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IP/Entertainment Case Law Updates

Atlantic Recording Corp. v. Spinrilla, LLC

In copyright infringement suit by record labels against hip-hop music streaming service, district court grants summary judgment in favor of record labels, finding defendant directly liable based on determination that streaming constitutes “public performance” under Copyright Act and holding that defendant did not qualify for safe harbor protections under DMCA. 

A group of major record companies sued Spinrilla, a streaming and downloading service for hip-hop music, and its founder, Jeffery Dylan Copeland, for copyright infringement. The parties cross-moved for summary judgment on liability and defendants’ safe harbor defense under the Digital Millennium Copyright Act (DMCA). The court granted in part plaintiffs’ motions on both issues, denied defendants’ motions and ordered a trial on the issue of damages. 

Copeland launched the Spinrilla website in early 2013 as an online music service geared to hip-hop mixtapes. Spinrilla followed up with Apple and Android apps in May 2013 and early 2014, respectively. As of October 2017, the service had grown to include approximately 19 million registered users and 1.5 million daily active users, with approximately 1.4 million songs available for download and streaming. Only DJs with “artist accounts,” of which there are about 14,000, have the ability to upload music to the service.

In March 2015, the record labels began sending notices of copyright infringement to Spinrilla. Between March 2015 and the commencement of the lawsuit in February 2017, plaintiffs sent a total of 59 takedown notices demanding that Spinrilla remove 407 identified sound recordings from its website and apps. Defendants claimed that they removed each identified infringing song immediately, but plaintiffs disputed that assertion and identified particular recordings that were not removed in response to the notices. Spinrilla first included a section on “Repeat Infringement” in its Terms of Service, which addressed termination of user accounts due specifically to copyright infringement, in July 2017. Around the same time, Spinrilla first registered a designated DMCA agent with the U.S. Copyright Office, though it previously received notifications of claimed copyright infringement directly by email through its website. 

After a series of amended complaints, the record companies ultimately claimed that Spinrilla infringed 4,082 sound recordings for which plaintiffs owned the copyrights. The labels claimed that defendants were directly liable for copyright infringement based on their streaming of the songs, which they argued constituted “public performance,” one of the exclusive rights granted to copyright owners under the Copyright Act. Defendants did not dispute that the 4,082 sounds recordings were uploaded to and downloaded or streamed from Spinrilla. Instead, they argued that only Spinrilla’s customers, and not the service itself, had engaged in the volitional conduct required for copyright infringement, relying on a line of cases holding that an internet service provider is not liable for the infringement of third-party users utilizing the provider’s systems.

The primary issue before the court was whether streaming music online constitutes public performance by Spinrilla, as opposed to its users. The DMCA added a provision to the Copyright Act giving copyright owners the exclusive right to perform sound recordings publicly by means of a digital audio transmission and defined the right of public performance in this context to include the right “to transmit or otherwise communicate a performance . . . to the public, by means of any device or process, whether the members of the public capable of receiving the performance . . . receive it in the same place or in separate places and at the same time or at different times.”

Plaintiffs, and ultimately the court, relied on the U.S. Supreme Court’s decision in ABC v. Aereo, Inc. as well as other cases addressing whether an internet service provider “transmits a performance” when a user accesses streaming content over its system. These cases held that an internet service provider “communicates” to the user, by means of a “device or process,” the work’s images and/or sounds, and transmits the work when that communication is contemporaneous with the images and/or sounds being visible and/or audible on the user’s computer. The court reasoned that the logic of these cases applied equally and consistently to Spinrilla’s online music streaming service, concluding that defendants were directly liable for copyright infringement, rendering the issues of secondary and contributory infringement moot and resulting in the grant of summary judgment to the labels. The court declined to follow earlier cases analogizing online service providers to the owners of a copy machine who merely let the public make copies and thereby avoid infringement liability.

The court then turned to Spinrilla’s safe harbor defense under the DMCA, which provides a limitation on liability for online service providers against claims of copyright infringement when certain criteria are met. In order to qualify for safe harbor protection, a service provider must not have actual or “red flag” notice of specific infringing activity on its site, or must act expeditiously to remove or disable access to the infringing content upon obtaining notice. The statute provides that the service provider also must have a designated agent to receive notifications of claimed copyright infringement, which must be accessible to the public through both the service provider’s website and the registry of the U.S. Copyright Office. The service provider must also have adopted, communicated to its users and reasonably implemented a repeat infringer policy, which provides for the termination of service access for repeat copyright infringers.    

The court noted that the safe harbor conditions require strict compliance. Because it was not until July 2017—after the filing of the lawsuit—that Spinrilla adopted a policy to terminate users’ accounts for repeat copyright infringement, implemented a mechanism for tracking repeat infringers and registered a designated DMCA agent with the U.S. Copyright Office, the court found that defendants could not invoke the safe harbor defense for their acts of infringement occurring before that time. The court also concluded that a determination of the safe harbor issue for the period after July 2017 was unnecessary because the 4,082 works in suit did not include any sound recordings that plaintiffs identified as being subject to the repeat infringer policy subsequently. Notably, in doing so, the court appears to have adopted the view that lack of compliance with the repeat infringer policy requirement does not disqualify a service provider from the benefits of the DMCA safe harbors entirely but only with respect to infringements by identified repeat infringers. Therefore, the court granted the record companies’ motion for summary judgment on the DMCA safe harbor defense and ordered a trial to determine plaintiffs’ damages. 

Summary prepared by Tal Dickstein and Jordan Meddy