3 Reasons MP3Tunes Matters to Copyright

MP3Tunes LogoOn the surface, MP3Tunes might seem like a bizarre footnote to copyright history. The seven-year-old case deals with a now-bankrupt company that operated what would today be considered a dated service.

However, the case could actually be one of the most important copyright cases in several years, in particular considering the lingering questions left behind due to the settlement in the Viacom/YouTube case.

If you are a host or operate a service where users may upload infringing material, this is a case that you need to study closely as it may be changing the dialog on safe harbor (the rules that limit liability of hosts when their users infringe) and the role that online service providers have when it comes to copyright.

However, to see why this is the case, we have to first look at the lawsuit itself and see how we got where we did.

Background of the Case

MP3Tunes was an early music locker/streaming service. It provided users a way to upload tracks from various sources, including MP3s posted publicly on the Web, and access/stream them at a later time.

The company also ran a sister site, Sideload.com, which was an MP3 search engine. It would find publicly-available files on the Web and then “sideload” them into the users MP3Tunes account. That search database was filled with the URLs that other users took advantage of to place content in their MP3Tunes accounts.

The record label EMI initially approached with a DMCA notice asking them to remove a series of infringing songs and websites from their search terms. EMI also asked the company to remove all of their songs from the service. Though MP3Tunes complied with part of the notice, removing infringing sites from its search index, but did not remove any music from its users lockers an sought further clarification.

This prompted EMI to band with other record labels to sue MP3Tunes. In an unusual step, they named Michael Robertson, the company’s founder and chief executive, as a defendant separately from the company.

In 2011 the judge handed down a summary judgment ruling that was widely seen as a victory for MP3Tunes. It found that, while MP3Tunes was liable for the music files it was notified of and failed to remove, the service enjoyed safe harbor protection and had no broad liability.

However, that victory was very short lived. After the Second Circuit Court of Appeals ruled in the Viacom v. YouTube case that a host could be denied safe harbor protection if it were “willfully blind” to copyright infringement, the summary judgment was withdrawn later that year and the case moved forward on those issues.

And it is on those issues the jury recents offered a verdict on, finding both MP3Tunes and Robertson liable for copyright infringement due to the fact they were willfully blind to the copyright infringements, making them the first case on willful blindness to reach a verdict and making MP3Tunes the first defendant to be held liable under that theory.

Reason 1: Willful Blindness

The first reason the case is important is fairly obvious, they are the first service provider to be found liable for copyright infringement and be denied safe harbor protection due to willful blindness.

This adds a completely new metric to DMCA safe harbor, one hosts had never been forced to consider.

For hosts, this means that obtaining and maintaining safe harbor status goes beyond having a DMCA agent and removing infringing works after notification. They now can be found liable if they are deliberately ignoring copyright issues on their service and are doing nothing about them.

For copyright holders, this presents an opportunity tackle sites that hide behind the DMCA, using it as a shield from liability while they develop services that they know are havens for infringement.

Reason 2: Personal Liability

The second issue is that it wasn’t just MP3Tunes that was found liable, it was also their CEO, Michael Robertson.

Normally, when a company does something unlawful, such as infringe copyright, the founders and employees of the company are not considered liable personally, just the company itself. While it is not unheard of for a decision-maker’s actions to be considered outside the bound of his employment and, thus, open for personal liability, it’s rarely applied in copyright cases.

This is especially important in this case as Robertson, personally, is very wealthy. However, MP3Tunes filed for bankruptcy in 2012 and likely has no assets of value.

As such, the only way the record labels are likely to see any damages is from Robertson himself.

More importantly for future cases, this one likely sets up a path to hold the executives of certain hosting services personally liable, raising the risk for setting up questionable services.

Reason 3: Pre-1972 Sound Recordings

We’ve talked before about the mess that is pre-1972 sound recordings, which do not currently enjoy federal copyright protection and are instead protected under the old state system. Though not part of today’s ruling, MP3Tunes was one of the first cases to test whether DMCA safe harbor applied to such sound recordings, with the court ruling that it does.

While that ruling is a moot point now because the jury found that MP3Tunes did not enjoy safe harbor protection at all, for sound recordings of any era, the issue is coming up again with Groovehsark and elsewhere.

As Congress is in the middle of its review of copyright law and the U.S. Copyright Office is seeking comments on pre-1972 sound recordings, this case is likely to be an important one on the issue of pre-1972 sound recordings and safe harbor.

Bottom Line

If you are an online service provider or run a site/service where users upload content, read this carefully: Safe harbor is not the same as it was last year, last month or even last week. This ruling, especially if upheld, will likely drastically change the way safe harbor functions and what your responsibilities are under it.

This ruling was nothing short of an unabashed, complete victory for the record labels. This is the judgment that Viacom had wanted in its lawsuit against YouTube and it is a victory that was snatched from the jaws of near-certain defeat.

Due to a ruling in a separate case, the record labels were able to turn around a case they had lost and have likely rewritten some of the rules on DMCA safe harbor in the process.

Any host and any copyright holder not familiar with this case needs to be, as it is going to be one of the most important rulings for a long time, especially on the issue of safe harbor.

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