A decision on a motion for summary judgment in UMG Recordings Inc., et al. v. RCN Telecom Services Inc., et al. was handed down in the District of New Jersey.
Universal Music Group Recordings (UMG) sued RCN Cable Network Company for contributory and vicarious infringement for allegedly allowing users illegally to download copyrighted works. RCN moved to dismiss the claims against it, but succeeded only in getting dismissed the claims against Patriot, its management company (since Patriot did not in fact “make policy decisions” that resulted in the infringing conduct).
In a nutshell, a company called Rightscorp has software that can crawl through the internet and find users who are unlawfully sharing copyrighted works for download. Thousands of notices of infringing plaintiff publishers’ music, detailing RCN’s customer user name and location, among other things, were provided to RCN. Rightscorp’s haul included thousands of users and millions of files — including many files from UMG.
After RCN took no action to cure its allegedly evil ways, UMG sued RCN and its management company, Patriot. In its defensive motion to dismiss, RCN asserted that it is not liable for infringement, only its subscribers are. Further, RCN said the plaintiffs were unable to show that RCN actually knew about the alleged infringement.
The court turned that back on RCN, pointing out that the numerous notices from Rightscorp put them on notice that there was a problem. That, the court said, is sufficient to give constructive knowledge, if not the appearance, that RCN was turning a blind eye to its subscribers’ activity. If RCN were not recklessly indifferent to infringing the copyrights of others, it could have used those notices to contact the subscribers and terminate them.
Contributory infringement requires 1) that a third party directly infringed the copyright; 2) that the defendant knew that the third party was directly infringing; and 3) the defendant materially contributed to or induced the infringement. Prongs one and two were taken care of by the notices sent to the defendant, alerting RCN to the widespread infringement being committed by its subscribers.
The court held that the third prong was satisfied because RCN materially induced the infringing activity by not shutting down infringing subscribers.
Vicarious infringement occurs when the plaintiff proves the defendant 1) has the right and ability to supervise or control the infringing activity; and 2) has a direct financial interest in such activities.
Here, the court held, RCN could have controlled such conduct by terminating the subscriber. As for the direct financial interest requirement, RCN obviously had a financial interest in not terminating any of its streams of revenue. The court went on to say that, “[t]he failure to take action against [RCN’s] subscribing copyright infringers is tantamount to encouraging infringement.”
One of the precedents RCN raised in its defense was the landmark Sony Corp. of America v. Universal City Studios, Inc., also known as “the Betamax case.” That case was argued in 1984 after the emergence of VCR technology. It basically said that recording television shows to watch at a later time was fair use, and not infringement. RCN claimed that, similarly, there is a legitimate use for file-sharing services, so the mere existence of them doesn’t mean that the app itself is inherently infringing.
The court disagreed, saying that technology has changed quite a bit since 1984 and Betamax. Unlike the Supreme Court’s understanding that Sony as the manufacturer of the recordable VCR did not necessarily know of infringing conduct, the court in this case was not willing to assume that the defendant was ignorant of any infringing uses — thanks to Rightscorp’s identifying and alerting RCN to infringers. That, the court said, was very different from the merely theoretical infringing uses of a VCR. This was a desperate move by RCN — probably because the sheer volume of infringing files is potentially bankrupting.
One of the more interesting aspects of this case was UMG’s assertion that RCN was known to infringers as an ISP that did not take any action in response to notices from copyright holders. Indeed, one interaction on the social media site Reddit seems to bolster that idea:
Q: Considering RCN for my next ISP and I am wondering if any of you that have RCN get copyright infringement emails from torrent monitors.
A1: RCN seems fairly lax…no data caps. I looked up before I switched and had little trouble.
A2: Seems extremely rare if ever.
To be fair, this was the only reference we could find. I think the takeaway is to not make breaking the law your top selling point. Something like that seems to be happening a lot with VPN services, who advertise that their servers are in countries that do not honor US laws and do not require that any logs be kept. Who could have seen that coming in 1984? It seems that Betamax is totally out of sync with today’s technological reality and is not the greatest choice for a defendant in this context.
