Capitol Records, Inc. v. MP3tunes, LLC
| Decision Date | 29 September 2014 |
| Docket Number | No. 07cv9931.,07cv9931. |
| Citation | 48 F.Supp.3d 703,112 U.S.P.Q.2d 1638 |
| Parties | CAPITOL RECORDS, INC., et al, Plaintiffs, v. MP3TUNES, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Andrew Harrison Bart, Lindsay Warren Bowen, Jr., Jenner & Block LLP, Maryaneh Mona Simonian, Jacob Boyd Radcliff, Leighton Elizabeth Dellinger, Donald S. Zakarin, Frank Phillip Scibilia, Ross McClintic Bagley, Pryor Cashman LLP, New York, NY, Brian Hauck, Jack Douglas Wilson, Luke Cardillo Platzer, Jenner & Block, LLP, Washington, DC, Russell J. Frackman, Mitchell Silberberg & Knupp LLP, Los Angeles, CA, Mark Andrew Tamoshunas, Law Offices of Mark Tamoshunas, P.C., Brooklyn, NY, for Plaintiffs.
Ira Stephen Sacks, Jamie Brooke Shyman, Mark Stuart Lafayette, Vincent Yang Liu, Scott Michael Kessler, Akerman Senterfitt, LLP, New York, NY, for Defendants.
Defendant Michael Robertson1 moves for judgment as a matter of law, or alternatively a new trial, and for remittitur following a jury verdict in favor of Plaintiffs.2 Plaintiffs, consisting of record companies (“Labels”) and music publishers (“Publishers”), filed this federal and state law copyright and unfair competition action alleging Robertson and Defendant MP3tunes, LLC, made infringing copies of copyrighted songs and cover art available to users of the MP3tunes service. The jury returned a verdict awarding Plaintiffs $48,061,073 in damages.
While the world has moved beyond the free–MP3–download craze, the parties in this case have not. This hard-fought litigation spans 7 years and 628 docket entries. Numerous substantive motions were heard. And decisions by this Court did not deter the parties from revisiting the same issues time and again. As trial approached, the parties launched salvos of motions in limine seeking to resurrect discovery disputes, relitigate prior motions, and level an impressive array of claims and defenses.
A primary function of pre-trial litigation is to distill claims. Ultimately, the goal is to make a dispute understandable to a lay person. Despite this Court's efforts to winnow the issues, the parties insisted on an 82–page verdict sheet on liability and a 331–page verdict sheet on damages that included dense Excel tables, necessitating at least one juror's use of a magnifying glass. While the jury did its best, their assignment was beyond all reasonable scale.
To understand how this happened, one must look at the impetus for this litigation. Robertson created a business model designed to operate at the very periphery of copyright law. He encouraged users of his service to copy any MP3 they found on the Internet onto MP3tunes' servers. The Labels and Publishers viewed Robertson's activities as a threat to their continued viability. Just as Robertson tried to turn the Digital Millennium Copyright Act (“DMCA”) against the Labels and Publishers, they sought to use it to destroy him by bringing a theater-wide assault with claims for thousands of works.
While Robertson's business practices sometimes infringed copyrights, many of the Plaintiffs' claims were just too big to succeed. Plaintiffs' evidence on their most significant theories of liability—red flag knowledge and willful blindness—was sparse. And Robertson—by his words, actions, and demeanor—came across as unworthy of belief. That led the jury to rely on something other than the evidence in reaching portions of its verdict. For the following reasons, Robertson's motions are granted in part and denied in part.
MP3tunes provided an integrated music service through two websites: MP3tunes.com and Sideload.com. MP3tunes.com offered online storage “lockers” where users could store music and stream or download it from the locker to any computer with an Internet connection. Sideload.com was a search engine that allowed users to search for free music downloads. Sideload users could install the sideload plugin to their Internet browser and, when navigating to a website with MPS files, use the plugin to sideload the file. Sideloading is similar to downloading except that the destination of the file was not the user's computer, rather, it was the user's MP3tunes locker and Sideload. (See Tr. at 278–92 (Horowitz).) Once an MP3 file was sideloaded, it was available to anybody who visited Sideload.
More information regarding the operation of Robertson's MP3tunes business model is available in this Court's earlier Memoranda & Orders. See Capitol Records, Inc. v. MP3tunes, LLC, 28 F.Supp.3d 190, 2014 WL 2431295 (S.D.N.Y. Apr. 7, 2014) (); Capitol Records, Inc. v. MP3tunes, LLC, 07 Civ. 9931(WHP), 2014 WL 503959 (S.D.N.Y. Jan. 29, 2014) (); Capitol Records, Inc. v. MP3tunes, LLC, 07 Civ. 9931(WHP), 2013 WL 1987225 () (“MP3tunes II ”), reconsidering Capitol Records, Inc. v. MP3tunes, LLC, 821 F.Supp.2d 627 (S.D.N.Y.2011) () (“MP3tunes I ”); Capitol Records, Inc. v. MP3tunes, LLC, 07 Civ. 9931(WHP), 2009 WL 3364036 (S.D.N.Y. Oct. 16, 2009) ().
In the liability phase, the jury sat attentively through a 12–day trial. The jurors found MP3tunes directly liable for infringement of Plaintiffs' reproduction and public display rights in cover art and for unfair competition with respect to pre–1972 sound recordings. Concluding that MP3tunes acted with both red flag knowledge and willful blindness, the jurors found MP3tunes secondarily liable for infringements by MP3tunes' users, third-party websites, and MP3tunes' Executives. Finally, the jury did not find MP3tunes secondarily liable for violating Plaintiffs' distribution rights. While the jury did not hold Robertson contributorily liable for MP3tunes' failure to remove certain works from lockers in response to takedown notices, it imposed secondary liability on Robertson for every other claim on which it held MP3tunes liable. (Sacks Decl. Ex. B, at 1–18.)
During the damages phase, the jury found MP3tunes and Robertson acted willfully as to all infringing acts except for MP3tunes' failure to remove works from lockers. The jury awarded Plaintiffs $48,061,073 in damages. (Def. Robertson's Br. at 1.)
A. Legal Standard
absence of evidence supporting the verdict that the jury's findings could only have been the result of sheer surmise and conjecture, or there is such an overwhelming amount of evidence in favor of the movant that reasonable and fair minded [jurors] could not arrive [at that verdict.]” Bucalo v. Shelter Island Union Free Sch. Dist., 691 F.3d 119, 127–28 (2d Cir.2012) (citations omitted). The court is not permitted to “weigh[ ] the credibility of the witnesses or otherwise consider[ ] the weight of the evidence.” This Is Me, Inc. v. Taylor, 157 F.3d 139, 142 (2d Cir.1998). It must also “draw all reasonable inferences in favor of the nonmoving party” and “disregard all evidence favorable to the moving party that the jury is not required to believe.” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150–51, 120 S.Ct. 2097, 147 L.Ed.2d 105 (2000).
To find Robertson vicariously liable for MP3tunes' copyright infringement through its Executives, the jury was required to find that “(1) Robertson had the right and ability to supervise the infringing activity of MP3tunes, and (2) Robertson received a financial benefit directly attributable to the infringing activity of MP3tunes.”3 (Decl. of Ira Sacks dated May 1, 2014, Ex. A: Liability Charge (“Charge”), ECF No. 613–1, at 24; see Arista Records LLC v. Usenet.com. Inc., 633 F.Supp.2d 124, 156 (S.D.N.Y.2009) (citation omitted).) Robertson contends there was insufficient evidence of a direct financial benefit.
A direct financial benefit exists where there is a causal relationship between the infringing activity and an obvious and direct financial interest—for example, where infringing material acts as a “draw” to attract subscribers to a defendant's business. (Charge at 25; see A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir.2001) (citation omitted).) The evidence showed that, in the short-term, infringing content—obtained surreptitiously through Sideload.com, the sideload plugin, and the actions of MP3tunes' Executives and users—drew users to MP3tunes, expanded the user base, and allowed Robertson to sell additional MP3tunes' locker subscriptions. In the long-term, Robertson planned to leverage that draw into a substantial user base creating a rival to iTunes. While those long-term plans were unrealized, the jury found that Robertson received a financial benefit in the short-term.
Robertson's argument conflates “financial benefit” with “profit.” Robertson derived a financial benefit by using the infringing material to draw additional subscribers. It does not matter whether MP3tunes or Robertson profited, because the point was to grow the business and its user base. A profit need not be realized to satisfy the standard for financial benefit. See MP3tunes II, 2013 WL 1987225, at *10 (citing A & M Records, Inc. v. Napster, Inc., 114 F.Supp.2d 896, 921 (N.D.Cal.2000), rev'd on other grounds, 239 F.3d 1004 (9th Cir.2001) ); cf. Arista Records, Inc. v. MP3Board, Inc., 00 CV 4660(SMS), 2002 WL 1997918, at *11 (S.D.N.Y. Aug. 29, 2002) (). Accordingly, Robertson's motion for judgment as a matter of law on this claim is denied.
To find Robertson contributorily liable, the jury was required to find that Robertson (1) had knowledge of the infringing activity and (2) induced,...
To continue reading
Request your trial