Emi Christian Music Group v. Mp

3TUNES, LLC 844 F.3d 79 (2016)

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Nature of the Case

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Facts

Ps are all record companies and music publishers. They filed this copyright infringement lawsuit against D and its founder and Chief Executive Officer Michael Robertson, alleging that D infringed their copyrights in thousands of sound recordings and musical compositions. Customers could visit MP3Tunes.com (owned by D) and purchase MP3 versions of music created by musicians who were not associated with major record labels. In 2005 MP3tunes.com added a 'locker storage' service, which charged users a fee to store music on the MP3tunes server. A user who uploaded songs to her 'locker' could play the music through other internet-enabled devices. D owned and operated a [second website, sideload.com, that allowed users to search for free music on the internet. Sideload enabled users to 'download' directly to their MP3tunes lockers free songs that they found on the internet. Songs sideloaded into users' lockers were then added to sideload.com's index of searchable songs. The more songs users sideloaded from the internet, the more free music became available for sideload.com users to stream, download, or sideload into their own lockers. Sideload.com became 'the most effective partner in driving traffic to D's locker service.' D encouraged users to upload songs to the sideload.com index. Eventually, MP3tunes's software would 'automatically go check for . . . cover art' provided on Amazon.com and download the cover art. Ps sued Ds for infringement. Both sides moved for summary judgment. In part, the District Court granted Ds summary judgment on other claims on the ground that MP3tunes qualified for safe harbor protection under the DMCA and that the safe harbor barred Ps' state-law claims. The District Court addressed §512(i)(1)(A)'s requirement that a service provider 'adopt and reasonably implement . . . a policy that provides for the termination in appropriate circumstances of subscribers . . . who are repeat infringers.' It held that MP3tunes had such a policy because it 'demonstrated that it has a procedure for responding to DMCA takedown notifications and does not interfere with copyright owners' ability to issue such notices.' Subsequent to Viacom International, Inc. v. YouTube, Inc. the District Court partially reconsidered its ruling that MP3tunes qualified for safe harbor protection under the DMCA. Whether MP3tunes was barred from the DMCA's safe harbor protection (because it was willfully blind to or had red-flag knowledge of infringing activity), it held, actually presented a question of fact that a jury had to decide, not a question of law. The case proceeded to trial before a jury, which returned a verdict for Ps and awarded them approximately $48 million, $7.5 million of which constituted punitive damages against Robertson. The District Court then granted judgment as a matter of law as to some of the claims. It reversed the jury's finding that MP3tunes was willfully blind or had red-flag knowledge regarding several different categories of songs on the ground that there was insufficient evidence of willful blindness or red-flag knowledge. It reduced the punitive damages award against Robertson to $750,000 on the ground that the $7.5 million punitive damages award violated due process. Everybody appealed.