Music Publishers File Appeal Brief in P2P Infringement Case
August 18, 2003. The National Music Publishers Association (NMPA), representing Jerry Liebler and other music publishers and songwriters, and the Recording Industry Association of America (RIAA) and Motion Picture Association of America (MPAA), representing MGM and other movie and record companies, filed appeal briefs with the U.S. Court of Appeals (9thCir) in Liebler v. Grokster and MGM v. Grokster.
Metro Goldwyn Meyer (MGM), and other movie companies, and various record companies, filed a complaint in the District Court against Grokster, Streamcast and Kazaa alleging copyright infringement, in violation of 17 U.S.C. § 501. They allege contributory and vicarious infringement. No direct infringers -- the users of the peer to peer networks -- were not named as defendants in this action.
In addition, professional songwriters and music publishers filed a class action complaint against the same defendants alleging contributory and vicarious infringement. The two actions were consolidated. The parties filed cross motions for summary judgment regarding the current versions of software provided by Grokster and Streamcast, but not by Kazaa.
On April 25, 2003, the U.S. District Court (CDCal) issued its opinion in holding that Grokster's and Streamcast's peer to peer file copying networks do not contributorily or vacariously infringe the copyrights of the holders of music and movie copyrights. See also, story titled "District Court Holds No Contributory or Vicarious Infringement by Grokster or Streamcast P2P Networks" in TLJ Daily E-Mail Alert No. 650, April 28, 2003.
The District Court reasoned that to be held contributorily liable, the defendants must have "knowledge" of the infringing activity. The District Court, unlike the Appeals Court in the Napster case, found that the defendants do not possess "knowledge" that their networks or being used to infringe copyrights. The District Court also wrote that to be held liable vicariously, the defendants must have the "right and ability to supervise the infringing conduct". It found that they did not.
Both the NMPA and the MPAA/RIAA appealed to the Ninth Circuit. The Appeals Court has consolidated the two appeals.
The MPAA/RIAA brief was filed under seal. The NMPA brief is also under seal. However, the NMPA has released a public redacted version of its brief [45 pages in PDF].
The NMPA wrote that "This lawsuit is about MusicCity's and Grokster's knowing operation of illicit commercial businesses that actively facilitate, materially contribute to, and encourage the wholesale infringement of Appellants' copyrighted works. Like the now defunct and notorious Napster service, MusicCity and Grokster operate unlicensed, peer-to-peer Internet ``file-sharing´´ services. Their business model depends upon their millions of end-users offering a veritable treasure trove of copyrighted music and motion pictures for downloading by others -- all for free and without any compensation to the copyright owners."
Knowledge. The NMPA argues in its brief that "The record indisputably demonstrates that MusicCity and Grokster have actual knowledge of infringing activity" and are therefore contributorily liable.
The brief elaborates that "MusicCity and Grokster, however, claim that they do not ``know´´ about infringements because their services encrypt the specific content downloaded by users and ``outsource´´ the central indexing/directory function, enabling MusicCity and Grokster to claim a lack of awareness of what is being downloaded at any given time. MusicCity's and Grokster's profession of ignorance rings hollow, particularly where they have taken deliberate steps to shield themselves from information about the infringements taking place every day on their services. Because the record establishes that, at best, MusicCity and Grokster have ``willfully blinded´´ themselves to these infringements, the law deems them to have ``actual´´ knowledge of the infringements occurring on their services."
Sony Betamax. The NMPA brief also argues that "The District Court ignored relevant evidence in holding that there were substantial non-infringing uses of MusicCity's and Grokster's services that are commercially significant", and therefore, "the Sony-Betamax decision is not a defense to MusicCity's and Grokster's conduct."
The Supreme Court held in Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), that the "sale of video cassette recorders (``VCR´´s) did not subject Sony to contributory copyright liability, even though Sony knew as a general matter that the machines could be used, and were being used, to infringe the plaintiffs' copyrighted works. Because video tape recorders were capable of both infringing and ``substantial noninfringing uses,´´ generic or ``constructive´´ knowledge of infringing activity was insufficient to warrant liability based on the mere retail of Sony’s products."
The MPAA brief argues that while the defendants submitted declarations on this issue, they did not address the extent of non-infringing uses. It argues that, to the contrary, "Appellants also introduced uncontroverted evidence in the District Court demonstrating that the overwhelming and primary use of the services is infringement".
Rationale for Secondary Liability. The MPAA brief next argues that imposing liability in these cases would be consistent with the rationales behind secondary liability because MusicCity and Grokster profit from illegal activity. The brief states that "the District Court's own assessment that MusicCity and Grokster know that their ``user base in the tens of millions´´ commits millions of acts of direct infringement, and that they ``may have intentionally structured their businesses to avoid secondary liability for copyright infringement,´´ the District Court concluded that MusicCity and Grokster were not liable as a matter of law. That result perverts the very meaning and purpose of secondary liability for copyright infringement."
"The District Court's Order effectively holds that a defendant may knowingly create a business that profits from widespread copyright infringement, refuse to make any effort to stop or limit the infringement, and escape any consequence for this deliberate conduct. This result makes a mockery of copyright law", according to the MPAA.
Legislative Balance. Finally, the MPAA brief argues that the District Court opinion deprives songwriters and publishers of the exclusive rights granted by the Congress, and threatens to undermine the statutory scheme for encouraging the creation and dissemination of musical works.
The brief states that "The District Court’s Order upends that carefully calibrated balance, and thus thwarts Congress’s express mandate. By acquitting the commercial services that exploit the rampant infringement on their services for profit, the court’s decision effectively deprives songwriters and music publishers of the exclusive right that Congress expressly gave them to exploit their works on the Internet, leaving the thousands of songwriters and music publishers with no realistic recourse to protect their copyrights. The Order creates an unprecedented standard for secondary copyright liability that compels copyright owners to police the conduct of millions of individual users of MusicCity's and Grokster's Internet services and pursue individual enforcement actions against private individuals."
The MPAA is represented by Carey Ramos, Aidan Synnott, and Theodore Cheng of
the law firm of Paul Weiss Rifkind Wharton &
Garrison, and by Kelli Sager, Andrew Thomas and Jeffrey Blum of the law firm
of Davis Wright Tremaine.