NY Court Eases Discovery Burden for Music Streaming Site

Ever since the definitive appellate rulings in the Napster and Grokster cases, big entertainment companies have pretty much had their way with tech startups in copyright infringement battles ' for instance, the recent resounding win a group of record companies scored in New York federal district court against the file sharing service LimeWire, now perilously close to being shut down.

But in June, there was news of a victory (albeit a small one) for the little guy. The underlying case against Escape Media, owner of the Grooveshark.com music streaming site, was filed in New York state court in January by Universal Music Group (UMG), which accused Escape of copyright infringement and unfair competition. UMG asserted that Escape made UMG-owned, pre-1972, songs from artists such artists as Buddy Holly, The Carpenters, Cat Stevens, Chuck Berry, The Jackson Five, The Mamas and the Papas, Marvin Gaye, The Supremes, The Temptations and The Who available to its users without paying a license fee.

UMG's lawyers at Jenner & Block proposed a bifurcated discovery schedule that would divide the case between liability and damages phases. For the initial liability phase, they proposed limiting discovery to a representative sample of recordings, which they helpfully suggested might speed up the case. But Escape's lawyers at Winston & Strawn didn't think the proposal was so thoughtful. They argued that by limiting initial liability discovery to a representative sample of songs, Escape was unfairly shouldering all the discovery burdens and was being stripped of its ability to raise affirmative defenses with respect to other songs. Robert Turner of Winston & Strawn says that UMG's proposed discovery schedule would specifically prevent Escape from challenging UMG's ownership of songs not in the representative sample.

In a four-page decision, New York State Supreme Court Judge Barbara Kapnick ruled for Escape, finding that a bifurcated schedule was not appropriate because the damages and liability issues were intertwined. She also rejected UMG's proposal of limiting discovery to a representative sample because it would restrict Escape's ability to raise affirmative defenses (see, http://amlawdaily.typepad.com/UMGBifurcationOrder.pdf). UMG Recordings, Inc. v. Escape Media Group, Inc., No. 100152/10.

Turner says the ruling is “a big deal,” because his client is a start-up without a lot of dough to fritter away on discovery. The burden of discovery, he says, is now going to be shared by both sides in the case.

UMG counsel Gianni Servodidio of Jenner & Block declined to comment.

Ever since the definitive appellate rulings in the Napster and Grokster cases, big entertainment companies have pretty much had their way with tech startups in copyright infringement battles ' for instance, the recent resounding win a group of record companies scored in New York federal district court against the file sharing service LimeWire, now perilously close to being shut down.

But in June, there was news of a victory (albeit a small one) for the little guy. The underlying case against Escape Media, owner of the Grooveshark.com music streaming site, was filed in New York state court in January by Universal Music Group (UMG), which accused Escape of copyright infringement and unfair competition. UMG asserted that Escape made UMG-owned, pre-1972, songs from artists such artists as Buddy Holly, The Carpenters, Cat Stevens, Chuck Berry, The Jackson Five, The Mamas and the Papas, Marvin Gaye, The Supremes, The Temptations and The Who available to its users without paying a license fee.

UMG's lawyers at Jenner & Block proposed a bifurcated discovery schedule that would divide the case between liability and damages phases. For the initial liability phase, they proposed limiting discovery to a representative sample of recordings, which they helpfully suggested might speed up the case. But Escape's lawyers at Winston & Strawn didn't think the proposal was so thoughtful. They argued that by limiting initial liability discovery to a representative sample of songs, Escape was unfairly shouldering all the discovery burdens and was being stripped of its ability to raise affirmative defenses with respect to other songs. Robert Turner of Winston & Strawn says that UMG's proposed discovery schedule would specifically prevent Escape from challenging UMG's ownership of songs not in the representative sample.

In a four-page decision, New York State Supreme Court Judge Barbara Kapnick ruled for Escape, finding that a bifurcated schedule was not appropriate because the damages and liability issues were intertwined. She also rejected UMG's proposal of limiting discovery to a representative sample because it would restrict Escape's ability to raise affirmative defenses (see, http://amlawdaily.typepad.com/UMGBifurcationOrder.pdf). UMG Recordings, Inc. v. Escape Media Group, Inc., No. 100152/10.

Turner says the ruling is “a big deal,” because his client is a start-up without a lot of dough to fritter away on discovery. The burden of discovery, he says, is now going to be shared by both sides in the case.

UMG counsel Gianni Servodidio of Jenner & Block declined to comment.