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Universal’s pre-1972 technicality fails in ongoing Grooveshark battle

By CMU Editorial | Published on Wednesday 11 July 2012

One chapter in the ongoing Record Industry v Grooveshark saga has reached its conclusion (any appeals pending) with a victory to the often controversial streaming music service, though arguably Universal Music had already given up on this particular legal assault, even if it still argued this case in court.

As much previously reported, while many indie labels do licence Grooveshark (for the time being at least), all four majors reckon that the US company’s business model is set up to abuse loopholes in American copyright law so that it can offer a vast catalogue of music, much of it without licence from rights owners. And while Grooveshark, in its defence, often positions itself as the champion of artists over labels, many musicians and songwriters have also been very vocal in their criticism of the streaming music platform in recent years.

The key difference between Grooveshark and the likes of Spotify, Rdio and Deezer, is that it allows users to upload music to its library. That means that large quantities of content from labels that have not done a licensing deal with the firm routinely appear in the Grooveshark library. But the company does operate a takedown system, pledging to remove unlicensed content if and when it is made aware of it. This, Grooveshark argues, and pretty convincingly based on recent precedent, protects it from liability for copyright infringement in the US jurisdiction, under the Digital Millennium Copyright Act.

But the major record companies argue that, because Grooveshark operates a passive takedown system, however many times a label requests content be removed, users will always quickly re-upload missing tracks, which renders the takedown process pointless. Some have also alleged that that fact is further exasperated by Grooveshark running a deliberately shoddy takedown system to further ensure it has as big a catalogue as possible at any one time. But the streaming music firm argues that the DMCA doesn’t require technology companies to develop rights-holder-friendly proactive takedown systems in order to avoid infringement claims, and court rulings in similar cases back up that claim.

To that end, the labels have been trying to find ways to circumvent the DMCA when challenging Grooveshark. One ruse attempted by Universal Music was to file a lawsuit in the New York courts that specifically related to recordings owned by the label that were released prior to 1972. This is because the DMCA is a piece of federal law, and US-wide copyright law only began in America in 1972. Copyright works from before then are protected by State laws, and, Universal’s legal team argued – somewhat optimistically – that the DMCA did not apply on State law.

The same argument was also presented as part of EMI’s much previously reported legal fight with the now defunct MP3tunes.com, and last November the judge hearing that case knocked the technicality back, saying it was ridiculous to say that DMCA rules only applied to post-1972 works, because that would put an unfair burden on tech companies utilising protection from the act, who couldn’t be expected to know what recordings in common circulation actually dated from before federal copyright law was introduced. In light of that ruling, it was going to be pretty hard for Universal to argue the same point.

And sure enough, according to Techdirt, that particular Universal lawsuit against Grooveshark has been knocked back too, with the judge citing the MP3tunes ruling as precedent. It means that the digital music service can claim DMCA protection for all the music its streams, oblivious of when that music was released. The judge also knocked back some of Universal’s attempts to have counterclaims made against it by Grooveshark dismissed, though the streaming service’s allegations of anti-trust behaviour by the music company were rejected.

Of course, within weeks of the MP3tunes ruling, Universal had filed a new lawsuit against Grooveshark, alleging that the digital firm had its own staff upload unlicensed music. If that could be proven, the digital firm would not be able to hide behind DMCA protection, and would be liable for copyright infringement. That case, now also backed by Sony Music and Warner Music, is ongoing.

Meanwhile, the US record industry is quietly – and sometimes not so quietly – lobbying for Congressional clarification on those elements of the DMCA used by Grooveshark and others (mainly YouTube competitors) to circumvent infringement claims.

An increasing number of rights owners believe that, because the courts have set a low minimum standard for takedown processes, it has allowed companies to build businesses out of a flaw in the system, ie that because users are constantly uploading unlicensed content, rights owners cannot keep up with takedown requests, meaning websites can offer vast catalogues of music at anyone time without permission, but without any copyright liability. The labels would like the DMCA to be amended so that more sophisticated takedown systems, such as that operated by Google’s YouTube, would become compulsory.