SoundExchange Royalties Case Against Muzak Reinstated By Appellate Court

SoundExchange v. Muzak, No. 16-7041 (D.C. Cir. Apr. 25, 2017).

The D.C. Court of Appeals reversed the dismissal of SoundExchange's complaint against Muzak, which alleges that Muzak underpaid royalties.  SoundExchange is a nonprofit entity charged with the responsibility of collecting royalties for performing artists and copyright owners of music; Muzak is a company that supplies digital music channels to satellite television networks who, in turn, sell to subscribers.  Muzak argued that it was permitted to pay lower, "grandfathered," rates that had been set by a copyright royalties board even after certain corporate changes.  There had been a statutory change in the 1990s as part of the DMCA-compromise, and the case turned on the statutory definition of a "preexisting subscription service."  The Court concluded:

The grandfather provisions were intended to protect prior investments the three business entities had made during a more favorable pre-1998 rate-setting regulatory climate. “Muzak was [a] pioneer music service that incurred both the benefits and risks that came with its investment,” specifically its investment in DishCD. 71 Fed. Reg. at 64,646. But when Muzak expands its operations and provides additional transmissions to subscribers to a different “service,” (i.e., SonicTap), this is an entirely new investment. * * * We conclude, therefore, that the better interpretation of the statute is that the term “service” contemplates a double limitation; both the business and the program offering must qualify before the transmissions are eligible for the favorable rate.

No Case Or Controversy In ISP's Declaratory Judgment Suit of NonInfringement

Windstream Services v. BMG Rights Management, 16-cv-5015 (S.D.N.Y. Apr. 17, 2017).

Plaintiff, an internet service provider (ISP), brought an action seeking a declaratory judgment of non-infringement based upon the DMCA's safe-harbor provisions.  Defendant is a music publisher.  The Court granted the defendant's motion to dismiss for lack of subject matter jurisdiction, finding that plaintiff sought an unauthorized advisory opinion (and even if the Court had subject matter jurisdiction, it would exercise its discretion and decline to hear the action).  "[Plaintiff] seeks a blanket approval of its business model, without reference to any specific copyright held by BMG or any specific act of direct infringement by any [plaintiff] subscriber."  The Court observed that the Southern District of California had rejected a nearly identical lawsuit in Veoh v. UMG, 522 F. Supp. 2d 1265 (S.D. Cal. 2007).  The complaint was hypothetical in nature.  Having dismissed the declaratory judgment clai, the Court declined to exercise supplemental jurisdiction over plaintiff's state law claim.

2d Cir. Addresses DMCA "Repeat Infringer" Policy In MP3Tunes Appeal; Finds Only A Single Statutory Damages Award For Infringed Composition & Sound Recording; Addresses Many Other Copyright Law Issues

EMI Christian Music et al. v. MP3Tunes, No. 14-4369 (2d Cir. Oct. 25, 2016).

In the MP3Tunes appeal, the Second Circuit vacated the District Court’s grant of partial summary judgment to the defendants based on its conclusion that MP3tunes qualified for safe harbor protection under the DMCA because the District Court applied too narrow a definition of “repeat infringer”; (2) reversed the District Court’s grant of judgment as a matter of law to the defendants on claims that MP3tunes permitted infringement of plaintiffs’ copyrights in pre‐2007 MP3s and Beatles songs because there was sufficient evidence to allow a reasonable jury to conclude that MP3tunes had red‐flag knowledge of, or was willfully blind to, infringing activity involving those categories of protected material; (3) remanded for further proceedings related to claims arising out of the District Court’s grant of partial summary judgment; and (4) affirmed the judgment in all other respects (relating to statutory damages for sound recordings and compositions, cover art liability, respondeat superior liability for MP3Tunes executives, personal jurisdiction, vicarious and contributory liability, statutory damages for singles & compilations, and punitive damages).

The plaintiff record labels and music publishers argued that MP3tunes never reasonably implemented a repeat‐infringer policy.  In addressing this argument, the Second Circuit answered two questions: first, whether certain MP3tunes users qualified as “repeat infringers”; and second, if so, whether MP3tunes reasonably implemented a policy directed at them.  As to the first question, the Second Circuit held "all it takes to be a 'repeat infringer' is to  repeatedly upload or download copyrighted material for personal use."  (Emphasis in original)  Having answered that question, the Court then found that MP3tunes did not "even try to connect known infringing activity of which it became aware 2through takedown notices to users who repeatedly created links to that infringing content in the sideload.com index or who copied files from those links...A jury could reasonably infer from that evidence that MP3tunes actually knew of specific repeat infringers and failed to take  action "

The Court also, notably, addressed statutory damages and whether it was improper to make only a single award where there are different owners of the copyright in the sound recording and in the composition.

 In our view, then, Congress did not intend for separate statutory damages awards for derivative works such as sound recordings, even when the copyright owner of the sound recording differs from the copyright owner of the musical composition.    In sum, the District Court’s decision to permit only one award of statutory damages for the musical composition and corresponding sound recording comports with both the plain text and the legislative history of the Copyright Act.  We therefore affirm that part of the judgment.

In addition to attacking the District Court’s exercise of personal jurisdiction over him, the individual defendant (MP3Tune's CEO) argued that there was insufficient evidence to support the jury’s finding that he was vicariously or contributorily liable for MP3tunes’s infringements.  The Second Circuit disagreed,

Questions Whether LiveNation Willfully Infringed Run-DMC Photos; 9th Cir.

Friedman v. Live Nation Merch., No. 14-55302 (9th Cir. Aug. 18, 2016).

In a copyright dispute over the use of photographs that the plaintiff took of the hip hop group Run-DMC, defendant Live Nation stipulated that it infringed the plaintiff photographer's copyrights when it used his photos without his authorization on t-shirts and a calendar.  Before the 9th Circuit was the question of whether there was sufficient evidence in the record to permit a jury to conclude that Live Nation committed willful copyright infringement, making it liable for additional damages under 17 U.S.C. § 504(c)(2); whether a jury could conclude that Live Nation knowingly removed copyright management information (“CMI”) from the photographs in violation of 17 U.S.C. § 1202(b) [the DMCA]; and whether the plaintiff could recover statutory damages awards under section 504 of the Copyright Act measured by the number of retailers who purchased infringing merchandise from Live Nation, even though the plaintiff photographer did not join those retailers as defendants in his suit.

The 9th Circuit held: (1) that there was a triable issue of fact as to whether Live Nation’s infringement was willful, and that the district court therefore erred in granting summary judgment to Live Nation on willfulness; (2) the plaintiff photographer could prevail upon a showing that Live Nation distributed his works with knowledge that copyright management information had been removed, even if Live Nation did not remove it, and accordingly summary judgment should not have been granted because there was a triable issue of fact as to whether Live Nation distributed the photographs with the requisite knowledge; and (3) the district court correctly held that the plaintiff photographer was limited to one award per work infringed by Live Nation because he did not name any of the alleged downstream infringers as defendants in the case ("A plaintiff seeking separate damages awards on the basis of downstream infringement must join the alleged downstream infringers in the action and prove their liability for infringement. ").  Notably, on third question involving downstream infringers, the 9th Circuit rejected a "mass marketing" exception that some lower courts had adopted.

DMCA Safe Harbor Applies To Pre-1972 Sound Recordings & Plaintiffs Have Burden Of Proving Red-Flag Knowledge; 2d Cir.

Capitol Records, LLC v. Vimeo, No. 14/1048 (2d Cir. June 16, 2016).

The Digital Millennium Copyright Act (DMCA) safe harbor (section 512 of the Copyright Act) applies to pre-1972 sound recordings and protects service providers from infringement liability under state copyright laws, holds the Second Circuit on an interlocutory appeal in a copyright infringement action brought by record labels against Vimeo.  Further, the Court held that the mere fact that a video contains all or virtually all of a “recognizable,” copyrighted sound recording and was viewed in some fashion by a service provider’s employee is insufficient to prove knowledge or red flag knowledge of infringement; and further that the record company plaintiffs' evidence was insufficient to support the imputation of knowledge to Vimeo through the theory of willful blindness.

On the safe harbor question, the Second Circuit found that "A literal and natural reading of the text of § 512(c) leads to the conclusion that its use of the phrase 'infringement of copyright' does include infringement of state laws of copyright. One who has been found liable for infringement of copyright under state laws has indisputably been found 'liable for infringement of copyright'.”  Further, "To construe § 512(c) as leaving service providers subject to liability under state copyright laws for postings by users of infringements of which the service providers were unaware would defeat the very purpose Congress sought to achieve in passing the statute."  Construing the safe harbor of § 512(c) as not granting protection to service providers from liability for state-law-based copyright infringements would substantially defeat the statute’s purposes.  Accordingly, the 2nd Circuit vacated the district court's grant of summary judgment to Plaintiffs as to the availability of the DMCA safe harbor to Vimeo in relation to liability for infringement of pre-1972 sound recordings. 

On the "red flag" part, the 2nd Circuit addressed the shifting burdens of proof (plaintiff has the burden of proving red flag knowledge) and held that "A copyright owner’s mere showing that a video posted by a user on the service provider’s site includes substantially all of a recording of recognizable copyrighted music, and that an employee of the service provider saw at least some part of the user’s material, is insufficient to sustain the copyright owner’s burden of proving that the service provider had either actual or red flag knowledge of the infringement."  The Court then addressed several reasons why.  Accordingly, the Court held that Vimeo was entitled to summary judgment on those videos as to the red flag knowledge issue, "unless plaintiffs can point to evidence sufficient to carry their burden of proving that Vimeo personnel either knew the video was infringing or knew facts making that conclusion obvious to an ordinary person who had no specialized knowledge of music or the laws of copyright."

Lastly, the Court rejected the Plaintiffs’ argument that the district court erred in its ruling in Vimeo’s favor as to the Plaintiffs’ reliance on the doctrine of willful blindness.

Cox Communications Not Protected By DMCA Safe Harbor In Bit-Torrent Case

BMG Rights Management v. Cox Communications, no. 14-1611 (E.D. Va. Dec. 1, 2015).

In an action by the putative owners of 1,400 musical compositions against an internet service provider (Cox) for contributory and vicarious liability based on its users Bit Torrent infringement, the Court held inter alia that the ISP was not protected by the DMCA safe-harbor because it did not terminate access of repeat infringers under appropriate circumstances.  The Court found that defendant did not implement a repeat infringer policy before 2012, and after 2012 it did not reasonably implement its policy.  Thus, if Plaintiff is successful at trial, it will not be limited in the remedies it seeks.

Other issues the Court addressed was whether Plaintiff had standing (the copyright registrations listed Plaintiff, its predecessor, someone else, or the works were purchased).  The Court further found questions of material fact, 1) whether there is evidence of direct infringement by third parties; (2) whether there is evidence of Cox’s contributory infringement; (3) whether there is evidence of Cox’s vicarious liability; and (4) whether BMG failed to mitigate its damages.  Lastly, the Court found that the "unclean hands" defense failed as a matter of law.

Fair Use Must Be Considered Before Sending DMCA Takedown Notices; 9th Circuit

Lenz v. Universal Music, No. 13-16106 (9th Cir. filed 9/14/2015) [decision].

Copyright owners must consider whether allegedly infringing use is "fair use" before sending takedown notices under the DMCA, holds the 9th Circuit.  In the so-called "dancing baby case," Plaintiff alleged that Universal Music violated 17 USC 512(f) by misrepresenting in a takedown notice that a home video of her son dancing to a Prince song and posted on YouTube constituted an infringing use of a portion of a "Prince" composition.  The Court held that the DMCA requires copyright owners to consider fair use before sending a takedown notice, and that failure to do so raises an issue of fact whether the copyright owner formed a subjective good faith belief that the use was not authorized by law.  Available theories of good faith belief are actual knowledge, and willful blindness.  "Universal faces liability if it knowingly misrepresented in the takedown notification that it had formed a good faith belief the video was not authorized by the law, i.e. did not constitute fair use." A prevailing plaintiff in such a case is entitled to nominal damages.  Ultimately, the 9th Circuit affirmed the district court's denial of the cross-motions for summary judgment, such that the case would proceed to trial on the issue of whether Universal had actual knowledge, and the amount of damages.

Pre-Trial Evidentiary Rulings In Grooveshark Case

UMG Recordings, Inc. v. Escape Media Group, No.11-cv-8407 (SDNY filed 04/23/15) [Doc. 174].

In advance of a jury trial on statutory damages, the Court made a number of pre-trial evidentiary determinations on motions in limine.  Among its holdings as to what the parties could or could not introduce at trial, the Court held that defendants were precluded from offering argument or evidence contesting that their conduct was willful or in bad faith (the jury would be instructed that there was a cap of $150,000 per work, not $30,000), but defendants were permitted to present proof as to the degree and extent of their willfulness.  As to Defendants' argument that Plaintiffs could receive statutory damages for infringement of pre-1972 sound recordings (or that the Court had jurisdiction over such claims), the Court reserved decision.  The Court also made several rulings as to what evidence Defendants could introduce concerning their failure to mitigate damages defense (e..g, concerning settlement and future licensing negotiations, failure to make claims against other infringers, DMCA compliance

Fraudulent DMCA Take-Down Notice May Be Basis For Claim If iTunes Stores Music At Direction Of A User

Distribuidora De Discos Karen, C por A. v. Seijas, No. 13 Civ. 5200 (NRB), 2015 BL 93133 (S.D.N.Y. Mar. 26, 2015).

Denying defendants' motion to dismiss, the Court held that: (1) a misrepresentation claim under the DMCA may be predicated on a technically defective take-down notice; (2) a misrepresentation claim under the DMCA must be predicated on a take-down notice that is not directed towards activity that the DMCA protects; and (3) it was premature to decide whether Apple stores music on iTunes "at the Direction of a User."  Accordingly, a notice sent by Defendants to iTunes stating that certain recordings had not been licensed for distribution can be the subject of a misrepresentation claim under the DMCA even if it did not meet all the statutory requirements for such a notice, but, such a claim could only apply if the notice was “directed at ‘storage at the direction of a user,' ” which might or might not have been true in the instant case.

Here, defendants and plaintiffs disputed who owned certain publishing and sound recording rights.  The artists' counsel sent Apple a take-down notice, saying that “no license has been issued” with respect to the recordings.  Apple then dropped the subject recordings from iTunes, and plaintiffs sued, alleging misrepresentation under the Digital Millennium Copyright Act of 1998, 17 U.S.C. § 512(f).  The DMCA creates a notice-and-takedown procedure for allegedly infringing copies of works posted online, and subsection (f) creates a cause of action for sending fraudulent takedown notices.  Defendants moved to dismiss for failure to state a claim.  The Court found that the communication to Apple “was not so deficient as to fall outside the reach of subsection 512(f).”  But, the remaining issue was whether iTunes falls within the section 512(c) safe-harbor, to wit: "whether Apple stores music on iTunes 'at the direction of a user,' 17 U.S.C. § 512(c) (1)".  The Court found that "the complaint simply does not state enough facts about iTunes for us to say what happens behind the scenes, so we cannot decide at the present stage whether iTunes stores music at the direction of users."  Accordingly, the motion to dismiss was denied.


2d Cir. To Hear Vimeo Interlocutory Appeal

Capitol Records, LLC v. Vimeo LLC, 2d Cir. Index Nos. 14-15 and 14-16 (2d Cir. April 9, 2014) [Doc. 57].

The Second Circuit agreed to hear interlocutory appeals, pursuant to 28 U.S.C. § 1292(b), and to consolidate the appeals.  The Second Circuit is now in a position to rule on whether the DMCA applies to pre-1972 sound recordings, and to clarify the willful blindness doctrine.

Vimeo Decision Modified; Leave To Appeal Granted

Capitol Records, LLC v. Vimeo, LLC, 2013 ILRC 3345, No. 09-cv-10101 (S.D.N.Y. Dec. 31, 2013).

Upon further review of the record, the Court agreed with defendants that Vimeo is entitled to summary judgment with respect to five videos for which the only evidence of employee interaction was that the user's account had been "whitelisted."  "It is simply unrealistic to infer that a Vimeo employee watched" those videos.  Also upon further review, the Court found that for two videos, the infringing nature of the videos was not objectively "obvious" and therefore Defendants did not have "red flag" knowledge of the videos' infringing content.  However, the Court found that 18 of the videos still should go to a jury.

The Court granted Plaintiff's motion to amend the complaint to add additional videos, including both pre- and post- 1972 sound recordings.

Lastly, the Court granted Vimeo's motion to certify two questions for interlocutory appeal: (1) Are the DMCA's safe-harbor provisions applicable to sound recordings fixed prior to Feb. 15, 1972, (2) and does a service provider's mere viewing of a user-generated video containing third party copyrighted music automatically give rise to a triable issue of fact as to the service provider's knowledge of infringement under the DMCA?

Pre-1972 Safe Harbor Issue Will Not Be Heard By NY's Highest Court

UMG Recordings v. Escape Media Group, 2013 NY Slip Op 87510(U) (1st Dep't Oct. 8, 2013).

The New York Appellate Division, First Department, denied defendants' motion for leave to appeal the Court's decision concerning pre-1972 sound recordings to the New York Court of Appeals, New York's highest court.

Safe Harbor Does Not Protect Vimeo For All Videos

Capitol Records v. Vimeo, No. 1:09-cv-10101-RA (S.D.N.Y. Opinion & Order filed 09/18/13) [Doc. 119].

Plaintiffs are record labels and publishers that brought a copyright infringement action against Vimeo, an online video sharing platform.  Vimeo moved for summary judgment, asserting entitlement to “safe harbor” protection pursuant to the DMCA. Plaintiffs cross-moved for partial summary judgment seeking a ruling that Vimeo is ineligible for such protection. The question before the Court was whether Vimeo is entitled to safe harbor protection pursuant to the DMCA.  The Court held that triable issues of fact remained as to whether Vimeo is entitled to safe harbor protection as to fifty-five of the videos that Vimeo employees interacted with or uploaded.  However, the Court held that Vimeo was entitled to summary judgment as to the remaining 144 videos at issue in the suit.

First, the Court considered threshold criteria whether Vimeo is eligible for safe-harbor protection.  The Court found that Vimeo is a "service provider", it had adopted and reasonably implemented a "repeat infringer policy", and it did not interfere with standard technical measures.  Thus, Vimeo was eligible for safe-harbor protection.

Having satisfied the threshold criteria, the Court considered whether Vimeo met the requirements of § 512(c), which apply to any claims “for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.”  As to 10 of the videos, the Court found a triable issue with respect to whether certain employees were storing their content as “users” within the meaning of § 512(c) or as employees acting within the scope
of their employment.  Also, the Court found triable issues exist as to whether Vimeo acquired actual or red flag knowledge of the infringing content in 55 videos with which Vimeo employees interacted (e.g., commented on the videos, "liked" the videos, placed on channels etc.)  By contrast, there was no evidence that Vimeo acquired actual or red flag knowledge as to 144 videos with which Vimeo employees indisputably did not interact, and Vimeo was thus entitled to summary judgment as to these videos.

Plaintiffs' "willful blindness" arguments failed.  The Court noted that service providers are under no affirmative duty to seek out infringement, even when they possess technological measures permitting them to do so.

Also, the Court concluded that Vimeo lacked the right and ability to control infringing activity.  The Court considered the totality of Vimeo’s monitoring program, and rejected Plaintiffs’ arguments and found no triable issue as to the exertion of substantial influence on user activity.  The Court also rejected Plaintiffs' argument that Vimeo exerted substantial influence on its users’ activities through inducement.

The Court also concluded that Vimeo acted expeditiously when it removed videos pursuant to take-down notices.

Lastly, the Court concluded that DMCA protection did not apply to pre-1972 sound recordings.  The Court recognized other authority in the SDNY that found otherwise, but found the recent decision by the New York First Dep't, UMG Recordings, Inc. v. Escape Media Grp., Inc., 964 N.Y.S.2d 106 (1st Dep’t 2013), and the December 2011 Copyright Office Report concluding that the DMCA  safe harbors do not apply to pre-1972 records.  Accordingly, even those 144 videos that were otherwise protected by the DMCA are not protected if they are pre-72 recordings.

CLE "Does The DMCA Apply To Pre-1972 Sound Recordings"

This afternoon, David Rabinowitz and I co-presented a CLE entitled "Why The Internet Distribution of Pre-1972 Sound Recordings Is Different From Everything Else In Copyright Law -or- Does The DMCA Apply To Pre-1972 Sound Recordings."  Topics included a brief history of copyright in sound recordings, the scope of common law copyright protection, federal preemption of common law copyright (except for pre-1972 recordings), related claims of unfair competition, the DMCA safe-harbor, conflicting case law on whether the DMCA safe-harbor applies to pre-1972 recordings, and conflicting decisions on whether there is immunity for service providers under the Communications Decency Act.  Thank you to those who attended.

Reconsideration in MP3Tunes Case

Capitol Records, Inc. v. MP3Tunes, LLC, No. 07-cv-9931 (S.D.N.Y. filed May 14, 2013) [Doc. 368].

All parties moved for reconsideration of the Court's October 25, 2011 order (821 F. Supp. 2d 627), springing from the 2nd Circuit's decision in Viacom Int'l v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012).  Plaintiff's motion was granted in part and denied in part: plaintiff's motion was granted as to the issue of willful blindness and "red flag" knowledge, and denied as to the inducement of copyright claim.  Defendant's motion regarding direct copyright infringement was granted in part and denied in part.  Defendant's motion for reconsideration regarding infringement of cover art, regarding personal jurisdiction and summary judgment as to his vicarious liability was denied.

There is an interesting discussion of "red flag" knowledge of infringement, under which service providers can lose the protection of the DMCA safe harbors if they have actual or apparent (i.e., "red flag") knowledge of infringing conduct.

DMCA Safe Harbor Does Not Apply To Pre-1972 Recordings, N.Y. Appellate Court

UMG Recordings, Inc. v. Escape Media Group, Inc.2013 NY Slip Op 02702 (1st Dep't Apr. 23, 2013).  Decision here.  

Plaintiff is UMG, and defendant is the service "Grooveshark"  As described by the Court, "Users of Grooveshark can upload audio files (typically songs) to an archive maintained on defendant's computer servers, and other users can search those servers and stream recordings to their own computers or other electronic devices. "

In its answer, Grooveshark asserted as its fourteenth affirmative defense that pre-1972 recordings sat within the safe harbor of section 512(c) of the DMCA. UMG moved, inter alia, to dismiss that defense pursuant to CPLR 3211(b). The motion court denied plaintiff's motion, relying heavily on Capitol Records, Inc. v MP3tunes, LLC (821 F Supp 2d 627 [SDNY 2011]), in which the United States district court tackled precisely the same issue and found that the DMCA embraced sound recordings fixed before February 15, 1972.  The Appellate Court reversed.

First, the Court found that applying the DMCA to pre-1972 recordings would 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."  Continuing, the Court found "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. ... Congress explicitly, and very clearly, separated the universe of sound recordings into two categories, one for works "fixed" after February 15, 1972, to which it granted federal copyright protection, and one for those fixed before that date, to which it did not. Defendant has pointed to nothing in the Copyright Act or its legislative history which prevents us from concluding that Congress meant to apply the DMCA to the former category, but not the latter."

Second, the Court rejected Grooveshark's argument that the very purpose of the DMCA will be thwarted if it is deemed not to apply to the pre-1972 recordings. "The statutory language at issue involves two equally clear and compelling Congressional priorities: to promote the existence of intellectual property on the Internet, and to insulate pre-1972 sound recordings from federal regulation. As stated above, it is not unreasonable, based on the statutory language and the context in which the DMCA was enacted, to reconcile the two by concluding that Congress intended for the DMCA only to apply to post-1972 works."


Pre-1972 Recordings Subject To DMCA

UMG Recordings, Inc. v. Escape Media Group, Inc., No. 100152/2010 (Sup. Ct., N.Y. Co. July 10, 2012) (Kapnick, J.S.C.).

New York State Court holds that the "safe harbor" provisions of the DMCA extend to common law copyright claims relating to pre-1972 recordings.

Plaintiff moved to dismiss defendant's "safe harbor" affirmative defense under the DMCA [17 U.S.C. 512(c)(1)].  Section 301(c) of the Copyright Act makes clear that the copyrights of pre-1972 recordings are not protected by the federal Copyright Act, and the Court analyzed whether the DMCA may provide a defense or "safe harbor" to internet service providers facing New York State common law copyright infringement claims (as opposed to claims under the federal act).  The Court observed that only one court has considered the issue (Capitol Records, Inc. v. MP3Tunes, 821 F. Supp.2d 627, 640 (SDNY 2011), and concluded that "there is no indication in the text of the DMCA that Congress intended to limit the reach of the safe harbors provided by the statute to just post-1972 recordings."  In response to a report by the Register of Copyrights that "it is for the Courts to interpret the applicable statute and decide the issues raise by this motion.  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...that the safe harbor provisions codified by section 512(c)(1) of the DMCA is applicable to pre-1972 recordings."  Accordingly, plaintiff's motion to dismiss the DMCA affirmative defense was denied.

However, the Court did dismiss defendant's affirmative defense based on the Communications Decency Act of 1996 (the "CDA") [47 U.S.C. 230].  Lastly, the Court dismissed defendant's counter-claim for violation of a New York State anti-trust statute, the "Donnelly Act" (NY General Business Law 340), but denied plaintiff's motion to dismiss the counter-claims for tortious interference with contract and business relations.

2d Cir Decision On DMCA Safe Harbor In Viacom v Youtube

Viacom v. YouTube (2d Cir. Apr. 5, 2012). Decision. Not a "music" case, but extremely important decision that will impact future infringement cases.

This appeal required the Second Circuit to clarify the contours of the “safe harbor” provision of the Digital Millennium Copyright Act (DMCA) that limits the liability of online service providers for copyright infringement that occurs “by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” 17 U.S.C. § 512(c). The District Court held that the defendants were entitled to DMCA safe harbor protection primarily because they had insufficient notice of the particular infringements in suit. The Second Circuit held:


We conclude that the District Court correctly held that the § 512(c) safe harbor requires knowledge or awareness of specific infringing activity, but we vacate the order granting summary judgment because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website. We further hold that the District Court erred by interpreting the “right and ability to control” provision to require “item-specific” knowledge. Finally, we affirm the District Court’s holding that three of the challenged YouTube software functions fall within the safe harbor for infringement that occurs “by reason of” user storage; we remand for further fact-finding with respect to a fourth software function.


Labels Denied Interlocutory Appeal In MP3Tunes Case

Capitol Records, Inc. et al. v. MP3Tunes, LLC et al., No. 07-9931 (S.D.N.Y. filed Jan. 9, 2012) [Doc. 277].

Plaintiffs (record companies and music publishers) asked the Court to certify an interlocutory appeal of the Amended Memorandum & Order dated October 25, 2011 ("October 25,2011 Memorandum & Order") pursuant to 28 U.S.C. § 1292(b). Plaintiffs sought interlocutory appeal on whether, (i) the DMCA safe harbors apply to sound recordings fixed before February 15, 1972, (ii) a repeat infringer policy can be reasonably implemented by terminating only "blatant" infringers, and (iii) red flag knowledge of infringement can be established through sources other than takedown notices. The Court denied Plaintiffs' request.

Summary Judgments In MP3Tunes Case

Capitol Records, Inc. v. MP3Tunes, LLC, 1:07-cv-09931-WHP (S.D.N.Y. filed 8/22/2011) [Doc. 267].

"This case turns in large part on whether MP3tunes is eligible for protection under the safe harbors created by the Digital Millennium Copyright Act ("DMCA"), 17 U.S.C. 512."

The Court addressed Plaintiff's argument that MP3tunes failed to reasonably implement a repeat infringer policy. The court distinguished between "blatant infringers" and users who merely consume the content and found "this applies to MP3tunes executives." There was no evidence that executives or employees had firsthand knowledge that websites linked on the sideload.com website were unauthorized. Additionally, MP3tunes did nor purposefully blind itself to its users' identities and activities, and had a procedure for responding to DMCA takedown notices.

The Court next addressed MP3tune's compliance with Plaintiff's take-down notices. The court found that MP3tunes was obligated to remove specifice works traceable to users' "lockers" and that MP3tunes interpreted the reach of Plaintiff's notices too narrowly. However, MP3tunes was not obligated to take down all of Plaintiff's cotnent because the notices provided a representative list. Plaintiff had to provide sufficient information --additional web addresses -- for MP3tunes to locate other infringing material. "Absent adequate notice, MP3tunes would need to conduct a burdensome investigation in order to determine whether songs in its users' accounts were unauthorized copies. As discussed, the DMCA does not place this burden on service providers."

The Court next addressed actual or "red flag" knowledge of infringement. The Court found that MP3tunes "undoubtedly...is aware that some level of infringement occurs. But there is no genuine dispute that MP3tunes did not have specific 'red flag' knowledge with respect to any particular link...other than the URLs noticed [in the DMCA takedowns]."

The Court next addressed defendant's benefit and control of infringing activity, finding "at worst, MP3tunes set up a fully automated system where users can choose to download infringing content."

In sum, MP3tunes could claim safe harbor protection for plaintiff's works stored on and linked to on the websites. However, MP3tunes did not qualify for safe harbor protection for songs identified in takedown notices which it failed to remove.

The Court then turned to whether MP3tunes is secondarily liable for storing material at the direction if its users. The court found that MP3tunes knowledge of the unauthorized use of infringing material "is manifest." "Accordingly, [Plaintiff's] motion for summary judgment on its claim for contributory infringement with respect to the songs listed in [Plaintiff's] takedown notices and which MP3tunes failed to removed from users' lockers is granted."

The Court next turned to direct infringment. Plaintiff motion with respect to songs downloaded by employees was denied because there was a dispute as to whether the songs were downloaded by employees in the course of their employment. On the other hand, an individual named defendant was directly liable for the songs personally "sideloaded" from unauthorized sites.