Alliance of Artists & Recording Cos. v. Gen. Motors Co.

• Decision Date: 23 March 2018
• Docket Number: No. 14–cv–1271 (KBJ),14–cv–1271 (KBJ)
• Parties: ALLIANCE OF ARTISTS AND RECORDING COMPANIES, INC., Plaintiff, v. GENERAL MOTORS COMPANY, et al., Defendants.
• Court: U.S. District Court — District of Columbia

306 F.Supp.3d 422

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

v.GENERAL MOTORS COMPANY, et al., Defendants.

No. 14–cv–1271 (KBJ)

United States District Court, District of Columbia.

Signed March 23, 2018

Richard Brian Dagen, Daniel K. Oakes, Morris A. Bloom, Axinn, Veltrop & Harkrider LLP, Washington, DC, Russell Mark Steinthal, Axinn, Veltrop & Harkrider LLP, New York, NY, for Plaintiff.

Annette L. Hurst, Pro Hac Vice, Orrick, Herrington & Sutcliffe LLP, Amy E. Hayden, Pro Hac Vice, Andrew Phillip Bridges, David Lloyd Hayes, Guinevere L. Jobson, Pro Hac Vice, Jedediah Wakefield, Pro Hac Vice, Fenwick & West, LLP, San Francisco, CA, Diana Szego Fassbender, Orrick, Herrington & Sutcliffe LLP, James Mitchell Burger, Thompson Coburn, LLP, Ellen S. Kennedy, Ryan Lee Ford, Hogan Lovells U.S. LLP, Joshua Hersh Packman, Baker Botts, LLP, David D. Golden, Robert S. Schwartz, Seth David Greenstein, Frank C. Cimino, Jr., Constantine Cannon, LLP, Megan Sunkel Woodworth, Venable LLP, Washington, DC, Steven John Routh, Seattle, WA, Lauren Beth Emerson, Pro Hac Vice, Baker & Botts, L.L.P., New York, NY, Paul J. Reilly, Pro Hac Vice, Van H. Beckwith, Pro Hac Vice, Baker & Botts, L.L.P., Dallas, TX, Armen Nercess Nercessian, Fenwick & West, LLP, Mountain View, CA, for Defendant.

MEMORANDUM OPINION

KETANJI BROWN JACKSON, United States District Judge

In the technological world that existed at the time that Congress enacted the Audio Home Recording Act of 1992 ("AHRA"), 17 U.S.C. §§ 1001 et seq. , the music industry faced an existential threat brought on by Digital Audio Tape ("DAT") machines and similar devices that could produce copies of music recordings serially, without any loss in quality. The AHRA was designed to address this problem; with that legislation, Congress amended federal copyright law to require manufacturers, importers, and distributers of such "digital audio recording devices" ("DARDs") to implement certain copying control technology with respect to their recording machines and to pay a per-device royalty fee to a specified non-profit organization—the Alliance of Artists and Recording Companies ("AARC")—which would distribute the royalties to recording artists and copyright owners. Notably, the AHRA also represented a careful compromise between the music industry and the high-tech industry, because the digital music recordings produced in the context of then-emerging computer technology were intentionally carved out of the statutory scheme. See Alliance of Artists & Recording Cos. v. Gen. Motors Co. ("AARC I "), 162 F.Supp.3d 8, 20 (D.D.C. 2016).

As often happens, recording technology has evolved significantly since the enactment of the AHRA, and in the instant lawsuit, this Court must determine whether that statute should extend to a more recent innovation: in-vehicle audio recording devices that copy music from CDs onto hard drives within the devices, allowing the music to be played back inside the vehicle even without the CD. AARC has filed this action against three suppliers of such devices (DENSO International America, Clarion Corporation of America, and Mitsubishi Electric Automotive America), along with three automobile manufacturers that have sold vehicles containing such recording devices (General Motors Company, Ford Motor Company, and FCA US, respectively).¹ AARC contends that Defendants' automobile recording devices constitute DARDs within the meaning of the AHRA, and that Defendants have violated the AHRA's prescriptions by failing to pay royalties and adopt the required copying control technology with respect to these devices. (See GM Compl., ¶¶ 53–70; FCA Compl., ¶¶ 52–70.) This Court has already made two forays into the thicket of issues that this case presents, having previously resolved two motions to dismiss, as well as motions for reconsideration and clarification. See AARC I , 162 F.Supp.3d 8 ; Alliance of Artists & Recording Cos., Inc. v. Gen. Motors Co. ("AARC II "), No. 14-cv-1271, 306 F.Supp.3d 413, 2016 WL 9963947 (D.D.C. Aug. 22, 2016).

Before this Court at present are the parties' cross-motions for summary judgment, which ultimately seek to answer the same legal question that was at the focus of the Court's prior opinions in this case: whether, as a matter of statutory interpretation, Defendants' in-vehicle music recording devices are DARDs, and are thus covered by the AHRA. Defendants argue that information produced in discovery has indisputably demonstrated that the hard drives of their devices contain materials that are not incidental to the music stored on them, such that their devices do not fit under the statutory definition of a DARD.

AARC does not deny that the hard drives in Defendants' devices contain non-music-related materials, but argues that the devices nevertheless satisfy the AHRA's DARD definition because the hard drives have "partitions" that contain only music and materials incidental to the music.

For the reasons explained below, this Court finds that Defendants' devices are not DARDs for the purpose of the AHRA. The Court agrees with Defendants that a hard drive itself is a material object under the statute, and that because the evidence establishes that each of the hard drives contained in Defendants' devices has data and information not incidental to the music recorded on them, the hard drives at issue here do not constitute "digital audio copied recordings" under the AHRA, which means that Defendants' devices do not constitute DARDs. The Court further rejects AARC's hard drive "partition" theory, because AARC has not demonstrated that a partition is a distinct object that is a separate component of the hard drive on which it sits, and even if it does have a separate physical existence, AARC has not established that the partition, as opposed to the whole hard drive, is the relevant material object as far as the AHRA's definitions are concerned. Accordingly, the Court will GRANT Defendants' Joint Motion for Summary Judgment (ECF No. 111), and DENY the three motions for partial summary judgment that Plaintiff has filed in regard to its claims against GM and Denso, Ford and Clarion, and FCA and Mitsubishi, respectively (ECF Nos. 115, 116, 117). A separate order consistent with this Memorandum Opinion will follow.

I. BACKGROUND

A. Prior Proceedings

This Court has issued two previous written opinions in this matter. See AARC I , 162 F.Supp.3d 8 ; AARC II , 306 F.Supp.3d 413, 2016 WL 9963947. The factual basis and procedural history of the instant dispute, as well as the AHRA's statutory framework and legislative history, are discussed at length in the Memorandum Opinion that the Court issued on February 19, 2016, see AARC I , 162 F.Supp.3d at 9–15, and those facts and findings are expressly incorporated herein.

For present purposes, it suffices to reiterate that Congress intended the AHRA to reflect a careful compromise brokered between the music and high-tech industries. See 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) (statement of Sen. Dennis DeConcini) ("[The AHRA] represents a historical compromise among opposing segments of the entertainment and electronic industries."). Accordingly, in drafting the statute, Congress limited its application to only a specific type of recording device—what it called a "digital audio recording device" or "DARD"—and it painstakingly defined what constitutes a DARD using a complex set of nested definitions. See AARC I , 162 F.Supp.3d at 11 (noting that Congress has defined a DARD in "an intricate set of interlocking (and non-intuitive) definitions" (internal quotation marks and citation omitted) ).

In sum, under the AHRA, a DARD is any machine for private use that has a recording function that is capable of, and has the primary purpose of, making a "digital audio copied recording" ("DACR").See 17 U.S.C. § 1001(3). In other words, a DARD is a device that produces a DACR. And the statute defines a DACR as "a reproduction in a digital recording format of a digital musical recording [ ("DMR") ], whether that reproduction is made directly from another digital musical recording or indirectly from a transmission." Id. § 1001(1). Thus, a DACR is a reproduction of a DMR in a digital recording format. See AARC I , 162 F.Supp.3d at 12 (emphasizing that a DACR is a reproduction of a DMR).

Down another level, the AHRA defines a DMR is defined as follows:

(A) A "digital musical recording" is a material object—

(i) in which are fixed, in a digital recording format, only sounds, and material, statements, or instructions incidental to those fixed sounds, if any, and

(ii) from which the sounds and material can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.

(B) A "digital musical recording" does not include a material object—

(i) in which the fixed sounds consist entirely of spoken word recordings, or

(ii) in which one or more computer programs are fixed, except that a digital musical recording may contain statements or instructions constituting the fixed sounds and incidental material, and statements or instructions to be used directly or indirectly in order to bring about the perception, reproduction, or communication of the fixed sounds and incidental material.

Id. § 1001(5). In essence, this means that a DMR is a material object that contains only sounds and data incidental to those sounds, although a material object is not a DMR if it only contains spoken word recordings, or if it contains one or more computer programs. See AARC I , 162 F.Supp.3d at 12.

At the motion to dismiss stage, this Court addressed the threshold legal question of whether the AHRA is applicable to Defendants' in-vehicle devices as they are described in Plaintiff's complaints. In that phase of the case, the parties' primary disagreement centered on whether, under the AHRA, a DACR must...