Internet Access Providers Face Contributory Copyright Liability for Subscribers’ Infringements–UMG v. Grande

October 13, 2024 · by · in Copyright, Derivative Liability

This is another lawsuit against an Internet access provider (IAP) for user-committed copyright infringement via P2P file sharing. For more background on this issue, see this rrcap and the links at the bottom of this post. My post on a pre-pandemic district court ruling in this case.

Previously, a jury held the IAP, Grande, liable for willful contributory copyright infringement and awarded damages of $47M. On appeal, the Fifth Circuit upholds Grande’s liability but reverses the damages computation in a way that will save Grande a few dollars. The judgment reversal is somewhat welcome news to Grande, but it doesn’t fix the structural and potentially existential problems with imposing contributory copyright liability on IAPs.

As usual, a key non-litigant is Rightscorp, which sent 1.3M NOCIs to Grande between 2011 and 2017. During the relevant time period, Grande didn’t terminate the account of subscribers who received NOCIs, no matter how many. According to the plaintiffs, “in one year alone, Grande had been advised that more than forty of its subscribers had infringed over 1,000 times and that one subscriber had infringed nearly 14,000 times.”

Contributory Copyright Infringement

Grande argued that it didn’t materially contribute to the subscribers’ infringements. The appeals court disagrees.

Grande made a bizarre argument that Grokster overrode decades of common law contributory copyright infringement doctrine, leaving only the inducement doctrine in place. Unsurprisingly, this argument fails. The court says Grokster didn’t shrink contributory doctrines; instead, “Grokster expanded the doctrine of contributory infringement” to include the new inducement doctrine.

Grande’s material contribution in this case is the continued provision of Internet access services after it received unverified NOCIs of past infringement from Rightscorp, not exactly a reliable source. The court distinguishes Grande’s provsiion of services from the vending of staple articles in commerce:

Grande provides its subscribers with internet services on a continuous basis in exchange for regular monthly subscription fees. Those actions create an “ongoing relationship” between Grande and its infringing subscribers that extends beyond a single moment of sale. Accordingly, Plaintiffs’ theory of liability in this case is not based on Grande’s knowledge about its subscribers’ likely future activities after the moment of sale, but rather on Grande’s knowledge of its subscribers’ actual infringements based on its ongoing relationship with those subscribers.

Grande argued that Grokster’s rearticulation of the contributory infringement doctrine (“intentionally inducing or encouraging direct infringement”) didn’t include the phrase “material contribution.” That’s true, but the Supreme Court provided no evidence that it intended to rewrite longstanding contributory infringement doctrines (although, this argument highlights why the Supreme Court shouldn’t have done its own gratuitous rephrase of the doctrine). After all, the Grokster court spent no energy explaining its rearticulation as a variation on the traditional common law test. As a result, most courts post-Grokster have continued to apply the traditional common law doctrine rather than the Grokster rearticulation. This court agrees: “Grokster endorsed the broader common-law theories of contributory liability articulated in Gershwin and other authorities; it didn’t constrict them.”

(In my Internet Law course, I tell my students that they may use the Grokster rearticulation because it’s technically not wrong, but it is “disfavored”).

Grande also argued that Taamneh v. Twitter amended the common law contributory copyright infringement doctrine. (Frontier, another IAP, failed with this argument elsewhere). The court responds that this conclusion “would require us to decide that the Supreme Court changed fundamental principles of copyright liability without saying so in a case that was not about copyrights.”

However, the court must make some razor-fine distinctions between Grande and Twitter. For example, “Grande’s conduct directly enabled and facilitated continued copyright infringement by its subscribers.” Yes, but so did Twitter, which provided hosting and promotion services to terrorist organizations. The court responds that “ISIS did not use the social media companies’ services to carry out its terrorist attack [while] this case involves tortfeasors that directly relied on and used Grande’s services to carry out their torts.”

There’s also the Twitter opinion passage where Justice Thomas, the idol of many Fifth Circuit judges, wrote that “we generally do not think that internet or cell service providers incur culpability merely for providing their services to the public writ large.” That language looks pretty helpful to Grande, but the court says that contributory copyright infringement is an exception contemplated by the qualifier “generally.”

Grande also referenced the Ninth Circuit’s jurisprudence that might suggest that if a defendant does not have “simple measures” available to it to prevent contributory infringement, then it’s not liable. The court says: “Grande had available to it at least one basic measure: it could have terminated high-speed internet services to known, repeat infringers, as it did when subscribers failed to pay Grande’s monthly fees.”

Calling the termination of Internet access a “basic” or “simple” measure misapprehends the implication. Losing Internet access can have dramatic consequences for the subscriber, usually far in excess of the consequences of losing a UGC account. Thus, in 512(c) cases, the web host can cut off a user’s power to continue publishing content when the user repeatedly shows that they will use that power to infringe. In contrast, the IAP can’t validate the infringement claim (the IAP doesn’t host the item, so it’s not available for inspection) and account termination removes the subscribers’ power to publish, the power to read, the power to download infringing items, and so much more.

Nevertheless, the court shuts down all of Grande’s arguments and upholds the jury verdict of liability.

Damages

The court holds that statutory damages are only available one per album (a compilation of songs), not per song on each album. This position isn’t unprecedented, but it is the minority view (as the court notes, five other circuits have held otherwise). The court responds that their position deviates from the statutory text. The court remands the case to a new trial to figure out how many works are parts of compilation and thus not eligible for their own separate statutory damages award.

Implications

This ruling fits with other appellate rulings indicating that IAPs can be contributorily liable for subscribers’ infringements (see, e.g., Sony v. Cox), so it doesn’t break new doctrinal ground that way. Nevertheless, this opinion reinforces how IAPs have become deputized as the copyright owners’ cops despite the superficially rock-solid safe harbor in 512(a). That puts far too much power in the hands of robonotice senders like Rightscorp, who make mistakes but have zero accountability for that (thanks to the failure of 512(f)), and leaves IAPs exposed to potentially existential damages. Worse, a subscriber’s loss of Internet access has social and safety implications that should not be dictated by copyright owners. We need a re-envisioning of 512(a) that provides a meaningful safe harbor for IAPs without stripping citizens of their ability to participate in our digital society.

Case Citation: UMG Recordings, Inc. v. Grande Communications Networks, L.L.C., 2024 WL 4449684 (5th Cir. Oct. 9, 2024)

Selected Posts About IAP Copyright Liability