of Prince fans singing Purple Rain the night of his death,” Lavinsky commented in a tweet this week. “This was clearly fair use and UMPG and Twitter are in the wrong.”

As the post above notes, the government's own website at the Copyright Office stipulates that news items are protected by Fair Use. Make no mistake, Universal is aware of all of this. It is in possession of the full scope and knowledge not just of Fair Use, but of how that law might apply to videos involving Prince songs. Again, this DMCA takedown comes as the ink has barely dried on Universal's dancing baby settlement.

Whatever the hell Universal's legal team was thinking, it seems likely that the Singing Crowd dispute will be the sequel to the Dancing Baby dispute. What a time to be alive.

Filed Under: copyright, dmca, fair use, prince
Companies: twitter, universal music