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Magistrate judge recommends vicarious infringement element of labels v Charter case be allowed to proceed

By | Published on Tuesday 22 October 2019

Charter Communications

A magistrate judge in the US has recommended that the courts reject an attempt by American internet service provider Charter Communications to dismiss half of the lawsuit being pursued against it by the major labels.

Charter is one of the ISPs being sued by the record industry in the wake of the landmark BMG v Cox ruling. In that case, BMG successfully argued that net firm Cox Communications should be held liable for its users’ copyright infringement, because it did not meet its obligations under US copyright law to earn safe harbour protection from such liability.

The case centred on Cox’s policy for dealing with repeat infringers. BMG argued that while Cox had such a policy, it deliberately implemented it in a shoddy way because it didn’t want to have to cut off any customers that repeatedly infringed copyright. On the back of the BMG case, the majors have sued Cox as well, plus rival ISPs Grande and Charter.

The labels are seeking to hold the net firms liable for both contributory and vicarious infringement. Although Grande successfully had the latter claim removed from its lawsuit, which is important because any damages due are likely to be higher if vicarious infringement is proven. So, unsurprisingly, Charter also wants the vicarious infringement element of the record industry’s case dismissed.

Arguing for that in June, Charter said that the labels had failed to prove liability for vicarious infringement. Noting the generally agreed definition of that kind of infringing activity, the ISP added that the lawsuit against them “lacks plausible allegations that Charter received a direct benefit from the alleged infringement or had the practical ability to stop it”.

However, having assessed the case, magistrate judge Michael E Hegarty isn’t sure about either of those claims. He reckons that the record industry’s arguments, as presented in its lawsuit, sufficiently justify the claim that the option to infringe copyright was at least a ‘draw’ for some customers buying Charter’s services, while the ISP’s own terms and conditions meant it did have the ability to stop any subsequent infringing activity.

It’s not Hegarty’s job to decide whether those arguments actually prove Charter’s liability for vicarious infringement, instead he is assessing whether said arguments are sufficient to allow the vicarious infringement claims to proceed to a full court hearing.

On that, he concludes, “taking plaintiffs’ allegations as true, plaintiffs plausibly allege the defendant profited from direct infringement while declining to exercise a right to stop or limit the infringing activity. Thus, this court respectfully recommends that [the judge actually overseeing this case] deny defendant’s motion to dismiss plaintiff’s claim for vicarious liability”.

Of course, one of Charter’s arguments for dismissing the vicarious liability element of this dispute is that that’s what happened in the Grande case. But Hegarty considers that, concluding that differences in the arguments presented in the two lawsuits means that allowing the vicarious liability part of this case to proceed would still be consistent with decisions made in that other big labels v ISP lawsuit.

It remains to be seen if the court concurs with Hegarty’s recommendation, and how Charter responds as this dispute continues to go through the motions.