Punitive Damages Verdict Significantly Reduced; Defendant Granted Judgment Notwithstanding Verdict On Cover Art And DMCA "Red Flag" Theories

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Capitol Records, Inc. v. MP3Tunes, No. 07-cv-9931 (S.D.N.Y. filed Sep. 29, 2014) [Doc. 629].

Defendant moved for judgment as a matter of law, or alternatively a new trial, and for remittur following a $48,061,073 jury verdict in favor of plaintiffs, who consisted of record labels and publishers who had filed copyright and unfair competition claims alleging that defendant and MP3Tunes made infringing copies of copyright songs and cover art.  The motion was denied in part, and granted in part.  Specifically, defendant's motion for judgment as a matter of law was granted as to plaintiffs' claims of (1) public display rights in cover art, and (2) copyright infringement under "red flag" knowledge and willful blindness theories (except for certain works sideloaded and which the source domain's URL was obviously infringing and viewed by a company executive).  Further, defendant's motion for a new trial on punitive damages was granted unless plaintiffs elected to remit the jury's punitive damage award to $750,000.

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

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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.

ISPs in UK Ordered To Block Access to BitTorrent Sites

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EMI Records Ltd. v. British Sky Broadcasting Ltd., 2013 ILRC 1337 (High Ct. of Justice Chancery Div. 2013) [link].

The UK's main retail ISPs were ordered to take measures to block or impede their customers' access to three peer-to-peer file-sharing websites (KAT, H33T and Fenopy) due to infringement.  Plaintiffs were record companies.  The Court concluded: (i) that UK users of the websites who have accounts with the Defendants have infringed, and are continuing to infringe, the plaintiffs copyrights by copying the Claimants' sound recordings on a large scale; (ii) that users of the Websites infringe the plaintiffs' copyrights both by copying and by communication to the public; and (iii) the operators of the Websites infringe the plaintiffs' copyright.  The plaintiffs' application was granted.

Veoh Protected By Safe Harbor; 9th Cir.

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UMG Recordings Inc. et al. v. Veoh Networks Inc. et al., No. 09-56777 (9th Cir. filed 12/20/2011) [Doc. 39]

Veoh Networks (Veoh) operates a publicly accessible website that enables users to share videos with other users. Universal Music Group (UMG) is one of the world’s largest recorded music and music publishing companies, and includes record labels such as Motown, Def Jam and Geffen. In addition to producing and distributing recorded music, UMG produces music videos. Although Veoh has implemented various
procedures to prevent copyright infringement through its system, users of Veoh’s service have in the past been able, without UMG’s authorization, to download videos containing songs for which UMG owns the copyright. UMG responded by filing suit against Veoh for direct and secondary copyrightinfringement. The district court granted summary judgment to Veoh after determining that it was protected by the Digital Millennium Copyright Act (DMCA) “safe harbor” limiting service providers’ liability 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.” 17 U.S.C. § 512(c). The 9th Circuit agreed, and accordingly affirmed.

"We ... hold that merely hosting a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the actual knowledge requirement under [the statute]".

LimeWire Damages in Trillions "Absurd"

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Arista Records LLC v. Lime Group LLC, 06 CV 5936, NYLJ 1202486126807 (S.D.N.Y. Mar. 10, 2011)

The Court already had granted summary judgment in favor of Plaintiffs on their claims against Defendants LimeWire LLC ("LW"), Lime Group LLC ("Lime Group"), and Mark Gorton (collectively, "Defendants") for secondary copyright infringement. The Court found that Defendants had induced Multiple users of the Lime Wire online file-sharing program ("Lime Wire") to infringe Plaintiffs' copyrights. The litigation is in the damage phase.

Plaintiffs identified approximately 11,000 sound recordings that they allege were infringed through the Lime Wire system. For the over 9,500 post-1972 sound recordings, Plaintiffs elected to seek statutory damages under Section 504(c)(1) of the Copyright Act.

"Squarely before the Court is a threshold dispute regarding Plaintiffs entitlement to statutory damage awards against Defendants: Where, as here, Defendants have been found liable for inducing numerous individual Lime Wire users infringe Plaintiffs' copyrights, may Plaintiffs recover from Defendants a separate statutory award for each individual's infringement of a work as to which Defendants are jointly and severally liable? Or, rather, are Plaintiffs limited to one statutory damage award per work from Defendants, regardless of the number of direct infringers of that work with whom Defendants are jointly and severally liable?"

The Court held that Plaintiffs were entitled to a single statutory damage award from Defendants per work infringed.

If one multiplies the maximum statutory damage award ($150,000) by approximately 10,000 post-1972 works, Defendants faced a potential award of a billion dollars in statutory damages alone. If Plaintiff's were able to pursue a statutory damage theory predicated on the number of direct infringers per work, Defendants' damages could reach into the trillions. As Defendants noted, Plaintiffs were suggesting an award that is "more money than the entire music recording industry has made since Edison's invention of the phonograph in 1877." This result is absurd, the Court found.

In sum, the Court found that the most plausible interpretation of Section 504(c) is one that authorizes only a single statutory damage award per work against a secondarily liable defendant, particularly in the context of the mass infringement found in the context of online peer-to-peer file sharing. Accordingly, the Court held that Plaintiffs were entitled to a single statutory damage award from Defendants per work infringed, regardless of how many individual users directly infringed that particular work.




Dep't of Justice on Constitutionality of Copyright Statutory Damages

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The U.S. Department of Justice's memorandum in defense of the constitutionality of the statutory damages provision of the Copyright Act, 17 U.S.C. § 504(c). Submitted to the U.S. District Court for the District of Minnesota in the peer-to-peer file sharing case against defendant Jammie Thomas.

Capitol v Thomas - DOJ Memo in Support of Statutory Damages

Sanctions for Blogging in Music Case?

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An attorney representing a college student in a copyright infringment case based on music downloads faces possible court sanctions for an Internet posting of deposition excerpts from his defense. The attorney, Professor Charles Nesson of Harvard Law School, is representing defendant in Capital Records Inc. v. Alaujan, a District of Massachusetts case that several record companies and the RIAA filed against the students.

Judge Nancy Gertner issued an electronic order on July 7 demanding an explanation why defendant and his counsel should not be sanctioned for the posting of parts of a deposition on Harvard Law School's Berkman Center for Internet & Society Web site. The court noted that prior oral and written orders "made clear" that deposition recordings were permitted but "not to be made public via the Internet."

Labels Request to Inspect Home Computers Denied

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Sony BMG Music Entertainment v. Tenenbaum, No. 08-MC-00104, 2009 BL 124443 (D.R.I. June 10, 2009).

Court denied various record labels' request to inspect and mirror image the home computer the parents of a defendant in a music downloading copyright infringement action pending in another district court.

Related action against son in another district: Capitol Records, Inc. v. Alaujan, No. 03-CV-
11661 [D. Mass. (i) May 6, 2009 order permitting labels to miror one of defendant's two computers; (ii) May 13, 2009 order that “reminded” the record companies that the Massachusetts lawsuit was “‘not an opportunity to explore any potential copyright infringement committed by [the son] at any time or place’ and that ‘relevant discovery [is] limited to
the infringement of specific songs whose copyrights were owned or licensed by the [record companies] and which were identified in Exhibits A or B to their Complaint.")

In the Rhode Island action, the record labels sought to inspect and mirror Tenenbaum’s parents’ home computer. The parents were not parties to the Massachusetts dispute involving their adult son. Additionally, the parents bought their computer after their son left for college. The court found that although it was possible that the computer contained some evidence relevant to their son's file sharing activities, the record companies had not “shown enough of a likelihood
of relevant evidence to warrant the intrusion of privacy arising out of a forensic computer analysis of a home computer utilized for years by non-parties to the underlying case.” Further, the Mass. court had granted the record companies permission to analyze the son's computer, and thus, the record companies’ request to search for similar information on his parents
computer would be “duplicative and invasive of [the parents’] independent privacy interests as non-parties.” Nor would denial of the motion “handcuff” plaintiff record companies’ ability to litigate the underlying copyright infringement claim: the son had also admitted to downloading music, and the record companies obtained records from the file-sharing service that were attributed to the son's user name/IP address.

Record companies’ motion to compel denied.

Broadband Fee for Unlimited Downloads

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Instead of fighting file-sharing, the local government of the Isle of Man announced a proposal this month that the 80,000 people who live on there would be able to download unlimited amounts of music — perhaps even from notorious peer-to-peer pirate sites. To make this possible, broadband subscribers would pay a nominal fee of as little as £1, or $1.38, a month to their Internet service providers.

[New York Times]

Improper Joinder of Doe Cases

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From the Bloomberg IP Report, Vol.2, No. 2, p. 8-9 (Jan. 12, 2009)

District of Connecticut Finds Record Companies Improperly Joined Doe Defendants in Two Closely Related Peer-to-Peer File Sharing Cases

Synopsis: In two closely related actions, the U.S. District Court for the District of Connecticut determined that plaintiff record companies improperly joined doe defendants in copyright
infringement suits involving peer-to-peer file sharing. The court also held, however, that the record labels could immediately serve subpoenas on the Internet Service Providers (ISPs) to
determine the doe defendants’ identities.

Analysis of: Arista Records, LLC v. Does 1-4, No. 08-CV-01280, 2008 BL 273554 (D. Conn. Dec. 9, 2008); and Interscope Records v. Does 1-6, No. 08-CV-01284, 2008 BL 273554 (D. Conn. Dec. 9, 2008).

End of RIAA Litigation for Online File-Sharing?

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"The recording industry plans to lay down its litigation offensive against music pirates in favor of a more PR-friendly, if not more effective, strategy. Instead of suing thousands of people for stealing tunes via the Internet, it will rely on the cooperation of Internet-service providers"

Article from the Wall Street Journal.

Improper Joinder of Does in RIAA/P2P Litigation

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Arista Records, LLC v. Does 1-11, No. 07-CV-02828, 2008 BL 253292 (N.D. Ohio Nov. 3, 2008).

Summary: Northern District of Ohio Finds Record Companies Improperly Joined Doe Defendants in Peer-to-Peer File Sharing Case

Diverging in opinion from its Southern District counterpart, the U.S. District Court for the Northern District of Ohio held that the Doe defendants in a music industry file sharing case
were improperly joined. The court reasoned that despite arguments and holdings to the contrary, addressing the issue of joinder was both legally and practically appropriate prior to
the identification of the Doe defendants, and that efficiency concerns should not supersede the requirements of the Federal Rules of Civil Procedure. Thus, the court converted defendant Doe 9’s motion to dismiss for improper joinder into a motion for severance and severed all of
Doe defendants, save Doe #1, from the current action.

Bloomberg law report.

P2P Jury Award Set Aside

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RIAA's $222,000 verdict in Capitol v. Thomas set aside. Judge rejects 'making available'; attacks excessive damages. [Article]

September 24, 2008, decision setting aside verdict

Synopsis from Ray Beckerman:
In Capitol v. Thomas, District Judge Michael J. Davis has set aside the jury's $222,000 verdict and ordered a new trial, ruling that his jury instruction -- which accepted the RIAA's "making available" theory -- was erroneous. He also rejected the 'offer to distribute' theory.

Spoliation in RIAA P2P Case (D.Ariz)

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August 29, 2008, Order striking defendant's answer and granting default judgment to plaintiffs in RIAA P2P case Atlantic v. Howell, No 06-cv-2076(D. Ariz.).

The basis of this order, and the sanction of granting default judgment to plaintiffs, was defendant file-sharer's repeated spoliation of evidence on his computer.

4 More Hours of Deposing LimeWire COO

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Lime Wire's Chief Operating Officer and Chief Technical Officer has been ordered to undergo 4 more hours of deposition, in addition to the two days of deposition that already occurred.

"Considering the facts set forth in Rule 26(b)(2)(C)(iii), this is a case in which the stakes are high, both sides have significant resources, and Bildson is apparently a central figure in the case."

The four additional hours "should be adequate time, particulary if the witness comes to realize that brisker, more responsive answers will undoubtedly reduce the tedium that he apparently feels and so visibly displays, with salutary effects on the impression he will make on the eventual factfind at trial."

I.e., take a hint.

Arista Records LLC v. Lime Group LLC, No. 06 Civ. 5936, 5/2/08 N.Y.L.J. "Decision of Interest" (S.D.N.Y. April 15, 2008).

Nail and Mail - The Bronx

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Warner Bros. Records Inc. v. Berry, No. 07 Civ. 1092-HB, 4/15/08 N.Y.L.J. "Decision of Interest" (S.D.N.Y. decided Apr. 9, 2008).

The court adopted Magistrate Judge's recommendation to deny Plaintiff's default judgment application and dismissed the case.

Plaintiff's alleged that Defendant used KaZaA to download, distribute and make available for distribution the copyrighted recordings of certain artists in violation of the Copyright Act. Over a year before filing the complaint, Plaintiffs served AOL (an ISP), which identified Defendant as the person responsible for the IP address that was using KaZaA. AOL provided Plaintiff's with an address for Defendant in the Bronx, NY. Plaintiffs then hired a process server, whose attempts at service were "unsuccessful"; thereafter, the process server affixed one copy on the property in the Bronx. and depositing a copy of the summons in a first class post paid envelope addressed to the same address.

However, the Court found that service on Defendant was defective and therefore dismissed the complaint. "Here, service was defective under the 'nail and mail' method [CPLR 308(4)] because Plaintiffs' process server both affixed and mailed the summons to Defendant's last known residence."

Though the mailing component of service by "affixing and mailing" may be to the defendant's last known residence, "the 'affixing' component must be to the door of the defendant's actual place of business, dwelling place or usual place of abode, and not to the defendant's last known residence. To blur the distinction between 'last known residence' and 'dwelling place' 'would diminish the likelihood that actual notice will be received by potential defendants.'"

However, the Court did not adopt the Magistrate Judge's recommendation that Plaintiffs be ordered to show cause they they did not violate FRCP 11(b). The Court found that "while Plaintiffs' lawyers should be faulted for failing to keep closer tabs on their process server and for failing to better supervise their paralegal, their actions do not rise to the level of a Rule 11(b) violation. Plaintiffs' lawyers might have been sloppy in their attempts to serve Defendant, but giving them as officers of the Court the benefit of the doubt, all their representations to this Court were...nor for the improper purpose of unnecessary delay."

Chinese Firms Face the Music on Downloads

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Wall Street Journal reports:
A Chinese court has agreed to consider copyright-infringement cases against two China-based Internet heavyweights that offer illicit music downloading, potentially pening Chinese companies to hefty damage claims they have previously dodged.

The music-industry lawsuits claim $9 million in damages against Baidu.com Inc., and $7.5 million against Sogou, the music-delivery service operated by Sohu.com Inc.

The Pirate Bay - Owe $2.5 Mil?

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The International Federation of the Phonographic Industry made a $2.5 million compensation claim Monday in a Swedish court, where the developers of The Pirate Bay (torrent-tracking site) have been indicted for copyright violations related to the sharing of 24 music albums, nine films and four videogames.

In response, Gottfried Svartholm Warg, one of four founders of The Pirate Bay, said Monday that "record companies can go screw themselves".

[Wired article]