State court ruling creates new uncertainty for DMCA safe harbors | White & Case LLP International Law Firm, Global Law Practice
State court ruling creates new uncertainty for DMCA safe harbors

State court ruling creates new uncertainty for DMCA safe harbors

White & Case Technology Newsflash

A New York state court has ruled that a DMCA safe harbor does not protect internet services from claims they infringe pre-1972 sound recordings. The decision, UMG Recordings v. Escape Media Group, creates new uncertainty and risks for internet services that rely on the protections of the DMCA to shield them from copyright infringement liability.

When it was revised in 1976, the U.S. Copyright Act preempted virtually all state law copyright protections, with one notable exception: state law continues to protect sound recordings that were fixed before February 15, 1972.

The Digital Millennium Copyright Act (DMCA) amended the U.S. Copyright Act in 1998 and created "safe harbors" to exempt certain types of internet services from copyright infringement liability. One of these safe harbors, 17 U.S.C. § 512(c), protects services that host and deliver content that is uploaded at the direction of users. Many popular online services, like YouTube, are protected by this safe harbor.

Grooveshark is a service that lets users upload audio files, typically songs, to an archive maintained on the defendant's computer servers. Other users can search those servers and stream recordings to their own computers and electronic devices. The plaintiff, UMG, owns a large catalog of recordings, including many iconic works from the early days of rock and roll like "Peggy Sue" by Buddy Holly, "Johnny B. Goode" by Chuck Berry, and "My Girl" by the Temptations. The plaintiff sued in state court alleging copyright infringement of its pre-1972 recordings, and the defendant asserted the DMCA safe harbor as an affirmative defense. The lower court denied the plaintiff's motion to strike the affirmative defense, and the plaintiff appealed.

The New York Appellate Court's Ruling
On April 23, 2013, a panel of the appellate division issued its opinion reversing the lower court's decision and ruling that the DMCA safe harbor does not apply to pre-1972 recordings. UMG Recordings, Inc. v. Escape Media Group, Inc., Index No. 100152/10 (N.Y. App. Div. 2013).

Section 301(c) of the Copyright Act provides that nothing in the Act annuls or limits state copyright protections in sound recordings fixed before February 15, 1972. This language, the court reasoned, is unqualified, and thus any material limitation on the right to assert a state-law infringement claim would violate Section 301(c). The court found no reason to conclude that Congress, when it enacted the DMCA, intended to modify Section 301(c) to make the safe harbor applicable to state law claims. Indeed, the court found, it was reasonable to interpret the DMCA as pertaining only to works covered by federal law. The court rejected the argument its ruling would thwart the purpose of the DMCA to protect online services, stating that it was up to Congress to amend the Copyright Act if it so decided.

Notably, the court was not persuaded by Capitol Records, Inc. v. MP3tunes, LLC, 821 F. Supp. 2d 627 (S.D.N.Y. 2011), where a federal district court ruled that the DMCA safe harbor did apply to pre-1972 sound recordings.

The defendant has publicly stated that it will appeal the appellate division's decision.

This decision could have significant implications.

It calls into question whether any of the DMCA safe harbors – including Section 512(a) for transitory digital network communications, Section 512(b) for system caching, and Section 512(d) for information location tools – shield internet services from claims that they infringe pre-1972 sound recordings. The court ruled that Section 301(c) bars any material limitation on state law rights in sound recordings, and Copyright owners might seek to extend that logic to the other DMCA safe harbors.

If the decision is not reversed, New York state courts, which are not bound by the federal court decision in Capitol Records, may become the preferred venue for copyright owners to enforce their rights in pre-1972 sound recordings.

Internet services should consider their existing practices to determine whether they face risks for transmitting, hosting, caching, and directing users to pre-1972 sound recordings.

If this decision proves disruptive, Congress may step in to clarify the appropriate application of the DMCA safe harbors.


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