162 F.Supp.3d 8 (D.D.C. 2016), C. A. 14-cv-1271 (KBJ), Alliance of Artists and Recording Companies, Inc. v. General Motors Co.

Docket Nº:Civil Action 14-cv-1271 (KBJ)
Citation:162 F.Supp.3d 8, 118 U.S.P.Q.2d 1134
Opinion Judge:KETANJI BROWN JACKSON, United States District Judge.
Party Name:ALLIANCE OF ARTISTS AND RECORDING COMPANIES, INC., Plaintiff, v. GENERAL MOTORS COMPANY, et al., Defendants
Attorney:Civil Action No. 14-cv-1271 (KBJ) For ALLIANCE OF ARTISTS AND RECORDING COMPANIES, INC., on behalf of itself and all others similarly situated, Plaintiff: Richard Brian Dagen, LEAD ATTORNEY, Daniel K. Oakes, Michael David Bednarek, Morris A. Bloom, AXINN, VELTROP & HARKRIDER LLP, Washington, DC. ...
Case Date:February 19, 2016
Court:United States District Court, Federal Circuit
 
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162 F.Supp.3d 8 (D.D.C. 2016)

118 U.S.P.Q.2d 1134

ALLIANCE OF ARTISTS AND RECORDING COMPANIES, INC., Plaintiff,

v.

GENERAL MOTORS COMPANY, et al., Defendants

Civil Action No. 14-cv-1271 (KBJ)

United States District Court, D. Columbia

February 19, 2016

For ALLIANCE OF ARTISTS AND RECORDING COMPANIES, INC., on behalf of itself and all others similarly situated, Plaintiff: Richard Brian Dagen, LEAD ATTORNEY, Daniel K. Oakes, Michael David Bednarek, Morris A. Bloom, AXINN, VELTROP & HARKRIDER LLP, Washington, DC.

For DENSO INTERNATIONAL AMERICA, INC., Defendant, Counter Claimant: Annette L. Hurst, LEAD ATTORNEY, PRO HAC VICE, ORRICK, HERRINGTON & SUTCLIFFE LLP, San Francisco, CA; Steven John Routh, LEAD ATTORNEY, ORRICK, HERRINGTON & SUTCLIFFE, LLP, Washington, DC; James Mitchell Burger, THOMPSON COBURN, LLP, Washington, DC.

For FORD MOTOR COMPANY, Defendant: Van H. Beckwith, LEAD ATTORNEY, BAKER & BOTTS, L.L.P., Dallas, TX; Joshua Hersh Packman, BAKER BOTTS, LLP, Washington, DC.

For CLARION CORPORATION OF AMERICA, Defendant: Paul J. Reilly, Van H. Beckwith, LEAD ATTORNEYS, PRO HAC VICE, BAKER & BOTTS, L.L.P., Dallas, TX; Joshua Hersh Packman, BAKER BOTTS, LLP, Washington, DC.

For GENERAL MOTORS LLC, Defendant: Andrew Phillip Bridges, LEAD ATTORNEY, FENWICK & WEST, LLP, San Francisco, CA; David Lloyd Hayes, LEAD ATTORNEY, San Francisco, CA.

For MITSUBISHI ELECTRIC AUTOMOTIVE AMERICA, INC., 14cv1920, Defendant: David D. Golden, Robert S. Schwartz, Seth David Greenstein, LEAD ATTORNEYS, CONSTANTINE CANNON, LLP, Washington, DC.

For FCA U.S. LLC, 14cv1920, Defendant: David D. Golden, Robert S. Schwartz, Seth David Greenstein, LEAD ATTORNEYS, CONSTANTINE CANNON, LLP, Washington, DC; Megan Sunkel Woodworth, LEAD ATTORNEY, VENABLE LLP, Washington, DC.

For ALLIANCE OF ARTISTS AND RECORDING COMPANIES, INC., on behalf of itself and all others similarly situated, Counter Defendant: Richard Brian Dagen, LEAD ATTORNEY, Michael David Bednarek, AXINN, VELTROP & HARKRIDER LLP, Washington, DC.

For GENERAL MOTORS LLC, Counter Claimant: Andrew Phillip Bridges, LEAD ATTORNEY; David Lloyd Hayes, LEAD ATTORNEY, San Francisco, CA.

For ALLIANCE OF ARTISTS AND RECORDING COMPANIES, INC., on behalf of itself and all others similarly situated, Counter Defendant: Richard Brian Dagen, LEAD ATTORNEY, Michael David Bednarek, AXINN, VELTROP & HARKRIDER LLP, Washington, DC.

[118 U.S.P.Q.2d 1136]MEMORANDUM OPINION

KETANJI BROWN JACKSON, United States District Judge.

The Audio Home Recording Act of 1992 (" AHRA" ), 17 U.S.C. § § 1001 et seq., requires

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manufacturers, importers, and distributers of " digital audio recording devices" (" DARDs" ) to incorporate certain copying control technology into their devices and pay a set royalty amount for each device. The AHRA is part of federal copyright law, and a non-profit organization called the Alliance of Artists and Recording Companies (" AARC" ) assists the U.S. Copyright Office in enforcing the AHRA's provisions by, among other things, collecting AHRA royalties and distributing them to featured recording artists and sound recording copyright owners. ( See Compl. (" GM Compl." ), ECF No. 1, ¶ 8); see also Justin M. Jacobson, What Is the AARC ?, 56 J. Copyright Soc'y U.S.A. 213, 215 (2008). In the instant action, the AARC contends that automobile suppliers DENSO International America, Clarion Corporation of America, and Mitsubishi Electric Automotive America have developed certain audio technology that car manufacturers General Motors Company, Inc., Ford Motor Company, and FCA U.S. (collectively, " Defendants" ) have been installing in certain car models since 2008.1 The AARC believes these audio devices qualify as DARDs for AHRA purposes; its five-count complaint seeks an injunction, a declaratory judgment, and monetary damages, claiming that Defendants should be paying royalties and implementing copying control technology when vehicles equipped with these devices are made and marketed, and that Defendants have violated the AHRA because they have done no such thing to date. ( See GM Compl. ¶ ¶ 52-70; FCA Compl. ¶ ¶ 53-70.)2

Before this Court at present are a motion to dismiss that Ford and Clarion have filed jointly under Federal Rule of Civil Procedure 12(b)(6), and a motion for judgment on the pleadings that General Motors has submitted pursuant to Rule 12(c). ( See ECF Nos. 30, 48.) Both dispositive motions make essentially the same argument: that none of the devices at issue, as described in the complaint, satisfies the AHRA's multi-faceted DARD definition, and thus the statute's mandated royalty payments and technology limits do not apply. This Court largely agrees with these defendants' interpretation of the statute for the reasons explained below, but it also concludes that the allegations that the AARC makes regarding the devices at issue are sufficient to survive the Rule 12 motions. Accordingly, and as set forth in the separate order that accompanies this Memorandum Opinion, these motions will be DENIED.

I. BACKGROUND

A. The Audio Home Recording Act Of 1992

In the 1980s, the music industry faced a growing problem in the form of emerging digital technology that allowed users to create multi-generation copies of sound recordings without losing sound quality. This was a new issue for the industry because, with older analog technology, each successive copy of the same sound recording

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sounded worse; consequently, consumers always had an incentive to purchase the original recording from its manufacturer. See Recording Indus. Ass'n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072, 1073 (9th Cir. 1999). By contrast, Digital Audio Tape (" DAT" ) machines and other new digital recording technology could produce a copy of an original audio recording, then copy that copy of the original, then copy the copy of the copy of the original, and so forth and so on, [118 U.S.P.Q.2d 1137] and the copies sounded just as good as the original recording, leading the music industry to fear that it could lose significant revenue. See H.R. Rep. No. 102-873, pt. 1, at 18 (1992).3 At the same time, the high-tech manufacturers and users of DAT machines and other digital audio recording technology were becoming increasingly concerned that the production and use of devices that could produce such high-quality copies of protected material would expose them to liability for copyright infringement on a massive scale. See Jacobson, supra, at 213. These various concerns led to protracted negotiations in Congress, which ultimately culminated in the Audio Home Recording Act of 1992 (" AHRA" ), 17 U.S.C. § 1001 et seq.

It is well-established that the AHRA was a " grand compromise" between the stakeholders insofar as the statute was designed to address both the serial copying problem that concerned the music industry and the high-tech industry's fear of widespread copyright infringement liability. Lee A. Hollaar, Legal Protection of Digital Information 150 (2002); see also The Audio Home Recording Act of 1991: Hearing on S. 1623 Before the S. Subcomm. on Patents, Copyrights & Trademarks of the S. Comm. on the Judiciary, 102d Cong. 1 (1991) [hereinafter 1991 Senate Hearing ] (statement of Sen. Dennis DeConcini) (" [This bill] represents a historical compromise among opposing segments of the entertainment and electronic industries. As in all such compromises, all parties had to give a little to gain a little." ). Significantly for present purposes, one by-product of the extensive negotiations is the particular and carefully defined scope of the statute: rather than " prohibit[ing] digital serial copying of copyright protected audio recordings" altogether, " the Act [instead] places restrictions only upon a specific type of recording device[,]" Diamond, 180 F.3d at 1075, and it provides immunity from copyright infringement lawsuits if the manufacturers of those particular devices comply with the statutory restrictions.

To this end, the AHRA contains a lengthy " Definitions" section that prescribes the statute's reach by laying out the intended meaning of a " digital audio recording device" (a.k.a. DARD), which is the only type of recording device to which the statutory requirements pertain. See 17 U.S.C. § 1001. Then, on the restrictions side of the AHRA balance, the statute imposes two limitations on electronics manufacturers and distributers with respect to the production of DARDs. First, it requires that DARDs be manufactured to " conform to the Serial Copy Management System [or] a system that has the same functional characteristics[,]" 17 U.S.C. § 1002(a)(1)-(2); that is, DARDs must contain technology that " allows the making of

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unlimited copies from an original digital recording but prevents any copies being made from those copies."...

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