Last year several major record labels, represented by the RIAA, filed a lawsuit against ISP Grande Communications accusing it of turning a blind eye to pirating subscribers.
According to the RIAA, the Internet provider knew that some of its subscribers were frequently distributing copyrighted material, but failed to take any meaningful action in response.
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Grande refuted the accusations and filed a motion to dismiss the case. The ISP partially succeeded as the claims against its management company Patriot were dropped. The same was true for the vicarious infringement allegations.
The labels were not willing to let go so easily. They pushed on with several new filings, including a motion for summary judgment, arguing that Grande has no safe harbor defense.
In order to enjoy safe harbor protection, the DMCA requires ISPs to adopt and reasonably implement a policy for terminating the accounts of repeat copyright infringers. According to the labels, it is clear that Grande failed to do so. As such, the company should be held directly liable.
Yesterday, US Magistrate Judge Andrew Austin issued his “report and recommendation” on the matter, which delivers a significant setback for the Internet provider.
According to the Judge, the undisputed evidence shows Grande had a policy that allowed it to terminate repeat infringers, but that the ISP failed to act on this for years. As such, the policy was not adopted and reasonably implemented.
“Grande affirmatively decided in 2010 that it would not enforce the policy at all, and that it would not terminate any customer’s account regardless of how many notices of infringement that customer accumulated, regardless of the source of the notices, and regardless of the content of a notice,” Judge Austin writes.
The evidence shows that Grande did not terminate a single repeat infringer between October 2010 and June 2017. This was effectively confirmed by the ISP’s own corporate representative.
“A ‘reasonably implemented’ termination policy requires that the policy be enforced, and not just adopted. Because the evidence is undisputed that Grande never enforced its policy during the relevant time period, it is precluded from raising the DMCA safe harbor defense in this case.
“It is hard to imagine a case in which it is more clear that the DMCA safe harbor is not available,” the recommendation reads.
In its defense, Grande argued that it did enforce a repeat infringer policy after the lawsuit was filed but, according to the Judge, this was “too little too late.”
The Internet provider also argued that terminating customers wasn’t appropriate because the copyright infringement notices sent by Rightscorp were flawed. However, Judge Austin concludes that this is no defense, as there is no evidence that Grande ever considered terminating a user.
On top of that, the concerns regarding Rightscorp’s notices don’t explain why similar complaints from other sources were also disregarded.
“Yet another failure with Grande’s argument about the Rightscorp notices is that it does not address the several hundred thousand copyright infringement notices it received from companies other than Rightscorp,” Judge Austin writes.
In weighing the arguments the Judge looked closely at the BMG v. Cox case, which was very similar. In that matter, the court concluded that Cox didn’t have a safe harbor defense and Judge Austin argues that that same should apply to Grande.
If the U.S. District Court Judge adopts this recommendation, it will be a major win for the labels of the RIAA. Without a safe harbor defense, ISPs are not shielded from contributory liability for the actions of pirating subscribers.
And there is more bad news for the ISP as well.
Grande requested summary judgment in its favor on a variety of liability issues, including direct infringement, willfulness, damages, and ownership of copyright. These are all under recommendation to be denied, except for two limited issues regarding the alleged violation of reproduction or public performance rights.
The RIAA labels also submitted a cross-motion on these liability issues, requesting a ruling in their favor, but that was denied as well. This means that the matters will be decided at trial.
While Judge Austin’s recommendations have yet to be adopted, both reports and recommendations have definitely not improved the outlook for Grande.
Update: we clarified that without a safe harbor ISPs aren’t shielded from contributory liability for the actions of pirating subscribers.