Should the Music Industry Force ISPs to Become Copyright Enforcement Agents?

Grande Communications argues that no, American internet service providers shouldn’t have to do the music industry’s job.

Yesterday, a federal judge dealt Cox Communications a fatal blow in its bitter case against BMG.

Judge Liam O’Grady ruled in favor of BMG, stating the music company can call copyright infringement “stealing.”

The decision came several weeks after a slew of major labels, including Sony, Warner, and Universal, sued the ISP for allegedly refusing to disconnect repeat offenders.

Now, one American ISP has fought back against the music industry.

No, ISPs shouldn’t become copyright enforcement agents, argues Grande.

High-speed internet service provider Grande Communications has accused the music industry of attempting to turn ISPs into “copyright enforcement agents.”

The Texas-based ISP was sued by 18 major music companies, including Warner, Universal, Sony, and Capitol Records, last year.  According to major labels, Grande has allowed its users to “engage in more than one million infringements of copyrighted works over BitTorrent systems.”

The music industry wrote that Grande has failed to “take any meaningful action to discourage this continuing theft.”  Organizations, including the RIAA, wanted the ISP to suspend and terminate subscribers who allegedly infringed on copyrights.

Calling the industry’s claims “absurd,” Grande states it has received “unsubstantiated and unverifiable allegations of copyright infringement.”

“To further this effort, the recording industry enlists a third party to bombard ISPs like Grande with hundreds of thousands of such allegations per year,” argues the ISP, adding it’s “more than any ISP could ever reasonably investigate and attempt to verify, even if it had the practical ability to do so.”

The third party in question refers to controversial anti-piracy company Rightscorp.

The curious case of Rightscorp – a company standing up for the music industry or just a copyright troll?

Last week, the ISP revealed that the RIAA had paid Rightscorp $700,000 for notices related to Grande Communications.  The anti-piracy company has a long history of preying on alleged copyright infringers, or pirates, according to Grande.

Via IP scans, Rightscorp determines which users have likely downloaded infringing material.  Once a user has been tagged as infringing, Rightscorp sends the owner of the account a notice.  Disguised as DMCA-style letters from ISPs, users are given an ultimatum – pay between $20 and $30 to avoid litigation or face a major lawsuit.  Users, fearing their ISPs have spied on them, pay out of fear to avoid a hefty lawsuit.

Speaking with Ars Technica, Chief Operating Officer Robert Steele explained the payment is a “socially fair way to create a deterrent.”

“For most people, a $10,000 judgment is a really tough thing.  We’re giving an opportunity for people to resolve the matter and recoup some loss to the creative, for a relatively small amount of money.”

Rightscorp has had some success.  In 2015, for example, the company had entered into an agreement with Sony/ATV Music Publishing.  Yet, going after pirates hasn’t proven a lucrative business.  The anti-piracy company has consistently posted net losses in the past several years.  In 2017, the company lost well over $1.45 million.

To turn things around, Rightscorp planned a new, more aggressive strategy.  Using technology called Scalable Copyright, the company would hijack users’ browsers, preventing Internet access until they paid the company.

Rightscorp explained the purpose of Scalable Copyright.

“Single notices can be read and bypassed similar to the way a software license agreement works [but] once the internet account receives a certain number of notices over a certain time period, the screen cannot be bypassed until the settlement payment is received.”

The RIAA has heavily depended on Rightscorp’s claims in court.  In 2016, its partnership with the anti-piracy company accounted for 44% of Rightcorp’s revenue.

Using Rightscorp’s notices, the RIAA has accused Grande of failing to terminated subscribers’ accounts.  But according to Grande, the anti-piracy company hasn’t revealed exactly how it tracks suspected copyright infringement activity, nor has it presented verifiable information.

An impossible situation for internet service providers?

Using these notices as evidence in courts puts ISPs in a very difficult situation, argues Grande.

“This puts ISPs in an impossible position: either terminate subscribers based on unverified allegations of infringement, or face litigation for the secondary infringement of thousands of copyrighted works.”

The ISP argues that existing US copyright law “does not and cannot allow for secondary liability in these circumstances.”

Grande also claims the music industry’s case against the ISP has “fatal evidentiary flaws.”  These include lacking verifiable evidence of copyright infringement by its users and relying on the dubious notices from Rightscorp.  No evidence exists that proves a subscriber “ever reproduced or distributed work on Grande’s network.”

“These failures,” writes the ISP, “entitle Grande to summary judgment for numerous reasons.”

In its request for a summary judgment, Grande Communications has laid out six arguments.

First, plaintiffs – the music industry – can’t directly prove direct infringement from the ISP.

Going on the offensive against Rightscorp, the ISP alleges the company’s technology has numerous flaws.  Rightscorp’s system can only detect when an infringing file “is made accessible.”  It can’t “detect when, or even whether, a file has ever actually been copied.”

“Because Rightscorp’s system cannot detect actual instances of a file being uploaded or downloaded by anyone, the notices it sends do not evidence any instance of actual infringement of a copyrighted work.  Even the date and time on the notice are misleading – they merely reflect the moment at which Rightscorp’s system performed its scan and not any recorded instance of a work being copied.”

Rightscorp’s system can’t prove “substantial similarity” to a copyrighted nor defend its alleged claims of infringement on Grande’s network.  It also can’t prove subscribers violated copyrighted reproduction, distribution, nor public performance rights on its network.

In order to validate direct infringement, the music industry “must come forward with specific evidence for each asserted copyright.”

Second, the industry can’t prove contributory liability.

To prove this, music companies must prove Grande had knowledge of specific instances of infringement on its network.  Rightscorp’s dubious notices don’t count, claims the ISP.  So, music companies and organizations must present evidence Grande actually induced the infringing conduct from its users.

In its second argument, the ISP has used the inducement theory of contributory infringement.  This theory states defendants who distribute a product or service with substantial non-infringing users aren’t liable unless they offer the product or service “with the object of promoting its use to infringe copyright.”  Grande argues it hasn’t shown a clear expression or taken affirmative steps to foster infringement on its network.  The ISP also claims no evidence exists to show the contrary.

Citing BMG v. Cox, Grande states the music company had conceded in its litigation that it couldn’t prove Cox induced subscribers to commit copyright infringement.

Third, plaintiffs can’t prove willful copyright infringement.

According to Grande, the music companies haven’t presented any evidence of willful copyright infringement on the ISP’s behalf.  Jurors can’t conclude the ISP’s conduct constitutes secondary copyright infringement.  In addition, the music companies can’t use Rightscorp’s notices as evidence because the anti-piracy company hadn’t sent any notices on their behalf.

Fourth, the music industry can’t prove the ‘discovery rule’ expands the statutory damages period.

In Texas, the discovery rule serves as an exception to the usual statute of limitations for damages.  In this case, the music industry used the discovery rule to expand the three-year period for damages.

Grande argues the industry can’t prove the discovery rule, as the companies have yet to demonstrate they “were unaware of the factual basis of their claims” of the ISP’s infringement until January 2016.

Fifth, the industry can’t prove actual damages or that Grande profited from copyright infringement.

According to Grande, no such evidence of infringement on its network exists.  And, the music industry hasn’t proven the ISP profited from this infringement.  Thus, the music industry can’t seek damages based on non-existent infringement.

Sixth, the industry can’t prove ownership of the copyrights it has asserted in the case.

The music industry detailed 1,582 copyrighted sound recordings and 782 unique registered copyrights.  Yet, Grande states the music company – in this case, Universal Music Group – only owns 421 of the 782 registered copyrights.  As Universal lacks proof of ownership of the remaining 361, the ISP has requested a partial summary judgment in its favor.

You can check out the complete motion for summary judgment below.

Featured image by Roger Gregory (CC by 2.0)

20 Responses

  1. Fuzzy Cracklins

    Meanwhile, Spotify is giving away artists’ music for free or almost free. Stopping some downloads won’t change that.

    • Tenn Tux

      Spotify pays 70% of its revenue for music.

      US AM/FM radio pays a couple percentage points and only to songwriters. Nothing for sound recordings.

      Which is the better deal for music, and by how wide a margin?

      Not even close. Fuzzy, indeed.

      • OldIndieGuy

        70% of nothing is nothing. Their revenue is still pathetic for their model to really work for everyone. The label I worked for was profitable from day one, for over 25 years, that all changed with the transition to streaming… that label is just part of someone’s larger catalog, and 9 real people are out of work. Say what you will, but the bottom line is that Terrestrial radio needs to pay the same as everyone else, and everyone else needs to pay creators more. If that means higher cost to the consumer, that’s what needs to happen. Sorry consumers, nothing in life is really free…. it only seems that way when you ignore who you are taking advantage of.

    • Paul Resnikoff

      Arguably, Spotify has a superior way of dealing with piracy, and converting them into ad-supported or paid users. Witness their approach to their own ad-blocking users.

    • Do The Math

      Actually the problem for Spotify is that they have to compete with “free” torrenting. Spotify loses hundreds of millions a year. Spotify like any other business would rather not have to compete with an identical free version of what they sell. Spotify and rights holders interests are aligned on this.

  2. Anonymous

    You could just tell them you won’t allow anything they produce on the isp and vigorously enforce it against everyone.

  3. OldIndieGuy

    Just like any other provider of services, there has to be some effort on the ISP’s part to prevent illegal activity that is being facilitated by their service.

    This bullshit of hiding behind the law, which is f-ed up and needs changing, does not change the moral obligation that should be inherent in doing business in our society. ISP’s have the power to allow only “legal” content on their networks, they are the gatekeepers, whether they like it or not. This is not an unsolvable problem for them, why they choose to spend the money in the courtroom rather than the development lab is a mystery to me, and should be a crime in and of itself.

    If you facilitate theft, you are a thief regardless of the legal loophole you justify it with.


    • Anonymous

      Oh don’t come here with that law stuff I seen what all of you do in whashington once the internet came and started disrupting everything you guy starting buying senators.

      But that’s fine. As long as the isps and the sites involved kick all of you off as well. I would not deal with people who are always trying to sue me in bad faith. I’m sure they don’t need the internet connection or the partnerships.

    • Angelito

      Do you think ANYONE in the world feels they have a moral duty to conduct business fairly?

      Chinese businessmen are giggling at your statement right now.

      • OldIndieGuy

        Yes, I do believe that there are still folks in the world that believe that the best deals are ones where both sides win, and that they have a moral obligation to deal fairly and truthfully. I also understand that there are those who lie, but that does not change my view, nor my ability to compete with liars and win.

  4. Oh dear

    Go ahead RIAA and everyone. Start kicking everyone off the net for good. And let it get big enough. Let’s see how long it last once a congressman calls in and ask why he has no internet connection becuase his son Is downloading things online.

    • Anonymous

      Well it just started on one. Cox settled. Extortion rackets begin in force. Might as well do as I said and kick all the music and everything else off the net and have the websites break The partnerships.
      If they want to go back to CDs or god before let them.

      • Do The Math

        Go ahead. If there’s a way to “kick all music off the Internet” that would be awesome. Create actual markets for music again. Gladly go back to CDs. For the smallest indie 1.000 cds minus shipping manufacture would be $11,500 profit. You’d need more than 14 million views on YouTube (not counting freebooting).

  5. Will Buckley

    I guess this answers your question. Cox settles with BMG for Safe Harbor Abuse. Payment reported to be substantial.

    • File 2

      I honestly don’t see how long it will last really. Eventually they are going to kick somone off like well said and guys going to actually have the stones and money to take it to court. argue he was summoned with a false notice wrong one or something becuase the ISP will most likely just start caution banning so they don’t get sued into oblivion. Add that to fact that people will also argue that no term for return to the internet exist and a lot of things like healthcare money etc are done on it or that many places only have provider with a good lawyer arguing I think it could stand up in court once a whole building losses internet access becuase one apartment watched GOT on an illegal stream.

      • Ruben

        Or the internet provider figures out how protect their interest and block troll scanners or scanner jammer, very easy to do… ?

        • Do the Math

          See comment below. Rightscorp uses p2p software. You’d have block all p2p. Or if they figure out how block just rightscorp they lose safe harbor and and then likely put them at risk of someone making a RICO argument. As a lawyer I’m kind of hoping they do something this stupid. Fat payday plus someone does a perp walk,

      • Do the Math

        Did you write this while high on Chinese research chemicals? I like the way you roll.

  6. Do The Math

    You guys all miss the point. The DMCA safe harbors require ISPs to cooperate with rights holders on “standard technical measures” to manage content i.e prevent piracy. If they don’t cooperate or have any sort of piracy deterrent they lose their safe harbor. Which means the ISPs are liable not users. Court in Cox case was incredibly clear. Grande is likely to suffer same fate. Also you technical no nothings. P2P clients make your IP address publicly available. And Rightscorp collects your addresses using slightly modified off the shelf p2p software. Grande would have to block P2P software to stop rightscorp. And isn’t that the point? Rightscorp wins either way. Good for them. Fuck the freeloading torrent freaks and their corporate protectors.