A major battle over cloud-music services has been resolved, and on balance, it looks like a pretty solid win for the small music-locker service run by MP3tunes. However, the service and its founder Michael Robertson were found liable for infringing copyright on hundreds of songs, because it didn’t go far enough in responding to takedown letters sent by the music label EMI.
This a high-impact case with ramifications that go way beyond Robertson’s relatively small music-locker service. Three tech giants-Apple (NSDQ: AAPL), Google (NSDQ: GOOG), and Amazon-have all launched cloud-music services lately, and Amazon (NSDQ: AMZN) and Google both did so without the recorded-music industry’s consent. The fact that MP3tunes was found to have mostly been protecte by a legal “safe harbor” in this case bodes well for those other music services in any future legal battles.
Where MP3tunes won. For the most part, the service was found to have been protected by the “safe harbor” rules of the Digital Millennium Copyright Act, or DMCA. Essentially, that law says that if an online service follows a few rules-like responding to takedown notices and terminating the accounts of repeat infringers-it can be immunized from copyright lawsuits over the actions of its users. MP3tunes kicked out repeat infringers (153 deleted accounts in all) and responding promptly to DMCA takedown notices.
Today, the DMCA safe harbor looks stronger than ever. The mp3tunes ruling is the third federal court ruling finding that an online service that followed the “rules of the road” couldn’t be shut down with copyright lawsuits. Other recent DMCA “safe harbor” wins were a 2009 ruling in favor of video-sharing service Veoh and, earlier this year, YouTube’s win against Viacom (NYSE: VIA). Both the Veoh and YouTube rulings are now being argued to appeals courts (and we can expect the mp3tunes case to take the same route.)
The big takeaway here is that it’s content companies, not online services, that are going to have to be the “copyright cops” of the digital age-and they’ll have to absorb the costs of that policing. The judge overseeing the case ruled that EMI’s vague demand that MP3tunes simply take down all EMI content wasn’t good enough to get MP3tunes in trouble. The record label had to send legally proper takedown notices that included the exact web addresses (the URLs) of the allegedly infringing content.
“If enabling a party to download infringing material was sufficient to create liability, then even search engines like Google or Yahoo! (NSDQ: YHOO) would be without DMCA protection,” writes U.S. District Judge William Pauley. “In that case, the DMCA’s purpose-innovation and growth of internet services-would be undermined.” (The full order is embedded below.)
Where MP3tunes lost. This case protected mp3tunes against vague allegations of piracy by the record labels. But there were also some very specific requests that came in the form of three letters sent in 2007, some months before this lawsuit was filed. In those letters, EMI asked MP3tunes to remove hundreds of songs it said were downloaded illegally through Sideload, the MP3 search engine that was part of MP3tunes. Even though MP3tunes quickly disabled the links to those songs, preventing more users from accessing them, it didn’t go into users’ lockers to actually delete the songs.
Today’s order says that mp3tunes should have taken that extra step and actually deleted the files from users’ lockers. Because it didn’t, MP3tunes is liable for infringing copyright, specifically for the songs mentioned in EMI’s takedown notices.
The ruling also dings founder Michael Robertson, who is named as a defendant, personally. Robertson was a user of mp3tunes and Sideload as well as founder of the company. Robertson was found liable for EMI songs that he personally downloaded with Sideload. However, that’s not much; EMI claims that 171 of its recordings were “sideloaded” by mp3tunes executives and employees in total, which means Robertson downloaded dozens of songs, at most.
Robertson, by the way, has a history of high-stakes copyright litigation. His first venture, MP3.com, was sued by Universal Music Group and ultimately shut down.
How much will MP3tunes be on the hook for? We don’t know how many songs were in the takedown notices, but it’s in the hundreds. The first of three letters is known to have 350 EMI songs listed; but the record available doesn’t state how many songs were in the second two letters. Because copyright infringement has enormous cash penalties, being found liable for infringing hundreds of songs is still potentially devastating; even unintentional infringemment can be penalized by up to $30,000 per work. So the company could still be facing a potential multi-million dollar judgment, despite the fact that it won the overall case.
Robertson sent out a statement this afternoon calling today’s ruling “definitely a victory for cloud music and MP3tunes’ business model after a multi-year litigation battle.” He added: “Those in the industry that are building or contemplating personal music service like Amazon, Google, Grooveshark and Dropbox will surely have renewed confidence in offering similar unlicensed services.” As to the part of the case that mp3tunes lost, Robertson writes “even in those areas we would suggest that the facts are inconsistent with the court’s ruling and are exploring appeal options.”
An EMI spokesperson sent an e-mailed statement that strongly implies the label will be appealing what it lost:
We are pleased that MP3tunes and Michael Robertson have been held liable for infringing hundreds of sound recordings and musical compositions through their Sideload and MP3tunes websites… At the same time, we’re disappointed that the Court found that MP3tunes was entitled to a safe harbor for some of its conduct under the DMCA. EMI believes that companies like MP3tunes, which knowingly build a business based on stolen music, should not be entitled to any DMCA safe harbor defense, and we’re evaluating our options to seek review of those portions of the decision. We will continue to fight – in this case and in the future – for the rights of our artists and writers, and to ensure that they are always properly compensated every time their music is used in a commercial setting.”