IP Law Daily, COPYRIGHT NEWS: Record labels win $50 million verdict against a Texas ISP for infringement, (Nov 4, 2022)

By Matthew Hersh, J.D.

The verdict against RCN affiliate Grande Communications is well short of earlier precedents against internet service providers.

A Texas-based internet service provider and affiliate of communications giant RCN will have to pay a group of major record labels nearly $50 million in damages for its users’ copyright infringement if the verdict of an Austin jury is upheld. The verdict, which comes more than five years after the labels first sued the ISP, is the latest development in a lengthy battle between the record labels and various ISPs over the scope of internet providers’ protections under federal copyright law (UMG Recordings, Inc. v. Grande Communications Networks LLC, November 3, 2022).

Background. The context for the litigation is the Digital Millennium Copyright Act, or DMCA, a controversial piece of legislation enacted in 1998. One component of the DMCA, Section 512, is designed to shield internet service providers from liability for acts of copyright infringement by their users. However, that “safe harbor,” as it is known, comes with several conditions. For one thing, under subsection (i) of Section 512, a service provider is entitled to protection from liability only if it has adopted and reasonably implement a policy that provides for termination of repeat infringements. Second, under subsection (c) of the same section, the service provider must act expeditiously to remove infringing material and must not profit directly from acts of infringement that it has the capacity to prevent.

In the 25 years since the DMCA was enacted, these provisions have been the source of considerable litigation—and no small measured of criticism. The DMCA was designed to balance two distinct goals: providing a measure of legal certainty for service providers on the one hand, and on the other hand protecting the legitimate interests of rights holders against potentially rampant copyright infringement. But in a landmark 2020 study of the DMCA, the Copyright Office concluded that “Congress’ original intended balance has been tilted askew.” The Office made a number of recommendations in that study that would tighten up the scope of the DMCA “safe harbor” and that would provide additional clarity to all stakeholders involved, but Congress has yet to act.

Meanwhile, litigation over the DMCA has proceeded apace, perhaps nowhere as aggressively publicized as in the record labels’ battle with internet service providers. In one prominent case, covered by IP Law Daily (here, here and here), record labels earned a $1 billion jury verdict against Cox Communications. The judgment in that case is now on appeal with the Fourth Circuit, which held oral argument in March of this year. Other major targets of the record labels and other copyright owners—including music publishers and moviemakers—have been Frontier Communications, Charter Communications, Bright House, and in a recent case brought by moviemaker Voltage Pictures, Comcast, Verizon, and AT&T.

Yesterday’s verdict. The verdict handed down by an Austin jury yesterday comes in the wake of a complaint filed by major record labels against Grande Communications, a subsidiary of Astound Broadcasting (the company newly formed in the wake of a merger between Grande, RCN, and Wave Broadband). The lawsuit contended that Grande permitted repeat infringers to access the service without suspending or terminating those infringers, even where Grande allegedly had “specific and actual knowledge of those subscribers’ blatant, repeat infringement.” The jury found that Grande was liable for the infringing conduct of roughly 1,400 works and that its conduct in doing so was willful. Some simple calculations show that the jury appears to have reached its ultimate figure by awarding $33,333 for each work, which is solidly within the range of $750 to $150,000 per work that the jury could have awarded.

The Case is No. 1:17-cv-00365-DAE.

Attorneys: Andrew H. Bart (Jenner & Block LLP) for UMG Recordings, Inc. Diana L. Nichols (Kelly Hart & Hallman LLP) for Grande Communications Networks, LLC.

Companies: UMG Recordings, Inc.; Grande Communications Networks, LLC

News: Copyright TechnologyInternet TexasNews