Judge Adjusts MP3Tunes Ruling, Blasts Everyone

from the some-good,-some-bad dept

We've been following Capitol Records' (EMI) lawsuit against MP3Tunes and Michael Robertson for a long time now, in part because the lawsuit has been going on forever, with lots of back and forth (and it's still at the district court level!). Back in March, the jury hit Robertson with a bill for over $40 million for his personal involvement with MP3Tunes. As we noted, there were plenty of issues with the ruling, especially with the idea that MP3Tunes was "willfully blind" in creating its music locker. Robertson challenged many of the jury's findings, and we noted that the most important one was the willful blindness.

The judge, William Pauley, has now ruled and it's a mixed bag of just about everything, including the judge berating both parties for their approach to this lawsuit. On the whole, Robertson still loses big time, but not quite as big as before. And, on the issue we found most important -- willful blindness -- the judge has overruled the jury, noting that under the standard in the Viacom v. YouTube case, MP3Tunes was not willfully blind (except for one track where they had been alerted to an infringing copy). That's big and very important, given the potential chilling effects the willful blindness ruling would have had on other startups in the digital locker space.
Red flag knowledge requires awareness of facts that would have made specific instances of infringement objectively obvious to a reasonable person.... General knowledge is insufficient. For example, knowledge that a high percentage of content on a domain is infringing does not establish actual or red flag knowledge of particular instances of infringement.... In this case, MP3tunes lacked even general knowledge. Even if MP3tunes tracked domains posting infringing files, a fact not in evidence..., MP3tunes would still need to investigate how much content the domain hosted before it could calculate what percentage was infringing.

To ascribe red flag knowledge to MP3tunes because it was possible for MP3tunes to research and identify other instances of infringing content hosted by these domains and sideloaded by users would "mandate an amorphous obligation to 'take commercially reasonable steps' in response to generalized awareness of infringement." ... But the DMCA imposes a duty on providers to track repeat infringement by users, not third parties....

The same reasoning disposes of the willful blindness argument. Imputing knowledge to MP3tunes would impose an obligation to affirmatively monitor content, which would contravene section 512(m)'s clear instruction that no such obligation exists.... Therefore, Robertson's motion for judgment as a matter of law is granted as to his liability for secondary infringement of tracks sideloaded by users from these domains.
This is the good news from the ruling. Robertson also more or less won on the issue of whether or not the cover art images that showed up in MP3Tunes were infringing. That was one of the many ridiculous side notes in the whole thing.

One other thing that turned out somewhat well was on the question of whether some of the penalties given to Robertson by the jury were unconstitutionally excessive. This is a claim that has previously been tried (unsuccessfully) in the famed Jamie Thomas Rasset and Joel Tenenbaum trials. But here, it actually worked somewhat. The court goes through the different factors to determine if a monetary award is excessive, given the actual harm, and concludes:
Viewed holistically, the punitive damages award violates due process.
Still, the judge argues there's plenty of reasons to punish Robertson, just not to the punitive damages tune of $7.5 million as the jury originally decided. The court reduces that to $750,000, but offers EMI the chance to hold yet another trial just over this issue (which would only add yet another chapter in this incredibly long saga). And of course, none of this even touches on the possibility of appeals (from both sides), which may still happen...

However, there's plenty of worrisome aspects to this new ruling as well. After the willful blindness issue, our biggest concern was the tertiary liability claims that EMI was making against Robertson. That is, we've now seen that secondary liability is a possible for copyright infringement (i.e., you can be guilty for someone else's infringement), even though that makes little sense. However, in this case, EMI advanced an even more tenuous argument: that Robertson was tertiarily liable for MP3Tunes' secondary liability of its users direct infringement. Unfortunately, the judge says this is fine, arguing that while the judge in the Napster case rejected such a theory, the judge in the Limewire case accepted it, and thus "tertiary liability" is a perfectly reasonable thing. That's going to have some serious chilling effects -- just wait and see.

The court also makes one interesting note concerning the Aereo ruling. EMI sought to use the Aereo ruling as evidence that MP3Tunes was guilty of "public performance" of the works as well, but the judge (thankfully) shut that down, noting that the Supreme Court in Aereo was clear that the ruling only applied narrowly to that specific case:
Plaintiffs also argue that the Supreme court's opinion in Aereo establishes that the third-party websites performed the work publicly. But the Supreme Court expressly excluded "novel issues not before the Court, as to which 'Congress has not plainly marked [the] course.'" ... Because the third-party domains here are not "substantially similar" to a community antenna television provider, they are beyond Aereo's reach.
Phew. Aereo bullet dodged there, for now.

Then we get around to the berating. The judge gets on the EMI execs' cases for how they treated the case, and their ongoing refusal to reveal the dates of the releases of various songs, despite being asked repeatedly. But the real slamming comes for Robertson, who apparently put on quite a show on the witness stand. While that may work in Hollywood movies, or made-for-CNN trials, it doesn't often work in real life, and it appears not to have worked here. The judge's own description of Robertson's appearance indicates that no one bought the performance at all:
This Court observed Robertson's demeanor on the witness stand. No transcript can capture his whole affect; you really had to be there.
The judge then reposts Robertson's somewhat lengthy and bizarre discussion of childhood abuse, which seemed to serve no purpose other than to (try to) tug at the heartstrings of the jury. The court (and the jury) were not impressed:
This seemingly rehearsed, five-minute fable-like narrative left the jury nonplussed and Plaintiffs' counsel shell-shocked. It was a dramatic presentation. Even if true, Robertson's decision to spin this yarn backfired on him. The jury saw it for what it was--a transparent attempt to tug at their heartstrings. Plainfiffs' counsel failed to appreciate what the jury grasped and reflexively moved for a mistrial claiming unfair prejudice. But Robertson's manipulative conduct only prejudiced him and that prejudice was not unfair. In denying Plaintiffs' motion, this Court observed "[j]urors see through performances, and the Oscars are over for this year." The jury's verdict demonstrated that this Court's observation was spot on.
Ouch.

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  • icon
    ACasey (profile), 30 Sep 2014 @ 7:24am

    When will judges learn that owning a filelocker site is not infringement?!

    reply to this | link to this | view in chronology ]

    • icon
      That One Guy (profile), 30 Sep 2014 @ 7:30am

      Re:

      When they stop believing everything the lawyers from the *AA groups tell them is honest and totally unbiased, and start realizing that those individuals couldn't answer something as simple as 'What is 2+2?' without trying to spin the numbers and answer in their favor.

      reply to this | link to this | view in chronology ]

      • identicon
        Zonker, 30 Sep 2014 @ 12:48pm

        Re: Re:

        "What is 2+2?"

        The answer will cost you just $19.99 plus shipping and handling. You will receive a CD with the answer and about a dozen answers to other questions you didn't ask on it.

        (License is non-transferable. You may not share the answer with anyone else. You may not publicly perform the answer. You may not use the answer for any commercial purpose. You may not copy the answer in any form. If you obtain the answer from anyone else, you owe us $150,000 each occurrence in damages. You must install the included DRM kit in order to obtain the answer. Answer not guaranteed to be fit for any purpose. No refunds, exchanges accepted only if the answer is not opened. We reserve the right to change the terms and conditions of this agreement at any time. If you do not accept the new terms and conditions, you must destroy all copies of the answer you received.)

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 1 Oct 2014 @ 1:56am

          Re: Re: Re:

          Remember the wise words of antidirt and Whatever: If you can't afford it, you don't deserve to be smart. Do without, or be a filthy pirate!

          reply to this | link to this | view in chronology ]

  • icon
    Ninja (profile), 30 Sep 2014 @ 7:30am

    They weren't so fast when Google launched their Google Music.

    Granted Google ended up grabbing a license but then again why the fuck they should have a license for something the users (theoretically) already have? "But, but, most files are infringing!" you say. "Bullshit!" I reply, the burden to prove some user is storing infringing files is entirely yours, MAFIAA. Which would be an incredible invasion of privacy to check in the first place. So yeah, how to deal with something most part of society is ok with and isn't changing its mind?

    reply to this | link to this | view in chronology ]

    • identicon
      JEDIDIAH, 30 Sep 2014 @ 7:46am

      It's the art, not the artist.

      You have a full court press by industry shills trying to codify the redefinition of certain key concepts and legal principles. It's constant, unrelenting, and somewhat inescapable.

      They have even poisoned the judiciary for the most part.

      Given a random copy of something, you can't simply "presume guilt".

      reply to this | link to this | view in chronology ]

      • identicon
        Anonymous Coward, 30 Sep 2014 @ 9:22am

        Re: It's the art, not the artist.

        sadly some judges have shown they are for sale to the highest bidder not any notion of honouring their oaths to see justice done

        reply to this | link to this | view in chronology ]

    • icon
      PaulT (profile), 30 Sep 2014 @ 7:53am

      Re:

      Then, of course, if a service simply treats every new play as if the person doesn't own it and pays a royalty every time regardless of their purchase history, they simply bitch that it's not enough (Spotify, Pandora, etc).

      reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Sep 2014 @ 8:15am

    " our biggest concern was the tertiary liability claims that EMI was making against Robertson. That is, we've now seen that secondary liability is a possible for copyright infringement (i.e., you can be guilty for someone else's infringement), even though that makes little sense. However, in this case, EMI advanced an even more tenuous argument: that Robertson was tertiarily liable for MP3Tunes' secondary liability of its users direct infringement. Unfortunately, the judge says this is fine, arguing that while the judge in the Napster case rejected such a theory, the judge in the Limewire case accepted it, and thus "tertiary liability" is a perfectly reasonable thing. That's going to have some serious chilling effects -- just wait and see."

    Has The Supreme Court ever ruled on such matter and if so what did they rule as the outcome? If not then I do hope that this matter is appealed all the way up to The Supreme Court as it would be interesting to see what they rule on the matter.

    reply to this | link to this | view in chronology ]

  • identicon
    zip, 30 Sep 2014 @ 8:18am

    octonary liability

    I'd like to know why they even need to stop on tertiary copyright infringement. Who says it needs to stop there?

    I would propose that websites such as Techdirt are almost certainly guilty of at least octonary liability (perhaps on a massive scale) by linking to sites that link to sites that link to sites ...

    ... that perpetrate copyright infringement.

    So there!

    reply to this | link to this | view in chronology ]

  • icon
    Vincent Clement (profile), 30 Sep 2014 @ 8:21am

    Exactly how has this lawsuit helped Capital Records/EMI in any way, shape or form? There is only one group that benefits from these lawsuits and it's the legal system.

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Sep 2014 @ 9:08am

      Re:

      No, law firms benefit from it, the legal system does not.

      reply to this | link to this | view in chronology ]

      • icon
        ACasey (profile), 30 Sep 2014 @ 10:18am

        Re: Re:

        No no no - the LAWYERS benefit! Gotta pay the bills on that jacuzzi and mansion, after all.

        reply to this | link to this | view in chronology ]

      • icon
        Vincent Clement (profile), 30 Sep 2014 @ 1:19pm

        Re: Re:

        The legal system most definitely benefits from it. When dockets become full, they have to hire more judges, more clerks, more security officers, more of everyone.

        You can't tell me that the employees of the Eastern District of Texas have not benefited from being a friendly ground for IP trolls?

        reply to this | link to this | view in chronology ]

  • icon
    GMacGuffin (profile), 30 Sep 2014 @ 9:36am

    Love Letter to the Appellate Court

    This Court observed Robertson's demeanor on the witness stand. No transcript can capture his whole affect; you really had to be there.

    Given there were discretionary calls here, the appellate review would likely be whether the judge abused his discretion -- a difficult barrier to overcome. An appellate court is generally to defer to the factual findings of the trier of fact (who saw the witness' demeanor, not just the words) -- but sometimes doesn't exactly do that.

    So this sentence is likely intended to serve as a reminder, and to stress that as far as transcripts go, this one in particular is not indicative of how over the top Robertson apparently was.

    reply to this | link to this | view in chronology ]

  • identicon
    wael, 30 Sep 2014 @ 9:58am

    Granted Google ended up grabbing a license but then again why the fuck they should have a license for something the users (theoretically) already have? "But, but, most files are infringing!" you say. "Bullshit!" I reply, the burden to prove some user is storing infringing files is entirely yours, MAFIAA. Which would be an incredible invasion of privacy to check in the first place. So yeah, how to deal with something most part of society is ok with and isn't changing its

    reply to this | link to this | view in chronology ]

  • identicon
    Anonymous Coward, 30 Sep 2014 @ 10:00am

    If Tertiary Liability becomes a thing, does that mean that Hollywood could be sued for the acts of their employees sharing movies?

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
    icon
    antidirt (profile), 30 Sep 2014 @ 11:31am

    The court also makes one interesting note concerning the However, there's plenty of worrisome aspects to this new ruling as well. After the willful blindness issue, our biggest concern was the tertiary liability claims that EMI was making against Robertson. That is, we've now seen that secondary liability is a possible for copyright infringement (i.e., you can be guilty for someone else's infringement), even though that makes little sense. However, in this case, EMI advanced an even more tenuous argument: that Robertson was tertiarily liable for MP3Tunes' secondary liability of its users direct infringement. Unfortunately, the judge says this is fine, arguing that while the judge in the Napster case rejected such a theory, the judge in the Limewire case accepted it, and thus "tertiary liability" is a perfectly reasonable thing. That's going to have some serious chilling effects -- just wait and see.

    There is no such thing as tertiary liability. The court didn't hold Robertson liable as a tertiary infringer; it held him liable applying regular secondary liability analysis. The court merely said that he is jointly and severally liable with the corporation that he ran as its principal--they're both secondary infringers together. And why is it that you think secondary liability "makes little sense"? I'd love to hear that. Do you only think that when it's copyright? Or do you think there should be no secondary liability generally, such as accomplice liability under criminal law?

    reply to this | link to this | view in chronology ]

    • identicon
      Anonymous Coward, 30 Sep 2014 @ 12:26pm

      Re:

      You apparently didn't read the court document.

      Page 8:

      "Accordingly, this Court reiterates its earlier conclusion that a ?tertiary? liability claim is cognizable. And Plaintiffs? established that claim at trial. Accordingly, Robertson?s motion for judgment as a matter of law on this claim is denied."

      Hence Mike's statement, "Unfortunately, the judge says this is fine, arguing that while the judge in the Napster case rejected such a theory, the judge in the Limewire case accepted it, and thus "tertiary liability" is a perfectly reasonable thing."

      reply to this | link to this | view in chronology ]

      • This comment has been flagged by the community. Click here to show it
        icon
        antidirt (profile), 30 Sep 2014 @ 1:00pm

        Re: Re:

        You apparently didn't read the court document.

        Page 8:

        "Accordingly, this Court reiterates its earlier conclusion that a ?tertiary? liability claim is cognizable. And Plaintiffs? established that claim at trial. Accordingly, Robertson?s motion for judgment as a matter of law on this claim is denied."

        Hence Mike's statement, "Unfortunately, the judge says this is fine, arguing that while the judge in the Napster case rejected such a theory, the judge in the Limewire case accepted it, and thus "tertiary liability" is a perfectly reasonable thing."


        I did read it. And I looked up the cites mentioned. The judge put quotes around the word "tertiary" for a reason. He was quoting Robertson's characterization of the liability. Robertson cited the Napster ruling, which did say there is such thing as "tertiary" liability (though without citing any sources as precedent for that strange claim), only to have the judge distinguish it. The judge then cited the Limewire case, where the defendant was held personally liable for the torts of the corporation that he ran:
        It is well established that “[a]ll persons and corporations who participate in, exercise control over or benefit from an infringement are jointly and severally liable as copyright infringers.” Musical Prods., Inc. v. Roma's Record Corp., No. 05–CV–5903, 2007 WL 750319, at *1 (E.D.N.Y. Mar. 7.2007) (quoting Sygma Photo News, Inc. v. High Soc'y Magazine, Inc., 778 F.2d 89, 92 (2d Cir.1985)). “[A]n individual, including a corporate officer, who has the ability to supervise infringing activity and has a financial interest in that activity, or who personally participates in that activity is personally liable for infringement.” Stumm v. Drive Entertainment *438 Inc., 2002 WL 5589, *5 (S.D.N.Y.2002) (emphasis added); see also Aram, Inc. v. Laurey, No. 05 Civ. 8380, 2006 WL 510527, *2 (S.D.N.Y. Mar. 1, 2006). These principles apply equally to claims of direct infringement and claims based on secondary liability. See Capitol Records, Inc. v. Wings Digital Corp., 218 F.Supp.2d 280, 284–85 (E.D.N.Y.2002) (finding that CEO of defendant corporation could be individually liable for contributory and vicarious infringement committed by corporation).
        Arista Records LLC v. Lime Grp. LLC, 784 F. Supp. 2d 398, 437-38 (S.D.N.Y. 2011).

        There is no tertiary liability test because there is no tertiary liability. The issue is whether Robertson is personally liable for what he did while running his corporation. He is. And that was determined by (1) applying secondary liability, and (2) determining whether he could hide behind the corporate veil.

        reply to this | link to this | view in chronology ]

        • identicon
          Anonymous Coward, 30 Sep 2014 @ 3:46pm

          Re: Re: Re:

          As you said, the judge quoted Robertson's characterization of the liability, then offered no correction of the use of the term and no modification of its characterization, and specifically stated that the claim was cognizable.

          Page 7:

          "Robertson contends that there is no legal basis for 'tertiary liability'--that is, Robertson's secondary liability for MP3tunes' secondary liability."

          And again:

          Page 8:

          "Accordingly, this Court reiterates its earlier conclusion that a ?tertiary? liability claim is cognizable. And Plaintiffs? established that claim at trial. Accordingly, Robertson?s motion for judgment as a matter of law on this claim is denied."

          You seem to just have a problem with the phrase "tertiary liability," even though you seem to agree with the concept. You just disagree with the judge's use of Robertson's term for it. That's just semantics.

          reply to this | link to this | view in chronology ]

          • This comment has been flagged by the community. Click here to show it
            icon
            antidirt (profile), 30 Sep 2014 @ 5:45pm

            Re: Re: Re: Re:

            You seem to just have a problem with the phrase "tertiary liability," even though you seem to agree with the concept. You just disagree with the judge's use of Robertson's term for it. That's just semantics.

            I don't agree with the concept generally, and especially I don't agree with it here. The point of calling it "tertiary" liability is to make it seem even more remote than secondary liability. Mike already thinks secondary liability is too remote, and the implication is that this is even more remote than that. It's not. Robertson was the corporation. The actions of the corporation were his own actions. Secondary liability is helping someone else to infringe. "Tertiary" liability is helping someone else who helps someone else to infringe. But Robertson didn't help someone else who helped someone else to infringe. The actions of the corporation were his own actions. It's just secondary liability. He, acting through corporate form, helped someone else to infringe.

            reply to this | link to this | view in chronology ]

            • identicon
              ryuugami, 1 Oct 2014 @ 12:33am

              Re: Re: Re: Re: Re:

              Robertson was the corporation. The actions of the corporation were his own actions.

              Exactly!

              This is why, when (for example) General Motors breaks the law, it's execs go to prison.

              /s

              reply to this | link to this | view in chronology ]

              • This comment has been flagged by the community. Click here to show it
                icon
                antidirt (profile), 1 Oct 2014 @ 5:31am

                Re: Re: Re: Re: Re: Re:

                This is why, when (for example) General Motors breaks the law, it's execs go to prison.

                The same rule for corporate officer liability applies to all corporations, big and small. I'm not sure what your point is.

                reply to this | link to this | view in chronology ]

                • identicon
                  Anonymous Coward, 10 Oct 2014 @ 1:00pm

                  Re: Re: Re: Re: Re: Re: Re:

                  Apparently you missed the point. Corporate officers don't go to jail for the actions of the corporation. Apparently they are only liable for the actions of their corporation if it's an infringement suit.

                  reply to this | link to this | view in chronology ]


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