RIAA: ISP Profited From Keeping Pirating Customers Aboard

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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.

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, as the court saw no evidence that the ISP had a direct financial interest in the infringing activity.

While the RIAA could still go after the ISP for contributory copyright infringement, it wants more. A few days ago, the music group submitted a motion for leave to file an amended complaint including new evidence obtained during discovery.

Among other things, the RIAA argues in more detail that Grande willingly kept pirating subscribers abroad, to generate more revenue. According to the complaint, Grande terminated accounts of pirating subscribers in the past, but stopped doing so in 2010.

“The evidence in this case reveals that, until 2010, Grande actually suspended and may even have terminated known repeat infringing customers,” reads the amended complaint, filed at a Texas federal court.

“But then, from 2011 to 2016, Defendants made the conscious decision not to terminate a single Grande subscriber for copyright infringement, regardless of how much proof they received, from any source, of those subscribers blatant, repeat infringement.”

After the RIAA filed its lawsuit, Grande allegedly started terminating subscribers again, According to the music group, the ISP hereby implicitly acknowledged that it acted unlawfully during the period in between.

The new complaint claims that Grande profited from the repeat infringers. They were also the most profitable customers by profit margin, as many had a more lucrative “a la carte” subscription.

“Defendants’ policy of refusing to take meaningful action against repeat infringers protects a significant revenue stream that Grande receives every month from its many infringing subscribers,” RIAA writes.

These allegations, including the claim that RIAA members’ sound recordings acted as a draw, are backed up by evidence filed under seal.

According to the record labels, however, it’s clear that Grande failed to adopt and reasonably implement a policy to stop repeat infringers. As such, it should have no DMCA safe harbor defense and be held liable for both vicarious and contributory copyright infringement.

In addition, the RIAA stated that newly discovered evidence also shows that the ISPs’ management company Patriot should not escape liability.

If the court accepts the amended complaint, Grande will have to respond to the new evidence and additional allegations.

As in the original complaint, the RIAA seeks statutory damages, which could go up to $150,000 per infringed work, actual damages, plus profits generated by Grande as a result of the infringement. The music group also asks for preliminary and permanent injunctions preventing Grande from further infringement.

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A copy of the amended complaint is available here (pdf).

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