Record Labels Urge Court to Uphold $47 Million Piracy Liability Verdict

Late 2022, several of the world’s largest music companies including Warner Bros. and Sony Music prevailed in their lawsuit against Internet provider Grande Communications.

 

The record labels accused the Astound-owned ISP of not doing enough to stop pirating subscribers. Specifically, they alleged that the company failed to terminate repeat infringers.

 

The trial lasted more than two weeks and ended in a resounding victory for the labels. A Texas federal jury found Grande guilty of willful contributory copyright infringement, and the ISP was ordered to pay $47 million in damages to the record labels.

$47 Million Appeal

This September, Grande filed its opening brief in which it again argued that the lower court reached the wrong conclusion. Internet providers shouldn’t be held liable for pirating customers based on third-party allegations, the company noted.

 

“This appeal presents important questions of first impression in this Circuit about whether, and in what circumstances, an internet service provider may be held secondarily liable for the conduct of users of its service,” the ISP wrote.

 

Among other things, the ISP believes that it shouldn’t have to terminate Internet access so easily. This view was supported by several telecom industry groups, who all object to disconnecting subscribers’ internet access based on copyright claims.

Record Labels Counter

In a recent 89-page response brief, the record labels counter Grande’s appeal. According to the music companies, the jury reached a sound verdict that should be upheld on appeal; the alternative would make it almost impossible to tackle the online piracy problem.

 

The labels explain that ISPs play a central role in BitTorrent-based piracy, as they are the only ones who can link an IP-address to a subscriber. This means that when rightsholders or their anti-piracy partners sent infringement notifications to Grande, the ISP was the only party that could address this conduct.

 

Before 2010, Grande did indeed take action against subscribers but when the private equity firm ABRY Partners purchased the ISP, it stopped terminating pirating subscribers. This went against the requirements under U.S. law, the music companies say.

 

“At trial, Plaintiffs demonstrated that Grande understood these legal obligations, but consciously ignored them,” the labels write.

 

“Instead, Grande decided in 2010 to maximize its revenues by continuing to collect subscription fees from subscribers it knew were repeat copyright infringers and providing them with the tools necessary to continue infringing, namely Grande’s high-speed internet services.”

Piracy v.s Profits

Grande could have avoided liability if it had adopted and reasonably implemented policies to terminate repeat infringing subscribers. However, the music companies argue that the ISP chose to increase the company’s profits instead.

 

The rightsholders believe that Grande’s decision was financially motivated. The company reportedly terminated the accounts of many subscribers who failed to pay their bills but took no action against repeat infringers.

 

“For nearly seven years, Grande enabled and facilitated massive copyright infringements by subscribers of its internet services as a result of its conscious decision to provide subscribers it knew were using those services to infringe with the very tools they needed to continue doing so.”

 

Grande now hopes to overturn the massive damages award, but the record labels claim its arguments fail to hold water.

Evidence?

The lawsuit relies on data collected by anti-piracy company Rightscorp which, according to Grande, is insufficient. The rightsholders disagree with that characterization and point out that plenty of support for the evidence was presented at trial.

 

“The trial record is replete with evidence about how Rightscorp reliably detected infringement by Grande’s subscribers, sent Grande more than one million notices of infringement, and downloaded copies of infringing files directly from Grande’s subscribers.”

Pirates and Terrorists

The second point of contention is whether Internet providers should be held responsible for the actions of individual users. This lies at the heart of the contributory copyright infringement concept, which ultimately resulted in the $47 million damages ruling.

 

To support its appeal, Grande draws heavily on the recent Twitter vs. Taamneh ruling, in which the U.S. Supreme Court recently held that the social media platforms aren’t liable for ISIS terrorists who used their services to recruit and raise funds.

 

The Supreme Court rejected the claim that Twitter and others aided and abetted terrorist activity because it didn’t “consciously and culpably” participate in the illegal activity. According to Grande, Internet providers are even further distanced from any wrongdoing.

 

The record labels believe that this ruling shouldn’t be directly translated into a copyright context. If the court applied the ruling here, it would essentially change the concept of contributory copyright infringement based on a case that has nothing to do with copyright.

 

“To rule otherwise would require this Court to conclude that the Supreme Court changed fundamental principles of copyright liability without saying so in a case that was not about copyrights,” the labels note.

 

In addition, they point out that both cases are fundamentally different. In the Twitter case, terrorists didn’t commit their terror attacks on Twitter. However, the contested copyright infringements did take place through Grande’s network.

 

“Unlike in Twitter — where ISIS did not use the social media companies’ services to complete its terrorist attack — this case involves tortfeasors that directly relied on and used Grande’s services to carry out their torts,” the response brief reads.

 

As is often the case in these disputes, the parties have opposing viewpoints that zoom in on aspects that favor their position. It is now up to the U.S. Court of Appeals to decide which party makes the most sense.

 

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A copy of the music companies’ response, countering Grande’s appeal, is available here (pdf).

 

If the court decides to vacate the existing judgment, the music companies also want to raise a counter-appeal, asking the court to clarify that taking affirmative steps to make a copyrighted work available for others to download online violates the exclusive right of distribution.