Skip Page Banner  
Skip Navigation

SDNY Finds Music Storage Locker MP3Tunes Mostly Eligible for DMCA Safe Harbor Protection But Liable for Contributory Infringement as to Certain Songs

Wednesday, August 31, 2011

Jessica McKinney | Bloomberg Law Capitol Records, Inc. v. MP3tunes, LLC, No. 07-CV-09931, 2011 BL 216391 (S.D.N.Y. Aug. 22, 2011) In an action brought by 15 record companies and music publishers, including plaintiff EMI, Inc. (collectively, "EMI"), against defendants MP3tunes, LLC and its founder, Michael Robertson, in connection with the music storage locker MP3tunes.com and the related music search engine Sideload.com, the U.S. District Court for the Southern District of New York granted in part and denied in part the parties' summary judgment motions. The court held that MP3tunes is entitled to safe harbor protection under the Digital Millennium Copyright Act ("DMCA"), except as to songs that were included in various takedown notices that MP3tunes did not remove from users' personal lockers. The court also found MP3tunes liable for contributory infringement as to those songs, and found Robertson liable for direct infringement for those songs that he personally sideloaded from unauthorized sites.

Defendants' Music Storage Locker and Search Engine

In February 2005, Robertson founded MP3tunes and launched the website MP3tunes.com. The website allows users to store music files in personal storage lockers. Users may upload mp3 files from their hard drives using a free software program available on the website, and may upload files from third-party sites by entering the web address containing a particular file. Uploaded songs are assigned a hash tag. "If different users upload the same song containing identical blocks of data to MP3tunes' servers, those blocks will be assigned the same hash tag and typically saved only once." MP3tunes at 2. Lockers with limited storage space are free; users who desire more space may obtain a premium locker by paying a subscription fee. To date, more than 300,000 users have lockers on MP3tunes.com. Defendants also operate the website Sideload.com, which allows users to search for free music files on the Internet. Users with lockers on MP3tunes.com may "sideload," i.e. download, files from third-party websites to their lockers for free. In addition, the free Sideload Plug-in software allows users to directly add songs to their lockers from third-party websites without needing to visit Sideload.com. Once songs are sideloaded from a third-party site, that site is added to Sideload.com's searchable index. "Thus, as users discover free songs on the internet, the number of songs available through Sideload.com increases." Id. at 4. MP3tunes tracks the sources and web addresses of sideloaded songs.

Takedown Notices Sent to Defendants

On September 4, 2007, non-party EMI Music Group North America ("EMGNA") sent a takedown notice to MP3tunes identifying 350 allegedly infringing songs and the web addresses containing those songs. EMGNA also included a list of EMI artists and demanded that MP3tunes "remove all of EMI's copyrighted works, even those not specifically identified." MP3tunes at 5. MP3tunes removed links to the web addresses listed in the takedown notice, but did not remove the identified songs from its users' lockers. Two additional takedown notices, similar in form and substance, were sent on October 25, 2007—another from EMGNA, and one from non-party EMI Entertainment World. MP3tunes again removed links to specifically identified web addresses, but removed nothing from users' lockers. EMI filed suit against MP3tunes and Robertson on November 9, 2007 in connection with the defendants' alleged infringement of its copyrights in various sound recordings, musical compositions, and album cover art. Both parties moved for summary judgment.

DMCA Safe Harbors

In determining whether MP3tunes was eligible for safe harbor protection under the DMCA, the court considered a number of issues raised by the parties, including whether MP3tunes reasonably implemented a repeat infringer policy, expeditiously removed works identified in the takedown notices, ignored red flags of rampant infringement, and controlled and benefitted from the alleged infringement. The court ultimately found that MP3tunes was entitled to safe harbor protection, except as to those songs that were identified in the takedown notices that MP3tunes failed to remove from its users' lockers. Notably, the court stated in a footnote that "the plain meaning of the statutory language makes the DMCA safe harbors applicable to both state and federal copyright claims." MP3tunes at 12 n.1. As such, sound recordings fixed prior to February 15, 1972 (which are protected by state copyright laws) are subject to the DMCA under the court's reasoning.

— Repeat Infringer Policy

To be eligible for any of the DMCA safe harbors, a service provider must "adopt[] and reasonably implement[], and inform[] subscribers and account holders of the service provider's system or network of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider's system or network who are repeat infringers." 17 U.S.C. § 512(i)(1)(A). Federal appellate courts have found the implementation of such policies reasonable if the service provider: "(1) has a system for dealing with takedown notices, (2) does not interfere with the copyright owner's ability to issue notices, and (3) under 'appropriate circumstances,' terminates users who repeatedly or blatantly infringe copyrights." MP3tunes at 9 (quoting Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1110 (9th Cir. 2007)). The instant court readily found that MP3tunes satisfied the first two requirements. With respect to the third requirement, the court distinguished between "users who know they lack authorization and nevertheless upload content to the internet for the world to experience or copy, and users who download content for their personal use and are otherwise oblivious to the copyrights of others." MP3tunes at 10 (citing Viacom Int'l Inc. v. YouTube, Inc., 718 F. Supp. 2d 514, 528-29 (S.D.N.Y. 2010); Io Group, Inc. v. Veoh Networks, Inc., 586 F. Supp. 2d 1132, 1143 (N.D. Cal. 2008)). According to the court, "[t]he former are blatant infringers that internet service providers are obligated to ban from their websites," while "[t]he latter, like MP3tunes users who sideload content to their lockers for personal use, do not know for certain whether the material they are downloading violates the copyrights of others." Id. The court also rejected EMI's argument that MP3tunes purposefully blinds itself to infringement. The court noted that MP3tunes tracks the sources of all sideloaded songs, has a policy in place to terminate the accounts of repeat infringers, and has actually terminated the accounts of 153 users who it deemed to be repeat infringers.

— Compliance with Takedown Notices

Pursuant to Sections 512(c)(3) (applicable to material stored on a service provider's system or network at the direction of a user) and (d)(3) (applicable to information location tools such as search engines) of the DMCA, a takedown notice must: (1) identify the allegedly infringed copyrighted work or provide a representative list if multiple works on a single site are covered by the same notice, and (2) identify the allegedly infringing material, or the reference or link to such material, with "information reasonably sufficient to permit the service provider to locate the material" or the reference or link. 17 U.S.C. §§ 512(c)(3)(A)(iii), (d)(3). After receiving proper notice, a service provider must expeditiously remove, or disable access to, the identified content. Id. § 512(c)(1)(C). The court agreed with EMI that MP3tunes was required to remove the songs identified in the takedown notices from both Sideload.com and users' personal lockers. The court noted that MP3tunes could easily do so because it kept track of the sources and web addresses of all sideloaded songs. "Where service providers such as MP3tunes allow users to search for copyrighted works posted to the internet and to store those works in private accounts," the court stated, "to qualify for DMCA protection, those service providers must (1) keep track of the source and web address of stored copyrighted material, and (2) take content down when copyright owners identify the infringing sources in otherwise compliant notices." MP3tunes at 15. However, the court rejected EMI's argument that MP3tunes should take down all of EMI's copyrighted works (including those not specifically identified), noting that service providers do not have this burden under the DMCA. "Even assuming the representative lists properly identified EMI's copyrighted works," the court explained, "EMI had to provide sufficient information—namely, additional web addresses—for MP3tunes to locate other infringing material." Id. (citing Wolk v. Kodak Imaging Network, Inc., No. 10-CV-04135, 2011 BL 70331 at *11 (S.D.N.Y. 2011)). For further analysis of the Wolk case, see District Court Rules Prior Takedown Notices Insufficient to Give Service Provider Actual or Apparent Knowledge of Future Infringements, Bloomberg Law Reports – Intellectual Property, Vol. 5, No. 14 (Apr. 4, 2011). The court also rejected MP3tunes' argument that if it removed allegedly infringing content from users' lockers, it would be subject to liability. The court observed that MP3tunes could block a user's access to his or her locker pursuant to its Terms of Use, and that Section 512(g) of the DMCA immunizes service providers from claims by users.

— Actual or "Red Flag" Knowledge of Infringement

To qualify for safe harbor protection under 17 U.S.C. §§ 512(c)(1)(A) or (d)(1), a service provider must not have actual knowledge of infringement, and in the absence of actual knowledge, must not be "aware of facts or circumstances from which infringing activity is apparent," i.e., of "red flags." The court noted that the knowledge provisions are geared towards "pirate sites whose illegal purpose is obvious to a reasonable person," and that such sites often use slang terms such as "pirate" or "bootleg," making their infringing nature "apparent from even a brief and casual viewing." MP3tunes at 16 (citing S. Rep. No. 105-190 (1998)). The court emphasized that general awareness of widespread infringement is not enough to strip a service provider of safe harbor protection. Rather, "'actual knowledge . . .' and 'facts and circumstances . . .' describe knowledge of specific and identifiable infringements of particular individual items." Id. (quoting Viacom, 718 F. Supp. 2d at 523). The court concluded that MP3tunes had neither actual nor "red flag" knowledge of infringement. First, EMI failed to show that songs were sideloaded from clearly pirate websites by MP3tunes' executives. The websites—including rapidshare.com, fileden.com, and filefactory.com—did not use words such as "pirate" or "bootleg" to indicate an illegal purpose. "While a reasonable person might conclude after some investigation that the websites used by MP3tunes executives were not authorized to distribute EMI's copyrighted works," the court explained, "the DMCA does not place the burden of investigation on the internet service provider." Id. at 17. See also 17 U.S.C. § 512(m)(1); CCBill, 488 F.3d at 1114. The court refused to construe the terms "free," "mp3," or "file-sharing" as equivalent to "red flag" knowledge, as urged by EMI, noting that these terms "are ubiquitous among legitimate sites offering legitimate services" and that adopting EMI's interpretation "would undermine Congress's goal of fostering development and innovation of internet services." MP3tunes at 17. The court further noted that EMI, as part of its marketing strategy, often distributes works on the Internet for free. As such, Internet users "have no way of knowing for sure whether free songs on the internet are unauthorized." Id. In addition, "notices by EMI or third parties that do not substantially comply with the DMCA or that simply give representative lists of copyrighted works do not establish actual or 'red flag' knowledge of infringement." Id. at 18 (citing Wolk, 2011 BL 70331 at *11; Viacom, 718 F. Supp. 2d at 523; Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090, 1109 (W.D. Wash. 2004)).

— Benefit and Control of Infringing Activity

A service provider may be disqualified from safe harbor protection if it "receive[s] a financial benefit directly attributable to the infringing activity" and "has the right and ability to control such activity." 17 U.S.C. §§ 512(c)(1)(B), (d)(2). While the court acknowledged that Sideload.com may draw users to MP3tunes.com and drive sales of pay lockers, it noted that Sideload.com has non-infringing uses and that MP3tunes does not promote infringement. Further, any link between a financial benefit and the infringing activity "is attenuated because sideloaded songs were stored free of charge and infringing and non-infringing users of Sideload.com paid precisely the same or nothing at all, for locker services." MP3tunes at 19. The court also found that MP3tunes does not have the right and ability to control infringement. The court posited that to have such control, "something more" is required "than the ability to remove or block access to materials posted on a service provider's website." Id. (citing Corbis, 351 F. Supp. 2d at 1110; Io Group, 586 F. Supp. 2d at 1151). "If enabling a party to download infringing material was sufficient to create liability," the court reasoned, "then even search engines like Google or Yahoo! would be without DMCA protection. In that case, the DMCA's purpose—innovation and growth of internet services—would be undermined." Id. at 19-20. The court therefore held that MP3tunes was entitled to safe harbor protection, except as to works specifically identified in the takedown notices that MP3tunes failed to remove from users' personal lockers.

Contributory Infringement Claims

The court also determined that MP3tunes was contributorily liable with respect to the songs in the takedown notices that it did not remove from users' lockers. First, EMI established that direct infringement by a third party occurred, a prerequisite to a finding of secondary liability. While MP3tunes argued that many of the works were registered as "works for hire" and that EMI did not submit proof showing that employees created the works within their scopes of employment, the court observed that MP3tunes had the burden of proof because the registrations were produced and failed to meet that burden. Further, "[w]hile the record reveals numerous instances where EMI authorized the free distribution of songs listed on the takedown notices as part of 'viral' marketing campaigns, MP3tunes has not established that the websites involved in that marketing were identical to the URLs identified in the notices." MP3tunes at 23. The court noted that in essence, MP3tunes claimed that EMI abandoned its rights by offering free promotional downloads, but that MP3tunes failed to prove this point. "Far from proving EMI's intent to abandon its rights," the court stated, "the record reveals that EMI placed careful restrictions on the use of its promotional songs and required consumers to visit certain websites or provide valuable marketing information before downloading a song." Id. at 23-24. Second, the court found that MP3tunes had knowledge of the infringement as a result of the takedown notices and that MP3tunes' servers were exclusively used by its users to download, store, and playback infringing material. The court rejected MP3tunes' argument that contributory liability should not be imposed because its servers and lockers have substantial non-infringing uses. Like in Arista Records LLC v. Usenet.com, Inc., 633 F. Supp. 2d 124, 155 (S.D.N.Y. 2009), the court reasoned, MP3tunes was aware of the infringement and had an ongoing relationship with its users, as it allowed them "to continue to store and access [the infringing] works on its servers." MP3tunes at 25.

Direct Infringement Claims

The court held that Robertson was directly liable for the songs he sideloaded but did not find MP3tunes vicariously liable for the songs sideloaded by other employees and executives, as EMI failed to prove that the sideloading took place in the course of their employment. The court also denied summary judgment on EMI's claim that MP3tunes' use and storage of album cover art infringes its copyrights, finding genuine issues of fact as to whether MP3tunes' conduct breached its license agreement with Amazon.com. Lastly, the court rejected EMI's argument that MP3tunes' use of an alleged "master copy" to rebroadcast songs violates EMI's public performance right under 17 U.S.C. § 106(4). According to the court, MP3tunes does not use a "master copy" storage system. "Instead, MP3tunes uses a standard data compression algorithm that eliminates redundant digital data," which "preserves the exact digital copy of each song uploaded to MP3tunes.com." MP3tunes at 27. The court distinguished Cartoon Network LP, LLLP v. CSC Holdings, Inc., 536 F.3d 121 (2d Cir. 2008), noting that the defendant in that case was not an Internet service provider, and consequently, was ineligible for safe harbor protection under the DMCA. "In contrast [to Cartoon Network], MP3tunes' online storage system utilizes automatic and passive software to play back content stored at the direction of users. That is precisely the type of system routinely protected by the DMCA safe harbor." MP3tunes at 27.
Disclaimer This document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy. ©2014 The Bureau of National Affairs, Inc. All rights reserved. Bloomberg Law Reports ® is a registered trademark and service mark of The Bureau of National Affairs, Inc.

To view additional stories from Bloomberg Law® request a demo now