Default Judgment Entered In Grooveshark Case

Arista Records v. Tkach et al., No. 15-cv-3701 (SDNY Dec. 11, 2015).

The Court granted Plaintiff record companies a default judgment on their claims for copyright infringement, trademark counterfeiting, unfair competition, and cybersquatting claims based on the websites "grooveshark.io" and "grooveshark.pw".  The plaintiffs had obtained a preliminary injunction, and the defendants did not respond to either the injunction or the complaint in any manner.  The Court entered a judgment permanently enjoining Defendants' use of the "Grooveshark" marks and the infringing domains.  Plaintiff UMG was also awarded $4 million for the trademark infringement, $400,000 for the cybersquatting, and statutory damages on the copyright claim of over $13 million.  Plaintiffs were also granted their attorney's fees, to be calculated on a later submission.

Third-Party Service Provider Subject To "Grooveshark" Injunction

Arista Records, LLC v. Tkach, No. 15-CV-3701 (AJN), 2015 BL 182234 (S.D.N.Y. June 03, 2015).

A third-party service provider is bound by and subject to the TRO and preliminary injunction in the Grooveshark case, finds Judge Nathan in the Southern District of New York.  The Court concluded that CloudFlare wasin active concert or participation with the Defendants based on the following facts: (1) CloudFlare admittedly owns and operates the authoritative domain name server for the new Grooveshark sites, which connects users entering the Grooveshark domain names into a web browser to the specific IP address associated with that site; (2) CloudFlare provides other services designed to improve the performance of the new Grooveshark sites; and (3) CloudFlare began providing its services to grooveshark.li after it acknowledged receipt of the TRO.  Furthermore, for the purpose of determining whether CloudFlare is in active concert or participation with the Defendants, it is not determinative that CloudFlare's services are automated, that CloudFlare lacks a specific desire or motivation to help the Defendants violate the injunction, or that the Grooveshark sites would continue to exist even without CloudFlare's assistance. The Court thus hereby concludes and clarifies that CloudFlare was bound by the TRO and is now bound by the existing preliminary injunction.

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

Grooveshark And Its Officers Liable For Copyright Infringment Based On Direct Uploads By Officers And Employees

UMG Recording, Inc. v. Escape Media Group, Inc. No. 1:11-cv-08407-TPG (S.D.N.Y. filed Sep. 29, 2014) [Doc. 100].

This case involved "Grooveshark" and the direct upload of plaintiffs' copyright music by defendant's officers and employees.  The Court granted plaintifss' motion for spoliation sanctions, and granted plaintiffs' summary judgment on nearly all of their claims.  As to spoliation sanctions, the Court found that defendants acted with a culpable state of mind when they deleted user upload information and relevant source code.  Based on the spoliation, the Court found that an individual defendant directly infringed plaintiffs' copyright recordings; however, the Court did not agree with plaintiffs' request that it find 10,000 instances of infringement and instead found that plaintiffs were entitled to judgment as a matter of law that that defendant illegally uploaded a small percentage (144) of the recordings.  Similarly, the Court found that the other employees uploaded a much smaller percentage  of additional files than requested by plaintiffs.

Turning to the summary judgment motion, the court first found that a certain expert report was admissible.  The Court then addressed defendants' affirmative defenses, and held that the claims were not barred by the statute of limitations, and that defendants' could not set forth a claim for equitable estoppel (or laches or waiver).  On plaintiffs' copyright claims, the Court found that plaintiffs established that defendants illegally uploaded 5,977 sound recordings (plaintiffs had requested a much higher number).  Accordingly, defendants were directly liable for infringement of plaintiffs' distribution, reproduction and public performance rights.  Further, Escape was liable for vicarious and inducement infringement because it had the ability to control its employee's infringing activity and instructed its employees to upload as many files as possible to Grooveshark as a condition of their employment.  Escape also materially contributed to the infringing employee uploads, and the Court granted plaintiffs summary judgment on their claim for contributory infringement.  The corporate officers were also liable., jointly and severally with the company.

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.

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."