from the this stuff is important dept
Back in February, we wrote about the details of the appeals court ruling in BMG v. Cox, a case that looked at whether or not internet access providers are required to terminate users accused of repeat infringement. The case was really a proxy for copyright trolling operation Rightscorp, which floods ISPs with claims of infringement tied to “settlement” offers that it wants the ISPs to pass on to end users. As discovery during the Cox case revealed, Rightscorp engages in incredibly sketchy practices to pressure people into paying up (such as telling them that they need to take their computers to the local police station for a search to prove they’re not infringing).
However, due to a bunch of weird details in that case — including a judge who made it clear he didn’t think the internet was such a big deal — Cox lost that case, and then again on appeal. The good thing in the appeal, however, was that the opinion mostly limited its decision to the specific facts in Cox’s case, which included the fact that it had a “repeat infringer policy” but it didn’t follow its own policy. That’s really what sunk Cox. The court noted that an ISP should have wide latitude in designing its own repeat infringer policy, it just had to then follow its own policy. And Cox didn’t.
While that case was going on, a second similar case was filed, this time by Universal Music Group against Grande Communications. Back in February, the magistrate judge on that case made recommendations to allow the case to move forward, though throwing out some of the claims. As TorrentFreak recently pointed out, the Article III judge in the case has accepted the recommendations of the magistrate, which you can see here.
Neither UMG nor Grande Communications are probably all that happy with the results (same probably goes for Rightscorp.), though UMG is probably happy that the case is at least moving forward on claims of contributory infringement. Grande’s management company, Patriot Media Consulting, is dropped from the case, and the vicarious infringement claims are dropped as well. People often confuse “vicarious” infringement and “contributory” infringement as they’re both forms of secondary liability for service providers. Vicarious infringement, though, requires two specific prongs: the right and ability to supervise or control the infringing activity, and the direct financial benefit from that activity. In other words, you need to be pretty damn involved and making money directly off of that specific infringement. In this case, the magistrate judge realized that clearly is not the case with an ISP:
The closest that the Complaint comes to addressing
this issue is the allegation that “the availability of music —and particularly UMG’s music— acts as
a powerful draw for user’s of Grande’s service, who use that service to download infringing music
files using BitTorrent protocols.” … This is not sufficient to show the “direct
financial interest” necessary to support a vicarious infringement claim. There are no allegations that
Grande’s actions in failing to adequately police their infringing subscribers is a draw to subscribers
to purchase its services, so that they can then use those services to infringe on UMG’s (and others’)
copyrights. Instead UMG only alleges that the existence of music and the BitTorrent protocol is the
draw. But that would impose liability on every ISP, as the music at issue is available on the Internet
generally, as is the BitTorrent protocol, and is not something exclusively available through Grande’s
services. Accordingly, the Court finds that UMG has failed to plead facts showing that Grande
receives a direct financial benefit from its subscribers’ infringing conduct, and that UMG’s vicarious
copyright infringement claim should be dismissed for failure to state a claim.
Contributory infringement, on the other hand, is the concept that comes mainly out of the famous Grokster ruling, and basically says that if the service provider is inducing infringement, then they can also be liable for contributory infringement. Grande tried to get around this by using the Sony Betamax standard, noting that there were substantial non-infringing uses of its service, and thus it shouldn’t be held liable for some infringement that does occur. The magistrate judge doesn’t seem entirely won over by Universal’s argument, but suggests at the motion to dismiss stage — at which point the judge is required to treat everything the plaintiff claims as true — there’s enough in the pleadings to allow the case to move forward:
The Court acknowledges that this is not yet a well-defined area
of the law, and that there are good arguments on both sides of this issue. However, at this point in
the case, the Court is persuaded that UMG has pled a plausible claim of secondary infringement
based on Grande’s alleged failure to act when presented with evidence of ongoing, pervasive
infringement by its subscribers.
That’s not exactly a strong endorsement, and if I were Universal Music’s lawyers, I’d be worried about how things will go at the next stage (most likely summary judgment). Grande now gets to make the case that it did not “induce” infringement on its network, and merely failing to do what Rightscorp demands hardly reaches the level of inducement. To me, that’s a pretty strong argument, but judges in copyright cases often seem to lose perspective when it comes to any kind of infringement. This will be an important case to pay attention to.
As a separate note, I’m a little surprised that the Supreme Court’s Packingham decision, saying that the government can’t kick people off the internet, didn’t come up yet in this case. I imagine it will at some later date.