IP Law Daily Record companies plead infringement claims against ISP in music piracy case
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Tuesday, September 1, 2020

Record companies plead infringement claims against ISP in music piracy case

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

Claims for contributory and vicarious infringement were adequately stated against the ISP on whose network the infringement occurred but not against a management company that provided services to the ISP.

In a suit by record companies that produce the great majority of commercial songs in this country alleging that an Internet services provider (ISP) infringed their copyrights by failing to halt widespread online piracy by its users, a claim for contributory infringement against the ISP survived a motion to dismiss because the allegations sufficiently established that the ISP knew of the infringement and had the means to stop it but failed to do so, a New Jersey federal district court has ruled. The court also denied the ISP’s motion to dismiss a claim for vicarious infringement because the allegations sufficiently established that the ISP profited from the direct infringement while declining to stop it. The court, however, dismissed contributory and vicarious infringement claims against a company that provided management services to the ISP because the "threadbare" allegations failed to establish that the management services company was contributorily or vicariously liable for the infringement (UMG Recordings, Inc. v. RCN Telecom Services, LLC, August 31, 2020, Shipp, M.).

Background. A collection of record companies, including UMG Recordings, Capitol Records, Sony, Arista Records, Atlantic Recording, Bad Boy Records, and Warner Records, which produce, manufacture, distribute, sell, and license most of the songs in the U.S., have sued various ISPs around the country, charging them with failing to prevent their subscribers from pirating the copyrighted music. In this case, the record companies sued RCN Telecom Services, LLC, and its affiliates, as well as the management services company Patriot Media Consulting, alleging contributory infringement and vicarious infringement against both defendants. Both defendants filed motions to dismiss.

Direct infringement. The allegations clearly established direct infringement by the ISP’s customers. By one estimate, 99.97% of all non-pornographic files distributed through the BitTorrent file-sharing system infringed copyrights. A tracking service hired by the music producers had established that 36,733 of the ISP’s customers had engaged in repeated infringement.

Contributory infringement—ISP. Having established direct infringement and the existence of valid copyrights in the pirated music, the music producers, to establish contributory infringement against the ISP, were required to sufficiently allege (1) that the ISP knew that its users were infringing and (2) that the ISP materially contributed to or induced the infringement.

Knowledge. The court concluded that the music producers’ allegations were sufficient to establish that the ISP had knowledge of the infringement. For starters, a piracy tracking company hired by the music producers sent five million notices to the ISP with the date, time, and content of the infringement. At the very least, that meant that the ISP had reason to know of the infringement.

Material contribution. Mere knowledge of infringement is not enough, in the absence of material contributions to the infringement. Where, however, a computer system operator learns of the infringement and fails to purge the material from the system, the operator can be liable for contributory copyright infringement. Similarly, it can be liable if it fails to take simple measures to stop the infringement once it has knowledge. The court concluded that the music producers had satisfied their requirements by pleading that the ISP materially contributed to the infringement by continuing to provide its network and the facilities necessary for its subscribers to commit repeated infringement. The ISP had the means to withhold that help but it failed to do so. Thus, the specific act was the continued providing of internet services to the subscribers, which meant that this was more than a simple failure-to-act case.

Because both knowledge and material contribution had been pleaded adequately, the motion to dismiss the contributory infringement claim was denied.

Vicarious infringement—ISP. Vicarious infringement occurs when a party profits from direct infringement while declining to stop it.

Right to supervise. Clearly, the court said, the ISP had the ability to control, supervise, or terminate the accounts of its subscribers. By pleading that they did, the music producers sufficiently established that the ISP had the right and ability to supervise the infringers.

Financial interest. The courts are split on whether a pleading is required to allege that the infringing activity is a draw or the draw. Given the uncertainty either way, the court ruled that the ISP had failed to carry its burden that no claim had been presented. Thus, the allegation that the ISP financially benefited from its subscribers’ repeated infringement was sufficient to defeat the motion to dismiss the claim for vicarious infringement.

Management service’s motion. In contrast to the denial of the ISP’s motion to dismiss both the contributory infringement and vicarious infringement claims, the court granted the management services company’s motion to dismiss on both counts. The allegations against the management services company were vague and conclusory, with the court referring to them as "threadbare." For example, no allegations existed that the management services company had knowledge of the infringement. Furthermore, the complaint failed to allege that the management services materially contributed to the infringement in any way. As for vicarious infringement, the complaint never established that the management services company had the ability to control any of the subscribers or to profit from the infringement.

The court, therefore, denied the ISP’s motion to dismiss on both counts, and it granted the management services company’s motion to dismiss on both counts without prejudice.

This case is No. 3:19-cv-17272-MAS-ZNQ.

Attorneys: George C. Jones (McElroy, Deutsch, Mulvaney & Carpenter, LLP) for UMG Recordings, Inc., Capitol Records, LLC, and Sony Music Entertainment. Edward Frederick Behm (Armstrong Teasdale LLP) for RCN Telecom Services LLC, RCN Telecom Services of New York, LP, and RCN Capital Corp.

Companies: UMG Recordings, Inc.; Capitol Records, LLC; Sony Music Entertainment; RCN Telecom Services LLC; RCN Telecom Services of New York, LP; RCN Capital Corp.

MainStory: TopStory Copyright TechnologyInternet GCNNews NewJerseyNews

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