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Windstream Services LLC v. BMG Rights Management (US) LLC

United States District Court, S.D. New York

April 17, 2017

WINDSTREAM SERVICES, LLC, Plaintiff,
v.
BMG RIGHTS MANAGEMENT (US) LLC and RIGHTSCORP, INC., Defendants.

MEMORANDUM OPINION & ORDER

          KIMBA M. WOOD, District Judge.

         Plaintiff Windstream Services, LLC ("Windstream"), an internet service provider ("ISP"), brings this action against Defendants BMG Rights Management (US) LLC ("BMG"), a copyright holder, and Rightscorp Inc. ("Rightscorp"), BMG's copyright enforcement agent, seeking declaratory judgment regarding copyright noninfringement and damages for intentional interference with contractual relations. Defendants move to dismiss for lack of subject-matter jurisdiction and for failure to state a claim. For the reasons set forth below, the motion to dismiss is GRANTED.[1]

         I. BACKGROUND[2]

         Windstream provides internet access services to over one million subscribers nationwide. Am. Compl. ¶¶ 12-14, ECF No. 38. Windstream's subscribers pay a monthly subscription fee to receive unlimited internet access. Id. ¶ 16. Windstream provides a "pipeline" to the internet to its subscribers and does not monitor or control the actions taken by its subscribers or the content transmitted over its network. Id. ¶ 26. Instead, Windstream merely transmits and routes the internet content requested by its subscribers. Id. ¶¶ 27-29.

         As part of their subscriptions, Windstream's subscribers must agree to Windstream's Acceptable Use Policy ("AUP") and Terms and Conditions ("T&Cs") before using Windstream's internet services. Id. ¶ 17. As part of the AUP, Windstream's subscribers acknowledge that it is a violation of the AUP to use Windstream's internet services in any way that "infringes intellectual property." Id. ¶ 20. The AUP also provides copyright owners with instructions for filing a copyright infringement notice with Windstream and instructions for submitting counter-notifications in response to a wrongfully filed copyright infringement notice. Id. ¶ 23. Windstream reserves the right to terminate service "that it determines is excessive or unreasonable, " id. ¶ 21, and may suspend or terminate accounts that violate the T&Cs, id. ¶ 22. The T&Cs state Windstream's ability to enforce copyright infringement policies and state that Windstream may limit, interrupt, suspend, terminate, or refuse internet services if a subscriber is using Windstream's services for unlawful activity. Id. ¶ 24.

         BMG owns, administers, and licenses copyrights in musical compositions. Id. ¶ 33. BMG hired Rightscorp to detect and document potential infringement of BMG's coprights. Id. ¶¶ 34-36. In particular, Rightscorp has technology to monitor peer-to-peer filesharing systems such as BitTorrent. Id. ¶ 36. BitTorrent is a filesharing system that allows a user to "join a 'swarm' of hosts to upload or download content from one another simultaneously." Id. ¶ 37. When a user requests a file, the BitTorrent software "identifies multiple host computers with the identical file, simultaneously downloads small pieces of the requested file from each of these computers, and then reassembles the pieces into one file on the requesting computer." Id. Rightcorp's monitoring system "searches BitTorrent systems and extracts information attempting to identify alleged infringers of BMG's copyrights." Id. ¶ 38. Using this information, Rightscorp, at BMG's direction, automatically generates copyright infringement notification letters that describe the potential infringement activity. Id. ¶ 39.

         Since at least 2011, BMG, through Rightscorp, has sent and continues to send Windstream copyright notices describing instances of alleged infringement by Windstream's subscribers. Id. ¶ 41. The parties provided the Court with one representative notice. Allan Decl. Ex. 1 ("Sample Notice"), ECF No. 43-1; see also Miller Decl. Ex. A, ECF No. 51-1. The Sample Notice is an email that begins "Note to ISP: Please forward the entire notice." Sample Notice at 1. The Sample Notice is, from then on, addressed to the accused infringer, and begins:

Your ISP has forwarded you this notice. Your ISP account has been used to download, upload or offer for upload copyright content in a manner that infringes on the rights of the copyright owner. Your ISP service could be suspended if this matter is not resolved. You could be liable for up to $ 150, 000 per infringement in civil penalties.

Id. The Sample Notice describes the filename of the song that is allegedly covered by BMG's copyright, notes the time and date of the alleged infringement, states that BMG is the exclusive owners of copyrights for that musical artist, and identifies the computer of the accused infringer by its internet protocol ("LP.") address. Id. The Sample Notice states that the "notice is an offer of settlement" and provides an internet link to Rightscorp's "automated settlement system, " where the accused infringer can pay $30 per infringement to receive a legal release from BMG. Id. The Sample Notice describes that unauthorized copying or distribution constitutes copyright infringement and states that Rightscorp has a good-faith belief that the use complained of is not authorized by the copyright owner. Id. at 1-2. The Sample Notice is signed by Rightscorp's CEO. Id. at 2.

         On April 1, 2016, counsel for BMG sent a letter to Windstream's general counsel regarding copyright infringement of BMG's copyrights on Windstream's network. Am. Compl. ¶ 51; see also Miller Decl. Ex. B ("April 1 Letter"), ECF No. 51-2. According to the April 1 Letter, Windstream had contacted Rightscorp in December "to discuss a solution to the ongoing infringement, " and BMG responded to try to reach such a resolution. April 1 Letter at 1. The letter describes the notifications BMG and Rightscorp have provided to Windstream, including: the emailed notices; a dashboard that Rightscorp provided to Windstream "to view both historic and real time infringement of BMG's copyrighted works on its network"; and "summary letters, detailing the infringement of its copyrights on Windstream's network and requesting Windstream to take appropriate action." Id. Based on these mechanisms, BMG states that Windstream has knowledge of the infringement on its network, which includes millions of instances of infringement of thousands of copyrighted works. Id. The letter suggests that Windstream is allowing repeat infringers to use its network to continue to infringe BMG's copyrights even after Windstream was notified of specific instances of infringement and suggests that Windstream may be liable for actual or statutory damages. Id. at 2. The letter concludes by suggesting that "the parties begin an open dialogue to discuss an amicable resolution to this ongoing" infringement. Id.

         On June 27, 2016, Windstream filed the instant lawsuit. Compl., ECF No. 1. In the amended complaint, Windstream brings suit on three counts: (1) declaratory judgment for noninfringement of copyrights; (2) declaratory judgment for statute of limitations; and (3) intentional inference with contractual relations under California law. Am. Compl. ¶¶ 59-79. As to the first count, Windstream seeks thirteen declarations from the Court:

(a) Windstream, as a mere conduit for the transmission of Internet services, is not directly liable under the Copyright Act for any alleged infringement of BMG's copyrights;
(b) Windstream, as a mere conduit for the transmission of Internet services, is not liable for contributory infringement of any of BMG's copyrights;
(c) Windstream, as a mere conduit for the transmission of Internet services, is not liable for vicarious infringement of any of BMG's copyrights;
(d) Windstream, as a mere conduit for the transmission of Internet services, is not liable for inducing infringement of any of BMG's copyrights;
(e) Windstream, as a mere conduit for the transmission of Internet services, is the type of ISP contemplated by 17 U.S.C. § 512(a) and is, therefore, not subject to the § 512(c) take-down notice provisions of the DMCA, including any Notices issued by Defendants;
(f) Windstream has not been and is not required to comply with or otherwise respond to Defendants' Notices;
(g) Even if Windstream were subject to the DMCA's take-down notice provisions, Defendants' Notices fail to comply with the DMCA's express statutory requirements for take-down notices as set forth in 17 U.S.C. § 512(c)(3) and are therefore insufficient to impose any legal duty on Windstream;
(h) Defendants' Notices do not provide Windstream with actual knowledge of any copyright infringement of BMG's copyrights by Windstream's subscribers;
(i) Defendants' Notices constitute misrepresentation of copyright infringement under 17 U.S.C. § 512(f);
(j) Defendants' Notices constitute intentional interference with contractual relations under California law;
(k) Windstream has never had actual knowledge of any copyright infringement of BMG's copyrights by Windstream's subscribers;
(l) Windstream has not acted willfully in violation of any provision of the Copyright Act or other laws; and
(m)BMG is not entitled to any compensation or damages from Windstream for any alleged infringement of ...

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