Wednesday 24 August 2011

Cloud lockers protected by 'safe harbor' provisions

In a potentially highly damaging day for the US content industries, the New York District Court has ruled that digital music 'cloud' lockers don't need licences from record labels to store recorded music and that the operators of digital locker services are protected by the ‘safe harbour’ provisions of the US Digital Millennium Copyright Act, something that will bring cheer to both Amazon and Google who launched their cloud storage services without licences from record labels or music publishers,

The New York District Court handed Capitol Records, part of the EMI Group, a mixed verdict in its lawsuit against MP3tunes, the San Diego music locker service founded by technology entrepreneur Michael Robertson. The lawsuit, filed in November 2007, contended that MP3tunes (and Robertson personally) violated copyright law when they allowed users to find music online and add songs to an online locker service that let them listen to those songs from any Internet connection. In its defence MP3tunes argued that it qualified for a so-called “safe harbor” exemption under the DCMA.

Judge William H. Pauley, III, in the U.S. District Court for the Southern District of New York ruled that MP3tunes did qualify for safe harbor exemption when it responded to requests from EMI and other copyright holders to ban links to sites known to distribute pirated music but gave EMI a partial victory, noting that whilst MP3Tunes did have copyright notices on its site prohibiting the storage of infringing material, a policy of excluding repeat copyright infringers and a takedown service, MP3tunes did not go far enough to enforce copyrights and was guilty of contributory infringement as it also should have deleted the pirated songs from its users' accounts. Whilst MP3tunes would remove identified links to pirate material, it did not delete material from users lockers.

One of the key elements in the case was a feature called, which let MP3Tunes users put any MP3s they found anywhere on the Internet into their locker, on the condition they provided the source URL. EMI contended that it was obvious MP3Tunes condoned (or contribted to) copyright infringement but the court disagreed noting that the DCMA “does not place the burden of investigation on the Internet Service Provider” , that words like “MP3” and “file-sharing” did not automatically mean that material was infringing and and noted that many legitimate services give away “free” songs for promotional and other purposes: “Because of these activities, EMI’s executives concede that internet users, including MP3tunes’ users and executives, have no way of knowing for sure whether free songs on the internet are unauthorized” particularly where songs have been used in online viral marketing campaigns and other give aways.

The ruling specifically says “MP3tunes users alone choose which websites they link to and the songs they sideload and store in their music lockers. MP3tunes does not participate in those decisions. At worst MP3tunes set up a fully automated system where users can chose to download infringing content”

Additionally, the ruling determined that playing back songs stored in a digital locker was not a public performance requiring a license, as EMI contended it was, saying that the service does not use a “master copy” for users to play back music in lockers and indeed the service is “precisely the type of system routinely protected by the DCMA safe harbor”. The Judge also dismissed any immediate summary relief relating to use and storage of album artwork on MP3tunes - MP3tunes links users to so users can see album artwork.

EMI also failed to convince the court that MP3Tunes profited from infringement. The court ruled that the “the financial benefit must be attributable to the infringing activity” saying “While may be used to draw users to and drive sales of pay lockers, it has non-infringing users. Moreover, MP3tunes did not promote infringement. Rather, it removed infringing links… and terminated the accounts of users who blatantly shared copyright files with others.”

The court’s ruling did side with EMI regarding two aspects of It agreed that MP3Tunes had failed to remove some tracks from lockers despite having received a takedown notice, and held the company liable for not doing so for some 350 of the 3,189 tracks EMI had indetified. It further ruled that Robertson is personally liable for songs that he sideloaded into the service, a potentially very expensive decision for Mr Robertson given that US statutory damages apply.

It is believed EMI will appeal the ruling.

Capitol Records, Inc. et al v MP3Tunes LLC et all (2011) 07 Civ 9931

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