Record Company Copyright Claims Against Amway Survive Dismissal

Alticor Inc. v. UMG  Recordings, Inc., No. 6:14-cv-542 (M.D. Fla. Dec. 10, 2015).

In a complex dispute between mutliple record companies and Amway concerning alleged direct, vicarious and contributory infringement of pre- and post-'72 sound recordings in over 1,000 videos, the Court dismissed Amway's Rule 12(b)(6) motion to dismiss the record companies counter-claims.  First, the Court found that the record companies had adequately alleged violations of their exclusive right of public performance.  Amway argued that the "public performance right" applicable to musical compositions and other works was inapplicable to sound recordings; the Court rejected that argument.  Second, the Court found that even though the Copyright Act does not conver a "making available" right, the act of making a work available for use of a direct infringer was relevant to the record companies' indirect infringement claims.  Third, the Court agreed with Amway that Florida common law does not create a public performance right for pre-72 recordings, but nonetheless held that it would not grant Amway partial relief under Rule 12(b)(6).

Aimee Mann Copyright Claim Survives Dismissal Based On Terminated License

Aimee Mann v. MediaNet Digital, Inc., et al., No. 2:13-cv-05269 (C.D. Cal. filed 11/27/13) [Doc. 26].

Plaintiff Aimee Mann (“Mann”), a songwriter and recording artist, brought this copyright infringement action against Defendant MediaNet Digital, Inc. (“MediaNet”), f/k/a MusicNet, a distributor of streaming music, online radio, and music downloads to companies like Songza, Stub Hub, Soundtracker, MTV, Yahoo Music, and Time Warner Cable (among others).  MediaNet moved to dismiss the copyright claims and Plaintiff's claim for rescission of a license agreement.  The Court denied the motion to dismiss the copyright claims, but dismissed the rescission claim with leave to replead.

On the copyright claims, MediaNet argued that Mann’s claim for direct infringement should be dismissed because: (i) MediaNet had a valid license at all relevant times and therefore cannot be liable for copyright
infringement, and (ii) the License Agreement was not terminated on December 4, 2006 as a matter of
law.  The Court found that MediaNet did not have a statutory compulsory license (17 U.S.C. 115).  The Court also found that the 2003 License Agreement was no longer in effect.  Relying on New York General Obligations Law § 5-903, Mann asserted that because MediaNet failed to alert her to the existence of the auto-renewal provision, the License Agreement was not automatically renewed after its initial term ended on December 4, 2006.  The Court agreed that the auto-renewal of the License Agreement is unenforceable under § 5-903. As such, Mann’s allegation that MediaNet exploited her pre-December 5, 2003 and post-December 4, 2006 compositions after the initial term of the License Agreement stated a claim for copyright infringement.  The Court further found that Mann had stated claims for secondary copyright liability (contributory, inducing and vicarious liability).

However, Mann's claim for rescission was dismissed with leave to replead.  The Court found rescission is an equitable remedy and that that Mann had failed to explain why the non-payment of royalties could not be adequately remedied by monetary damages. "This failure is fatal to her rescission claim."

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.