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,

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

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.

Capitol's Motion To Dismiss Class Action Denied

Davis v. Capitol Records, LLC, No. 4:12-cv-01602-YGR  (N.D. Cal. filed 04/18/13) [Doc. 73].


Plaintiff brought the action as a member of the music group, “The Motels,” and a shareholder, beneficiary, and/or successor-in-interest of the now-dissolved The Motels Music Corporation, Inc.  She brought the complaint alleging a nationwide class action for breach of standard recording contracts and for statutory violations of California law against Defendant Capitol Records, LLC (“Capitol”).  Plaintiff alleged that Capitol failed to account properly for royalties stemming from the licensing of musical performances or recordings produced by Plaintiff and putative class members under contract with Capitol, which were then were utilized by digital content providers, such as music download providers, music streaming providers, and ringtone providers, for digital download, streaming and distribution.  Capitol moved to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6).

First, Capitol argued that the claims were time-barred under the parties' agreement relating to objecting to royalty statements.  However, the Court found that Plaintiff's allegations "arguably support a basis for tolling of the contractual limitations period."  (Emphasis added).  Accordingly, the motion to dismiss on limitations grounds was denied.

Second, Capitol moved to dismiss Plaintiff's claim for declaratory relief as duplicative of her claim for
breach of contract.  The Court held that it could not determine, as a matter of law, that declaratory relief would be duplicative or otherwise inappropriate such that it should be dismissed at the pleading stage.

Third, Capitol moved to dismiss Plaintiff;s claim for breach of the implied covenant of good faith and fair dealing on the grounds that it is duplicative of her breach of contract claim. The Court disagreed.

Fourth, Plaintiff alleged a claim for violation of California Business & Professions Code section 17200, California’s Unfair Competition Law (“UCL”), based upon all three prongs of the statute – that is, unfair, unlawful, and fraudulent conduct. Capitol sought to dismiss the claim to the extent it is based upon either unlawful or fraudulent conduct.  As to the fraud prong, the Court found that Plaintiff's pleadings contained sufficient particularity to survive.  As to the unlawful prong, the Court found that, "Where, as here, the complaint alleges systemic conduct meant to breach the terms of, or deny the benefits of, agreements between the defendant and a group of similarly situated parties, it is sufficient state a claim for an unfair business practice in violation of the UCL."

Fifth, the Court struck Plaintiff's demand for punitive damages.