X Clearly Profits from Widespread Music Piracy, Labels Argue

Earlier this year, Universal Music, Sony Music, EMI and others filed a complaint at a Nashville federal court, accusing Elon Musk’s X Corp of “breeding” mass copyright infringement.

 

The company behind X allegedly fails to properly respond to takedown notices and lacks a proper termination policy for repeat infringers.

 

As a result, X is reportedly rife with music piracy. This activity generates many millions of views which are monetized by the social media platform, while rightsholders receive no compensation for the use of their works.

Motion to Dismiss

X doesn’t agree with these characterizations at all. A few weeks ago, the social media platform filed a motion to dismiss, refuting all piracy allegations.

 

The complaint argues that X is liable for direct infringement, and is contributorily and vicariously liable for the copyright-infringing activities of its users. However, X’s attorneys contested all three claims.

 

With more than a quarter billion dollars in potential piracy damages on the line, the music companies are not backing down. They responded to X’s motion to dismiss by pointing out that all counterarguments fail. As such, the case should continue as is.

 

“The motion to dismiss filed by Defendant X Corp. should fail in its entirety,” the music companies write, before going into further detail.

Different Interpretations

Both parties highlight existing jurisprudence from different angles. X, for example, insists that a direct copyright infringement claim requires non-automated and intentional acts by a defendant, while its alleged wrongdoing mostly relates to passive and automated algorithms.

 

The music companies see things differently. Citing the Aereo case, among others, they note that automation doesn’t shield online platforms from infringing public performance rights.

 

“Aereo and the cases cited below foreclose X’s argument that the automated aspects of its system or the end user’s role in selecting which content to upload or access insulate it from direct liability here.

 

“[A]utomation is not a talisman that precludes direct liability, as X asserts,” the music companies add, concluding that X violated their public performance rights.

 

Even if volitional conduct is required to support a direct copyright infringement claim, the music companies believe that their complaint is sufficient. For example, X intentionally created a feature that supports music streaming and encouraged users to upload content directly to the platform.

 

In addition, X’s alleged failure to properly take down infringing content and the subsequent uploads of repeat infringers can also be seen as direct infringements of public performance rights.

Contributory and Vicarious Infringement

The parties also differ in their interpretations of contributory and vicarious copyright infringement. Musk’s lawyers argue that the plaintiffs failed to show that X took active and intentional steps to encourage infringement, something the music companies contest.

 

In their opposition brief, the publishers point out that intent isn’t a requirement under U.S. copyright law; material contribution to copyright infringement should be sufficient to state a claim.

 

Responding to the vicarious copyright infringement allegations, X disputes the notion that it financially profits from copyright infringing activities on is platform and that it has the ability to do anything about it.

 

Again, the music companies see things differently and argue that their claims are sufficient to survive a motion to dismiss.

‘Profiting from Piracy’

For vicarious liability to exist, a rightsholder must show that financial benefits are triggered by the infringing activity. That is the case here, the music companies argue, due to the presence of advertising.

 

The complaint showed how advertisements were shown next to copyright infringing content. This suggests that more infringements should directly lead to more advertising revenue.

 

“The causal relationship between the infringement of Plaintiffs’ works and X’s profits could not be more direct. When X runs ads in connection with infringing video content, money flows into its pockets,” the music companies write.

 

Music Companies Oppose

 

In addition, these infringements could draw more users to the platform or create more engagement. Both have the potential to increase advertising revenues.

 

“The ability to view and post infringing content draws users to X’s platform, the increased engagement brings X more advertising revenue, and X’s service would be less attractive if it properly policed infringement on its platform.”

 

All in all, it’s clear that both parties have an entirely different view on the copyright infringement claims. It is now up to the District Court in Nashville, Tennessee, to decide whether the case can move forward.

 

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A copy of the music companies’ opposition to X’s motion to dismiss is available here (pdf)