IP Law Daily Music producers assert vicarious copyright infringement claim against Charter Communications over P2P file-sharing
Thursday, April 16, 2020

Music producers assert vicarious copyright infringement claim against Charter Communications over P2P file-sharing

By Robert B. Barnett Jr., J.D.

The court concluded that the ISP benefits financially by attracting users interested in copyright infringement, who see that Charter makes no effort to police their conduct.

In a claim alleging that Internet service provider Charter Communications engaged in vicarious copyright infringement by allowing file-sharing programs such as BitTorrent to operate on its network, Warner Records and 54 other record companies and music publishers plausibly alleged that Charter profited from direct infringement while declining to exercise a right to stop or limit the infringing activity, the federal district court in Denver has ruled. As a result, the court has accepted a magistrate judge’s recommendation that Charter’s motion to dismiss be denied because Warner and the others have pleaded a valid claim for vicarious copyright infringement (Warner Records Inc. v. Charter Communications, Inc., April 15, 2020, Jackson, R.).

The dispute arose after music copyright holders became aware that their copyrighted works were being shared for free through online peer-to-peer file-sharing programs, such as BitTorrent. Charter, one of the nation’s largest Internet service providers, has 22 million subscribers. Some subset of Charter’s subscribers routinely share the music through their Internet connection. One report estimated that 11.4 percent of all Internet traffic involved unauthorized distribution of copyrighted works through BitTorrent. Fifty-five music copyright holders sued Charter in Colorado federal court, seeking to hold Charter responsible for infringement activities occurring on its service. (Other ISPs have been sued in other cases.) Charter filed a motion to dismiss. The magistrate judge recommended that the motion be denied on the ground that the complaint adequately stated a claim for vicarious copyright infringement. In reaching his decision, the magistrate concluded that Charter (1) incurred a direct financial benefit from the alleged infringement and (2) had the ability to control the infringement. Charter objected to the recommendation.

Direct financial benefit. On the issue of direct financial benefit, the question was how much of a draw the infringing conduct was required to be. The magistrate had concluded that the infringing conduct need be only a draw. Charter argued that the magistrate had misapplied the rule, which it said requires that the infringing conduct be the attracting factor. Agreeing with the magistrate’s interpretation, the court concluded that Charter had misread the law. The case that Charter cited, rather than standing for the proposition that the infringing conduct be the attracting factor, stood for the proposition that subscribers must be attracted to Charter’s services in part because of their ability to infringe copyrights. In any event, the court noted, no Tenth Circuit cases had relied on the case that Charter cited. Instead, the Tenth Circuit has relied on cases stating that the infringing use must be merely something "that customers value" rather than be a draw to subscribe.

Charter also argued that it did not receive any financial benefit from infringement because its revenue was the same regardless of whether users infringe copyrights. The court concluded, however, that Charter does benefit by attracting users who may want to infringe copyrights. And they may want to pay the higher rates for the faster service for the purpose of infringing copyrighted music. Moreover, it is enough for pleading purposes if the infringing users constitute only a "small draw" in proportion to Charter’s overall profits. As a result, the court agreed with the magistrate that the copyright holders had established that Charter received a direct financial benefit from the infringing conduct.

Supervision of conduct. Charter also argued that it had no practical ability to supervise or control its subscribers’ infringing activities. And, once again, the court ruled that Charter had too narrowly construed the rule. A valid vicarious copyright infringement claim does not require proof that Charter can identify, control, and eliminate all infringers and infringing activity. It only requires allegations that Charter has the practical ability to stop or limit infringement. In this case, the court concluded, Charter does have such an ability because it can cancel their account and block their internet access through Charter. In fact, the copyright holders alleged that, when the copyright holders identified particular infringers in their infringement notices, Charter terminated the infringers’ accounts. "This is sufficient to allege that Charter has the ability to control infringement," the court said.

The court, therefore, adopted the magistrate’s recommendation and denied Charter’s motion to dismiss.

This case is No. 1:19-cv-00874-RBJ-MEH.

Attorneys: Jeffrey M. Gould (Oppenheim & Zebrak LLP) and Jonathan Michael Sperling (Covington & Burling LLP) for Warner Records Inc., Atlantic Recording Corp., and Bad Boy Records LLC. Craig D. Joyce (Fairfield & Woods, PC) for Charter Communications, Inc.

Companies: Warner Records Inc.; Atlantic Recording Corp.; Bad Boy Records LLC; Charter Communications, Inc.

MainStory: TopStory Copyright TechnologyInternet GCNNews ColoradoNews

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