Another Tortured DMCA Online Safe Harbor Ruling–EMI v. MP3Tunes

We’re inadvertently “celebrating” Section 512 week at the Technology and Marketing Law Blog, with Monday’s post on the Copyright Office’s kneecapping of designated agents, today’s post on the MP3Tunes ruling, and a forthcoming post on Pond5. In the past, blogging such a confluence of Section 512 developments would be exciting; now, ennui has set in and I find the task mostly arduous. (Indeed, this post has festered for a week because working on it has been joyless). Most new developments continue to erode 512’s protective powers, and the case rulings involve highly technical statutory parsing that gets worse, and more tedious, with each iteration.

Today’s case involves the sad saga of MP3Tunes, a site that allowed searches of MP3 files and enabled users to sideload MP3 files into its database. In 2011, MP3Tunes mostly won the DMCA online safe harbor issues in district court. However, following the Second Circuit’s 2012 Viacom v. YouTube ruling, the district court reconsidered the case, and MP3Tunes’ case fell apart. On appeal to the Second Circuit, MP3Tunes suffers another stinging loss.

The opinion has many nuggets plaintiffs will love. I’ll highlight just three points:

Who counts as a repeat infringer?

To win a 512 safe harbor defense, the defendant must have “adopted and reasonably implemented…a policy that provides for the termination in appropriate circumstances of subscribers…” The court says that sideloaders can count as infringers (“all it takes to be a ‘repeat infringer’ is to repeatedly upload or download copyrighted material for personal use….a ‘repeat infringer’ does not need to know of the infringing nature of its online activities, or to upload rather than download content”). As a result, MP3Tunes wasn’t entitled to summary judgment on this point:

there was clearly enough disputed evidence relating to MP3tunes’s policy regarding infringers to conclude that summary judgment was inappropriate. To show that it reasonably implemented such a policy, MP3tunes proffered evidence at the summary judgment stage that it terminated 153 users who shared locker passwords. In response, though, the plaintiffs demonstrated that MP3tunes did not even try to connect known infringing activity of which it became aware through takedown notices to users who repeatedly created links to that infringing content in the sideload.com index or who copied files from those links….

There was also evidence that MP3tunes was capable of cataloging the sideloads of each MP3tunes user….

A reasonable jury alternatively could have determined that MP3tunes consciously avoided knowing about specific repeat infringers using its services, even though the infringement was rampant and obvious….MP3tunes’s failure to track users who created links to infringing content identified on takedown notices or who copied files from those links evidenced its willful blindness to the repeat infringing activity of its users.

So it sounds like the Second Circuit wants service providers to maintain profiles on each user who accrues an infringement strike. But does this conflict with 512(m)(1), which says service providers don’t need to affirmatively monitor users? The court says no “because [MP3Tunes] already had adequate information at its disposal in the form of takedown notices provided by EMI as to which links were allegedly infringing….MP3tunes would simply have had to make use of information already within its possession and connect that information to known users.”

Red flags/Willful blindness

The Second Circuit’s Viacom opinion introduced the possibility that a service provider could lose the safe harbor because it had “willful blindness,” and that would be differnt from the statute’s “red flags of infringement” prong. The willful blindness exception, and its relationship to red flags, was poorly defined then and remains a baffling mystery now.

The court says MP3Tunes had enough willful blindness or red flags to defeat summary judgment for it:

MP3tunes and Robertson knew that major music labels generally had not even authorized their music to be distributed in the format most widely available on sideload.com, let alone authorized it to be shared on the internet….With respect to MP3s sideloaded before 2007, therefore, the jury reasonably could have concluded that MP3tunes and Robertson were aware of “facts and circumstances that make infringement obvious.”…

the jury could reasonably have found that MP3tunes conceived of and was designed to facilitate infringement based in part on evidence presented at trial that MP3tunes “actively encourage[d] infringement” and that Robertson and MP3tunes executives “personally used [sideload.com] to download infringing material.”…

The trial evidence supported the plaintiffs’ argument that Robertson and MP3tunes executives knew that personal file storage sites and college student webpages were distributing infringing files. There was also evidence that Robertson himself sideloaded from personal websites, and that other MP3tunes executives regularly sideloaded from these sites. The jury could therefore conclude that MP3tunes knew that songs from sites with personal file storage or college URLs were available on sideload.com and that those sites were “obviously infringing,” yet failed to act on that information.

Statutory Damages

The court apparently reverses Bryant v. Media Right, which said courts would grant only one statutory damages award per album. The court says: “we conclude that the District Court properly allowed separate statutory damages awards for songs that the plaintiffs issued as singles, even if those songs were also made available on albums.” Given that virtually every modern song is released as a digital single, even if it’s part of an album, it seems like the one-statutory-damages-award-per-album rule is now defunct.

Implications

When the Second Circuit’s Viacom v. YouTube ruling came out in 2012, many commentators celebrated it as a win for defendants. I took a contrarian position, calling it a “bummer” and “a loss” for the defense. I explained:

this opinion exposes a structural deficiency of the 512(c) safe harbor. The statute’s simply too long and detailed, and if a defendant fails to satisfy each and every element, the safe harbor is lost completely. This is reminiscent of military strategy and information security: the defense has to work equally well across its entire border, while the adversary can concentrate its attack and only has to succeed on one point of attack to win. The same is true with a 512(c) defense. So, it doesn’t matter that YouTube won most of the points of contention; if any single point of contention fails, YouTube’s 512(c) defense fails

This is why repeated plaintiff hammering on prongs like “repeat infringer” and “red flags of infringement” have made 512 opinions longer, more technical and less defense-favorable.

The MP3Tunes case demonstrates another way in which the Viacom case hurt defendants. The Second Circuit’s introduction of a willful blindness doctrine hurt MP3Tunes case; it literally snatched MP3Tunes’ probable defeat from the jaws of near-victory in its initial district court ruling. This appellate court ruling only reinforces how MP3Tunes is in much deeper trouble than it appeared in 2011.

As usual, this case has been percolating in the courts for way too long (the case was filed Nov. 2007–9 years ago!), and it’s churned up massive billable hours along the way. Even if MP3Tunes somehow magically still finds a way to win this case, millions of dollars of legal fees–and the company’s chance in the marketplace–is long gone.

Earlier this year, the Second Circuit issued a nice and seemingly important ruling in the Vimeo case that had lots of good news for the defense. I hoped that ruling signaled a positive trend in the Second Circuit to consolidate and overcome the mess from the Viacom v. YouTube ruling. Apparently not.

Case citation: EMI Christian Music Group, Incorporated v. MP3tunes, LLC, 840 F.3d 69 (2d Cir. Oct. 25, 2016)