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UMG Recordings, Inc. v. Escape Media Group, Inc.

Supreme Court, New York County

July 10, 2012

UMG Recordings, Inc., Plaintiff,
v.
Escape Media Group, Inc., Defendant.

Plaintiff was represented by Andrew H. Bart and Gianni P. Servodidio, Esqs., JENNER & BLOCK LLP.

Defendant was represented by Matthew Giger, Esq., ROSENBERG & GIGER, PC.

BARBARA R. KAPNICK, J.

Motion sequence nos. 002 and 005 are consolidated for disposition.

Plaintiff UMG Recordings, Inc. ("plaintiff" or "UMG"), a division of Universal Music Group, is the owner or exclusive United States licensee of the rights in sound recordings created prior to February 15, 1972 ("Pre-1972 Recordings") of some of the most popular and successful recording artists of the 20th Century.

Defendant Escape Media Group, Inc. ("defendant" or "Escape") developed, owns and operates the website www.grooveshark.com ("Grooveshark"). [1]

On January 6, 2010, UMG filed its Complaint asserting two causes of action against defendant Escape for (1) common law copyright infringement of UMG's rights in the Pre-1972 Recordings; and (2) unfair competition.

On February 22, 2010, Escape filed its original Answer, which asserted thirteen affirmative defenses. Escape then filed its First Amended Answer, dated June 16, 2010, which added a fourteenth and fifteenth affirmative defense, which assert that plaintiff's claims are barred by the "safe harbor" provision set forth in Section 512 of the Digital Millennium Copyright Act (the "DMCA"), codified by 17 USCA § 512, and that plaintiff's claims are preempted by Section 230 of the Communications Decency Act of 1996 (the "CDA"), codified by 47 USCA § 230(c)(1) and (e)(3).

By Order of this Court on motion sequence no. 003, dated January 13, 2011, defendant was granted leave to amend its Amended Answer in order to assert counterclaims. The Amended Answer and Counterclaims (the "Answer") was filed on January 21, 2011 and contains three counterclaims for (1) a violation of the Donnelly Act, codified by New York General Business Law Section 340 ("NY GBL 340"); (2) tortious interference with contract; and (3) tortious interference with business relations.

Motion Sequence No. 002

In this motion, UMG moves, pursuant to CPLR 3211(b), for an order dismissing Escape's fourteenth and fifteenth affirmative defenses.

Fourteenth Affirmative Defense

The DMCA provides "safe harbors" for certain categories of internet service providers, who would otherwise be subject to liability for copyright infringement. Here, Escape claims that it qualifies for the DMCA's "safe harbor, " created by 17 USCA § 512(c)(1), which provides as follows:

(c) Information residing on systems or networks at direction of users.—
(1) In general.—- A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright (emphasis added) by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider, if the service provider-—
(A)(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;
(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or
(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;
(B) does not receive a financial benefit directly attributable to infringing activity, in a case in which the service provider has the right and ability to control such activity; and
(C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

In support of this motion, UMG argues that this protection is not available to Escape, because the word "copyright" used in section 512(c)(1) refers exclusively to copyrights created pursuant to and protected by the U.S. Copyright Act (the "Copyright Act"), 17 USCA § 101, et seq. There is no dispute that in this case UMG is suing for infringement of copyrights created pursuant to and protected by New York State common law, not the federal Copyright Act. Thus, UMG reasons that the "safe harbor" provision in the DMCA cannot be implicated, because it can only protect internet service provides from liability for infringement of copyrights protected by the Copyright Act.

Section 301 of the Copyright Act makes clear that the copyrights of the Pre-1972 Recordings at issue here are not yet protected by the Copyright Act. Although Section 301, which is entitled "Preemption with respect to other laws, " does preempt all state laws pertaining to rights within the general scope of copyright, subsection (c) contains one relevant exemption:

(c) With respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, 2067. The preemptive provisions of subsection (a) shall apply to any such rights and remedies pertaining to any cause of action arising from undertakings commenced on and after February 15, 2067. Notwithstanding the provisions of section 303, no sound recording fixed before February 15, 1972, shall be subject to copyright under this title before, on, or after February 15, 2067.

17 USCA § 301(c); see Goldstein v. California, 412 U.S. 546, 552 (1973).

In Capitol Records, Inc. v. Naxos of Am. Inc., 4 N.Y.3d 540');">4 N.Y.3d 540, 559-560 (2005), the Court of Appeals defined the scope of common-law copyright protection in New York:

With the 1971, 1976 and subsequent congressional amendments to the federal Copyright Act, New York common-law protection of sound recordings has been abrogated, but only in two respects. First, the common law does not apply to any sound recording fixed, within the meaning of the federal act, after February 15, 1972, because recordings made after that date are eligible for federal statutory copyright protection. Second, state common-law copyright protection is no longer perpetual for sound recordings not covered by the federal act (those fixed before February 15, 1972), because the federal act mandates that any state common-law rights will cease on February 15, 2067. The musical recordings... created before February 15, 1972, are therefore entitled to copyright protection under New York common law until the effective date of federal preemption- February 15, 2067.
Here, the issue is whether the DMCA may provide a defense or "safe harbor" to internet service providers facing New York State common law copyright infringement claims, as opposed to copyright infringement claims under the Copyright Act.
To date, only one court has considered the issue of whether the safe harbors provided in the DMCA apply to sound recordings fixed prior to February 15, 1972. In Capitol Records, Inc. v. MP3tunes, 821 F.Supp.2d 627');">821 F.Supp.2d 627, 640 (SDNY 2011), the Hon. William H. Pauley III concluded that "there is no conflict between section 301 and the DMCA's safe harbors for infringement of pre-1972 recordings."
Judge Pauley found that "Congress did not intend the grant of federal protection [to post-1972 recordings] to preempt state and common law protection of works created before 1972. To implement that policy, Congress enacted section 301(c)." Id. at 641. However, Judge Pauley also found that Section 301(c) does not limit
Congress's ability to grant immunity to qualified internet service providers for the infringement of copyrights in works fixed before 1972. Read in context, section 301(c) is an anti-preemption provision ensuring that the grant of federal copyright protection did not interfere with common law or state rights established prior to 1972. But section 301(c) does not prohibit all subsequent regulation of pre-1972 recordings... The text of the DMCA limits immunity for the infringement of copyrights' without drawing any distinction between federal and state law.... It is beyond dispute that the common law meaning of the term copyright infringement' encompasses violations of both federal and state protections... The plain meaning ...

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