Arista Records LLC v. Usenet.com, Inc., June 30, 2009, No. 07 Civ. 8822, Opinion
On June 30, 2009, a New York District Court granted summary judgment for the Recording Artist Association of America (RIAA) in its case against Usenet.com. Judge Harold Baer of the Southern District of New York held the website liable for direct, contributory, and vicarious copyright infringement. Additionally, Judge Baer issued discovery sanctions against Usenet.com for engaging in a wide array of litigation misconduct that included wiping hard drives, sending witnesses to Europe to avoid depositions, and stonewalling legal questionnaires. A magistrate judge will soon determine the appropriate remedies.
Ars Technica summarizes the litigation, providing background to the case and the history of the website. Greg Sandoval of cnet news offers a short recap of the case. Billboard.biz writer Ben Sheffner outlines the potential precedential impact of the decision. The RIAA released a statement regarding the victory on its Music Notes Blog.
In a suit that arose in October 2007, the RIAA sued Usenet.com, Inc., Sierra Corporate Design, Inc., and the companies' director and sole shareholder, Gerald Reynolds. The RIAA accused the company of allowing and encouraging users to pay up to $19 a month to gain access to their copyrighted material. Usenet.com is a commercial provider of access to Usenet newsgroups, which offer "binaries" groups that are used to share music, movies, and pictures without paying labels or publishers. At trial, the RIAA offered evidence that the Usenet.com marketers had targeted young people who use file-sharing programs, promising that Usenet.com was "a safe alternative to peer-to-peer file sharing programs [record companies] were getting shut down."
The District Court held that Usenet.com satisfied the Cablevision test of direct infringement because the company took active steps and routinely exercised control over its servers and customers' ability to obtain copyrighted music files. Significantly, Judge Baer held that Usenet.com was guilty of secondary infringement (vicarious and contributory) and could not claim protection under the Sony Betamax decision, which allowed companies to avoid liability for contributory infringement if the device they create is "capable of significant non-infringing uses." While Sony had no control over what its buyers did with its products, Usenet.com maintains an ongoing relationship with its customers.
During litigation, the RIAA accused Usenet.com of withholding evidence such as emails, as well as destroying seven hard drives that held employee-generated data. Usenet.com was also accused to providing false information and sending employees to Europe to avoid depositions. The judge made a point of noting that there was "strong evidence of extreme wrongdoing," and he refused to allow the defendants to assert an affirmative defense under the Digital Millennium Copyright Act's ("DMCA") safe harbor provision.
The DMCA safe harbor provision protects Internet service providers from being held responsible for criminal acts committed by users. Without the safe harbor defense, Usenet.com had no case to make, and Judge Baer therefore issued summary judgment for the recording industry. A magistrate judge will determine an injunction and damages in the next few weeks.
In a statement released on its Music Notes Blog, RIAA spokeswoman Cara Duckworth stated, "We're pleased that the court recognized not just that Usenet.com directly infringed the record companies' copyrights but also took action against the defendants for their egregious litigation misconduct.
While peer-to-peer networks like BitTorrent account for far more pirated downloads than Usenet services, copyright owners are particularly concerned about Usenet.com. Usenet users demonstrate a willingness to pay for online content, and therefore these downloads are more likely to represent lost sales. Although Usenet.com is only one portal to Usenet services, this can be seen as the biggest blow to the Usenet network to date.