Last year several major record labels, represented by the RIAA, filed a lawsuit in a Texas District Court, accusing ISP Grande Communications of turning a blind eye on its pirating subscribers.
According to the RIAA, the Internet provider knew that some of its subscribers were frequently distributing copyrighted material, and accused the company of failing to take any meaningful action in response.
Grande disagreed with this assertion and filed a motion to dismiss the case. The ISP argued that it doesn’t encourage any of its customers to download copyrighted works, and that it has no control over the content subscribers access.
The Internet provider admitted that it received millions of takedown notices through the piracy tracking company Rightscorp. However, it believes that these notices are flawed and not worthy of acting upon. It was not keeping subscribers on board with a profit motive, as the RIAA suggested.
A few days ago US Magistrate Judge Andrew Austin issued his “report and recommendation” on the motions to dismiss, which brings some good and bad news for both sides.
First of all, Judge Austin recommends granting the motion to dismiss the piracy claims against Grande’s management company Patriot Media Consulting, which is also listed as a defendant.
According to the order, the RIAA failed to show that Patriot employees were involved in the decisions or actions that led to the infringements, only that they may have been involved in formulating Grande’s infringement related policies.
“This is a far cry from showing that Patriot as an entity was an active participant in the alleged secondary infringement,” Judge Austin writes.
Moving to Grande Communications itself, Judge Austin recommends dropping the vicarious infringement claim, as Grande requested. To show vicarious infringement, the RIAA would have to prove that the ISP has a direct financial interest in the infringing activity. That is not the case here.
The record labels argued that the availability of copyrighted music lures customers, but the Judge found this allegation too vague, as it would apply to all ISPs.
“There are no allegations that Grande’s actions in failing to adequately police their infringing subscribers is a draw to subscribers to purchase its services, so that they can then use those services to infringe on UMG’s (and others’) copyrights,” Judge Austin argues.
“Instead UMG only alleges that the existence of music and the BitTorrent protocol is the draw. But that would impose liability on every ISP, as the music at issue is available on the Internet generally, as is the BitTorrent protocol, and is not something exclusively available through Grande’s services.”
While the above is good news for the Internet provider, the report and recommendation opt to keep the contributory infringement claim alive. Contributory copyright infringement happens where a defendant intentionally induces or encourages direct infringement.
Grande argued that Rightcorp’s notices were not sufficient to show that copyrighted material was ever downloaded, but Judge Austin disagrees. The RIAA has made a “plausible claim” that the ISP’s subscribers are infringing the labels’ copyrights.
“It would be inappropriate to dismiss the case based on factual allegations Grande makes about the Rightscorp notices and system, without any evidence to back those up,” Judge Austin’s recommendation reads.
In addition, Grande also argued that it’s protected from a secondary copyright infringement claim under the “staple article of commerce” doctrine, as “it is beyond dispute” that ISPs have numerous non-infringing uses.
Referring to the legal case between BMG and Cox Communications, Judge Austin says that this isn’t as clear as Grande suggests.
“The Court acknowledges that this is not yet a well-defined area of the law, and that there are good arguments on both sides of this issue,” the recommendation reads.
“However, at this point in the case, the Court is persuaded that UMG has pled a plausible claim of secondary infringement based on Grande’s alleged failure to act when presented with evidence of ongoing, pervasive infringement by its subscribers.”
The recommendation, therefore, is to deny the motion to dismiss the contributory infringement claim against Grande. If the U.S. District Court Judge adopts this position, it would mean that the case is heading to trial based on this claim.
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Judge Austin’s full report and recommendations filing is available here (pdf).
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