Legal Lessons Gleaned from Music Industry's High-Profile, File-Sharing Litigation

In his September 2008 retrial order, Judge Davis noted: “While the Copyright Act does not offer a uniform definition of 'distribution,' the [c]ourt concludes that, in light of the examined provisions, Congress's choice to not include offers to do the enumerated acts or the making available of the work indicates its intent that an actual distribution or dissemination is required in [17 U.S.C.] '106(3).” But the judge disagreed with Thomas's claim that distribution to the record-industry's investigator Media Sentry couldn't constitute copyright infringement. Capitol Records Inc. v. Thomas, 579 F.Supp.2d 1210 (D.Minn.2008).

Tenenbaum

On June 15, 2009, the same day the new Thomas trial started, the U.S. District Court for the District of Massachusetts issued a pre-trial ruling in another closely watched file-sharing suit. In the Massachusetts case, District Judge Nancy Gertner dismissed an abuse-of-process counterclaim by defendant Joel Tenenbaum, a
Boston University student. Tenenbaum argued abuse because so many of the industry's suits have been filed against young people unable to pay for lawyers. But Gertner emphasized: “Abuse of process, as the cause of action is defined, does not turn on the identity of the defendants, their ability to hire an attorney, nor their inclination to settle the claims against them. Congress has handed the Plaintiffs a massive hammer to combat copyright infringement, and they have chosen to use it. That choice, whether wise or unwise, does not amount to an abuse of process.” Capitol Records Inc. v. Alaujan, 03-CV-11661-NG.

Yet, calling it “troubling,” Gertner allowed Tenenbaum to add a fair use defense because, the judge believed, “this amendment will not significantly prejudice the Plaintiffs nor substantially delay trial.” By contrast, Judge Davis refused to allow the addition of a fair use defense on the eve of the Thomas trial because he found it would be “highly prejudicial” to the record label plaintiffs.

There have been other recent rulings in the Tenenbaum litigation. In April 2009, in a decision of first impression, the U.S. Court of Appeals for the First Circuit refused Tenenbaum's request to permit the Webcasting of a hearing in his case. In re Sony BMG Music Entertainment, 546 F.3d 1 (1^st Cir. 2009). In May 2009, the District of Massachusetts granted the record labels' request to make a mirror image of Tenenbaum's laptop, though under a protective order that required the labels' computer forensic expert to sign a confidentiality agreement. The protective order also provided Tenenbaum's counsel with an opportunity to object, if he thought it warranted on attorney-client privilege grounds, to information in the expert's report prior to the report's release to record label counsel. Capitol Records Inc. v. Alaujan, 03-CV-11661-NG. Then on June 10, a magistrate for the U.S. District Court for the District of Rhode Island denied the record labels' motion to compel Tenenbaum's parents to allow a hard-drive mirror image to be made of a computer they had purchased after their son left home for college. Sony BMG Music Entertainment v.
Tenenbaum, 1:08-MC-104S.

Minervini

Some computer-user defendants have sought dismissal of file-sharing suits by arguing the complaints weren't specific enough under Rule 8 of the Federal Rules of Civil Procedure. In Loud Records LLC v. Minervini, 08-CV-551-bbc, Frank Minervini, a student at the University of Wisconsin, sought a Rule 8 dismissal. But the U.S. District Court for the Western District of Wisconsin denied the motion on June 3, noting: “In their complaint, plaintiffs allege that they possess exclusive rights to certain copyrighted sound recordings and that without their permission, defendant has used and continues to use a P2P network to download and distribute the copyrighted recordings. In addition, plaintiffs attached to their complaint a list of seven recordings that they have marked with notices of copyright as required by 17 U.S.C. '401 and that defendant allegedly copied or distributed. Contrary to defendant's assertions, the allegations in the complaint meet the requirements of Rule 8 and have provided defendant with sufficient information to allow him to respond.” The court had also noted: “Exhibit A to the complaint identifies the date and time of capture and a list of copyrighted recordings that defendant has downloaded or distributed to the public without plaintiffs' permission.”

Minervini also argued his rights had been violated under the Family Educational Rights and Privacy Act (FERPA), 20 U.S.C. '1232g, when the University of Wisconsin responded to a subpoena from the label plaintiffs, who had the student's ISP address, seeking Minervini's identity. However, the district court explained: “Under '1232g, a university may release so-called 'directory information,' which consists of name, address, telephone listing, date and place of birth ' and other items of information not at issue in this case. It may also release fuller details in response to a judicial order or lawfully issued subpoena, so long as the student and parents (if the student is a dependent) are notified of all such orders or subpoenas in advance of the university's compliance.” The court continued: “Plaintiffs' subpoena to the University of Wisconsin is proper under either exception to the general rule prohibiting the release of student information. The subpoena seeks only defendant's true name, current and permanent addresses and telephone numbers, [e-mail] addresses and medical access control addresses, all of which are items an educational institution may disclose if it has given general notice that it will do so. Defendant has not suggested that the university did not give such notice.”

CFAA Issues

Some file-sharing defendants, including Minervini, contend that labels seeking computer information on the defendants violate the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. '1030. A CFAA violation happens when a party “intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage and loss.” A “protected computer” is one “used in or affecting interstate ' commerce or communication.” “Damage” is defined as “any impairment to the integrity or availability of data, a program, a system or information.” The Western District of Wisconsin found, however, that Minervini hadn't alleged his was a “protected computer” under the Act. The court stated that “because the [file sharing] files that plaintiffs allegedly accessed were accessible by the public, any allegation that the computer should be considered protected or that plaintiffs acted without authorization is tenuous at best.”

On June 2, in Atlantic Recording Corp. v. Raleigh, 4:06-CV-1708 (CEJ), the U.S. District Court for the Eastern District of Missouri dismissed
a an alleged file-sharer's CFAA counterclaim, noting in part that the
defendant “provides no specific facts to explain how her computer was used in or affected interstate commerce. As such, defendant provides a conclusory allegation that her computer is a 'protected computer' within the scope of the CFAA. Finally, defendant alleges that '[plaintiffs'] conduct ' resulted in impairment to the integrity and/or availability of data, a program, a system or information on [her] computer[.]' ' With the exception of a few additional words and punctuation marks, this allegation only contains the statutory definition of the term 'damage.'
See, 18 U.S.C. '1030(e)(8). Moreover, defendant offers no supporting facts to describe any impairment to her computer's data, programs, system, or information. In sum, defendant's unsupported conclusory allegations contain nothing more than 'a formulaic recitation of the elements' of a claim under 18 U.S.C. '1030(a)(5)(C).”

Damages

At play in both the Tenenbaum and Thomas litigations have been whether statutory damages allowed under the Copyright Act are excessive (i.e., up to $150,000 under '504 per willfully infringed work). In his retrial order, Judge Davis had stated that Thomas's “status as a consumer who was not seeking to harm her competitors or make a profit does not excuse her behavior. But it does make the award of hundreds of thousands of dollars in damages unprecedented and oppressive.” (The jury in the first trial assessed a total of $222,000 against Thomas for 24 songs; the second jury made it $1.92 million.)

On the other hand, the Eastern District of Pennsylvania appeared to favor '504 when it refused on May 29, 2009 to dismiss a suit against an alleged file sharer. The Pennsylvania federal court noted the “[c]ourt's reading of the statutory damages provision of the Copyright Act finds that the amount of damages awarded to a successful plaintiff varies considerably ' Moreover, any potential damages may vary drastically, even on a finding of willfulness, since the amount of damages to be awarded, if any, is left to the court's discretion.” Sony Music Entertainment v. Cloud, 08-CV-01200.

In a motion to intervene that the court granted, the U.S. government submitted a “Memorandum in Defense of the Constitutionality of the Statutory Damages Provision of the Copyright Act.” But despite its favorable '504 comments, the district court decided to refrain “at this early phase of the litigation ' from making any specific ruling on the constitutionality of the statutory damages provision of the Copyright Act.”

Finally, in Cloud, the defendant argued that the digital music files didn't amount to infringible tangible copies of recordings. But the district court explained: “Plaintiffs allege that the object in question could be 'perceived, reproduced, etc.' within the medium of an audio file stored in a computer. Moreover, they state that such files could remain in that state for more than a 'transitory duration.' ' The allegations, taken in the light most favorable to the plaintiff, fulfill the standard needed to overcome a Motion to Dismiss.”

Conclusion

Clearly, despite the public unpopularity of the record industry suits against file sharers, practical legal strategies have developed from these actions that record labels are bound to put into play as challenging legal issues continue to arise in the fast-moving digital music era.

When the cash-strapped recording industry announced at the end of 2008 that it would largely drop its aggressive litigation campaign against unauthorized file sharers, some observers saw this as a defeat for record labels. But numerous court rulings have been issued over the past few years that debate and/or establish legal guidelines that will be referenced in file-sharer cases that are either still in the pipeline or may later crop up. This article examines some of the most recent of these cases and decisions.

Thomas

File-sharing litigation made big headlines in June 2009 for the retrial of Jammie Thomas, the losing defendant in both the first file-sharing suit against an individual user to go to trial and the trial replay. Chief District Judge Michael J. Davis of the U.S. District Court for the District of Minnesota had ordered the second trial on the ground that he had improperly instructed the first trial jury that Thomas could be liable by “making copyrighted sound recordings available for electronic distribution on a peer-to-peer network ' regardless of whether actual distribution has been shown.”

In his September 2008 retrial order, Judge Davis noted: “While the Copyright Act does not offer a uniform definition of 'distribution,' the [c]ourt concludes that, in light of the examined provisions, Congress's choice to not include offers to do the enumerated acts or the making available of the work indicates its intent that an actual distribution or dissemination is required in [17 U.S.C.] '106(3).” But the judge disagreed with Thomas's claim that distribution to the record-industry's investigator Media Sentry couldn't constitute copyright infringement. Capitol Records Inc. v. Thomas , 579 F.Supp.2d 1210 (D.Minn.2008).

Tenenbaum

On June 15, 2009, the same day the new Thomas trial started, the U.S. District Court for the District of Massachusetts issued a pre-trial ruling in another closely watched file-sharing suit. In the Massachusetts case, District Judge Nancy Gertner dismissed an abuse-of-process counterclaim by defendant Joel Tenenbaum, a
Boston University student. Tenenbaum argued abuse because so many of the industry's suits have been filed against young people unable to pay for lawyers. But Gertner emphasized: “Abuse of process, as the cause of action is defined, does not turn on the identity of the defendants, their ability to hire an attorney, nor their inclination to settle the claims against them. Congress has handed the Plaintiffs a massive hammer to combat copyright infringement, and they have chosen to use it. That choice, whether wise or unwise, does not amount to an abuse of process.” Capitol Records Inc. v. Alaujan, 03-CV-11661-NG.

Yet, calling it “troubling,” Gertner allowed Tenenbaum to add a fair use defense because, the judge believed, “this amendment will not significantly prejudice the Plaintiffs nor substantially delay trial.” By contrast, Judge Davis refused to allow the addition of a fair use defense on the eve of the Thomas trial because he found it would be “highly prejudicial” to the record label plaintiffs.

There have been other recent rulings in the Tenenbaum litigation. In April 2009, in a decision of first impression, the U.S. Court of Appeals for the First Circuit refused Tenenbaum's request to permit the Webcasting of a hearing in his case. In re Sony BMG Music Entertainment, 546 F.3d 1 (1^st Cir. 2009). In May 2009, the District of Massachusetts granted the record labels' request to make a mirror image of Tenenbaum's laptop, though under a protective order that required the labels' computer forensic expert to sign a confidentiality agreement. The protective order also provided Tenenbaum's counsel with an opportunity to object, if he thought it warranted on attorney-client privilege grounds, to information in the expert's report prior to the report's release to record label counsel. Capitol Records Inc. v. Alaujan, 03-CV-11661-NG. Then on June 10, a magistrate for the U.S. District Court for the District of Rhode Island denied the record labels' motion to compel Tenenbaum's parents to allow a hard-drive mirror image to be made of a computer they had purchased after their son left home for college. Sony BMG Music Entertainment v.
Tenenbaum, 1:08-MC-104S.

Minervini

Some computer-user defendants have sought dismissal of file-sharing suits by arguing the complaints weren't specific enough under Rule 8 of the Federal Rules of Civil Procedure. In Loud Records LLC v. Minervini, 08-CV-551-bbc, Frank Minervini, a student at the University of Wisconsin, sought a Rule 8 dismissal. But the U.S. District Court for the Western District of Wisconsin denied the motion on June 3, noting: “In their complaint, plaintiffs allege that they possess exclusive rights to certain copyrighted sound recordings and that without their permission, defendant has used and continues to use a P2P network to download and distribute the copyrighted recordings. In addition, plaintiffs attached to their complaint a list of seven recordings that they have marked with notices of copyright as required by 17 U.S.C. '401 and that defendant allegedly copied or distributed. Contrary to defendant's assertions, the allegations in the complaint meet the requirements of Rule 8 and have provided defendant with sufficient information to allow him to respond.” The court had also noted: “Exhibit A to the complaint identifies the date and time of capture and a list of copyrighted recordings that defendant has downloaded or distributed to the public without plaintiffs' permission.”

Minervini also argued his rights had been violated under the Family Educational Rights and Privacy Act (FERPA), 20 U.S.C. '1232g, when the University of Wisconsin responded to a subpoena from the label plaintiffs, who had the student's ISP address, seeking Minervini's identity. However, the district court explained: “Under '1232g, a university may release so-called 'directory information,' which consists of name, address, telephone listing, date and place of birth ' and other items of information not at issue in this case. It may also release fuller details in response to a judicial order or lawfully issued subpoena, so long as the student and parents (if the student is a dependent) are notified of all such orders or subpoenas in advance of the university's compliance.” The court continued: “Plaintiffs' subpoena to the University of Wisconsin is proper under either exception to the general rule prohibiting the release of student information. The subpoena seeks only defendant's true name, current and permanent addresses and telephone numbers, [e-mail] addresses and medical access control addresses, all of which are items an educational institution may disclose if it has given general notice that it will do so. Defendant has not suggested that the university did not give such notice.”

CFAA Issues

Some file-sharing defendants, including Minervini, contend that labels seeking computer information on the defendants violate the Computer Fraud and Abuse Act (CFAA), 18 U.S.C. '1030. A CFAA violation happens when a party “intentionally accesses a protected computer without authorization, and as a result of such conduct, causes damage and loss.” A “protected computer” is one “used in or affecting interstate ' commerce or communication.” “Damage” is defined as “any impairment to the integrity or availability of data, a program, a system or information.” The Western District of Wisconsin found, however, that Minervini hadn't alleged his was a “protected computer” under the Act. The court stated that “because the [file sharing] files that plaintiffs allegedly accessed were accessible by the public, any allegation that the computer should be considered protected or that plaintiffs acted without authorization is tenuous at best.”

On June 2, in Atlantic Recording Corp. v. Raleigh, 4:06-CV-1708 (CEJ), the U.S. District Court for the Eastern District of Missouri dismissed
a an alleged file-sharer's CFAA counterclaim, noting in part that the
defendant “provides no specific facts to explain how her computer was used in or affected interstate commerce. As such, defendant provides a conclusory allegation that her computer is a 'protected computer' within the scope of the CFAA. Finally, defendant alleges that '[plaintiffs'] conduct ' resulted in impairment to the integrity and/or availability of data, a program, a system or information on [her] computer[.]' ' With the exception of a few additional words and punctuation marks, this allegation only contains the statutory definition of the term 'damage.'
See, 18 U.S.C. '1030(e)(8). Moreover, defendant offers no supporting facts to describe any impairment to her computer's data, programs, system, or information. In sum, defendant's unsupported conclusory allegations contain nothing more than 'a formulaic recitation of the elements' of a claim under 18 U.S.C. '1030(a)(5)(C).”

Damages

At play in both the Tenenbaum and Thomas litigations have been whether statutory damages allowed under the Copyright Act are excessive (i.e., up to $150,000 under '504 per willfully infringed work). In his retrial order, Judge Davis had stated that Thomas's “status as a consumer who was not seeking to harm her competitors or make a profit does not excuse her behavior. But it does make the award of hundreds of thousands of dollars in damages unprecedented and oppressive.” (The jury in the first trial assessed a total of $222,000 against Thomas for 24 songs; the second jury made it $1.92 million.)

On the other hand, the Eastern District of Pennsylvania appeared to favor '504 when it refused on May 29, 2009 to dismiss a suit against an alleged file sharer. The Pennsylvania federal court noted the “[c]ourt's reading of the statutory damages provision of the Copyright Act finds that the amount of damages awarded to a successful plaintiff varies considerably ' Moreover, any potential damages may vary drastically, even on a finding of willfulness, since the amount of damages to be awarded, if any, is left to the court's discretion.” Sony Music Entertainment v. Cloud, 08-CV-01200.

In a motion to intervene that the court granted, the U.S. government submitted a “Memorandum in Defense of the Constitutionality of the Statutory Damages Provision of the Copyright Act.” But despite its favorable '504 comments, the district court decided to refrain “at this early phase of the litigation ' from making any specific ruling on the constitutionality of the statutory damages provision of the Copyright Act.”

Finally, in Cloud, the defendant argued that the digital music files didn't amount to infringible tangible copies of recordings. But the district court explained: “Plaintiffs allege that the object in question could be 'perceived, reproduced, etc.' within the medium of an audio file stored in a computer. Moreover, they state that such files could remain in that state for more than a 'transitory duration.' ' The allegations, taken in the light most favorable to the plaintiff, fulfill the standard needed to overcome a Motion to Dismiss.”

Conclusion

Clearly, despite the public unpopularity of the record industry suits against file sharers, practical legal strategies have developed from these actions that record labels are bound to put into play as challenging legal issues continue to arise in the fast-moving digital music era.