New York Supreme Court

Transcription

1 New York County Clerk s Index No /10 To Be Argued By: John J. Rosenberg New York Supreme Court APPELLATE DIVISION FIRST DEPARTMENT UMG RECORDINGS, INC., Plaintiff-Appellant, against ESCAPE MEDIA GROUP, INC., Defendant-Respondent. BRIEF FOR DEFENDANT-RESPONDENT JOHN J. ROSENBERG MATTHEW H. GIGER BRETT T. PERALA ROSENBERG & GIGER P.C. Attorneys for Defendant-Respondent 488 Madison Avenue, 10th Floor New York, New York jrosenberg@rglawpc.com mgiger@rglawpc.com bperala@rglawpc.com Printed on Recycled Paper

2 TABLE OF CONTENTS Page INTRODUCTION... 1 QUESTIONS PRESENTED... 5 FACTUAL BACKGROUND AND PROCEDURAL HISTORY... 6 Escape s Business... 6 Escape s Compliance with the DMCA... 8 The Present Litigation... 9 The MP3tunes Decisions The Copyright Office Report The Lower Court s Decision The Notice of Appeal ARGUMENT I. Standard of Review II. The Relevant Statutes III. The Language, Legislative History and Intent of the DMCA Confirm Its Applicability to Both Pre- and Post-1972 Recordings A. The Language of the DMCA Makes No Distinction Between the Application of Its Safe Harbor Provisions to Claims of Infringement Based on Pre- and Post-1972 Recordings B. The Statutory Intent and Legislative History of the DMCA Further Undermine UMG s Asserted Position i

3 C. The Copyright Office Report Is Not Entitled To Deference IV. Application of the DMCA to Pre-1972 Recordings Neither Limits Nor Annuls State Law A. Application of the DMCA to Pre-1972 Recordings Does Not Violate Section 301(c) CONCLUSION PRINTING SPECIFICATIONS STATEMENT ii

4 TABLE OF AUTHORITIES Page Cases 182 Fifth Ave., LLC v. Design Dev. Concepts, Inc., 300 A.D.2d 198, 751 N.Y.S.2d 739 (1st Dep t 2002)... 6, 15 Am. Library Assoc. v. Pataki, 969 F. Supp. 160 (S.D.N.Y. 1997) Bartok v. Boosey & Hawkes, Inc., 523 F.2d 941 (2d Cir. 1975) Bishop v. Maurer, 33 A.D.3d 497, 823 N.Y.S.2d 366 (1st Dep t 2006) Butler v. Catinella, 58 A.D.3d 145, 868 N.Y.S.2d 101 (2d Dep t 2008)... 16, 24 Capitol Records, Inc. v. MP3tunes, LLC, 821 F. Supp. 2d 627 (S.D.N.Y. 2011)... passim Capitol Records, Inc. v. Naxos of Am., 4 N.Y.3d 540, 830 N.E.2d 250 (2005)... 16, 17, 26 Elektra Entm t Grp. v. Barker, 551 F. Supp. 2d 234 (S.D.N.Y. 2011)... 13, 32, 33 EMI Records Ltd. v. Premise Media Corp., L.P., Index No /08, 2008 N.Y. Misc. LEXIS 7485 (Sup. Ct. N.Y. Co. 2008) Fireman s Fund Ins. Co. v. Farrell, 57 A.D.3d 721, 869 N.Y.S.2d 597 (2d Dep t 2008)... 15, 16 Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 654 F.3d 958 (9th Cir. 2011) Goldstein v. California, 412 U.S. 546 (1973) Grunder v. Recckio, 138 A.D.2d 923, 526 N.Y.S.2d 267 (4th Dep t 1988) McCarthy v. Bronson, 500 U.S. 136 (1991) iii

5 Morris v. Bus. Concepts, Inc., 283 F.3d 502 (2d Cir. 2002) Polan v. State Ins. Dep t, 3 N.Y.3d 54, 814 N.E.2d 789 (2004) Small v. Gen. Nutrition Co., 388 F. Supp. 2d 83 (E.D.N.Y. 2005) UMG Recordings, Inc. v. Veoh Networks Inc., 665 F. Supp. 2d 1099 (C.D. Cal. 2009)... 18, 19, 28 Viacom Int l Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012)... 19, 35 Viacom Int l Inc. v. YouTube, LLC, 718 F. Supp. 2d 514 (S.D.N.Y. 2010),... 19, 27, 28, 39 Wolk v. Kodak Imaging Network, Inc., 10 Civ (RWS), 2011 U.S. Dist. LEXIS (S.D.N.Y. 2011) Yeardon v. Henry, 91 F. 3d 370 (2d Cir. 1996) Statutes 17 U.S.C U.S.C , U.S.C U.S.C , 4, U.S.C. 301(a) U.S.C. 301(c)... passim 17 U.S.C. 501(a)... 21, 22, 25, U.S.C passim 17 U.S.C. 512(c)... 7, 17, 19, U.S.C. 512(c)(1) U.S.C. 512(c)(3)(A)(iii) iv

6 17 U.S.C. 512(c)(3)(A)(v)... 24, U.S.C. 512(m)(1) U.S.C. 512(c)(2) U.S.C. 512(c)(3) U.S.C. 230(e)(2) U.S.C. 230(c)(1) and (e)(3) N.Y. Gen. Bus. Law v

7 INTRODUCTION This appeal raises significant issues concerning the applicability and scope of the Digital Millennium Copyright Act, 17 U.S.C. 512 (the DMCA ), a statute that was intended to facilitate the robust development of the internet by providing a safe harbor from copyright infringement liability to internet service providers for content uploaded to their websites by third parties. Hoping that this Court will ignore the decisions of the federal and state courts that have addressed the issue, plaintiff-appellant UMG Recordings, Inc. ( UMG ) argues that the DMCA s safe harbor provisions should be unavailable in respect of sound recordings that were created prior to February 15, In advancing its untenable position, UMG urges this Court to contort the plain language of the DMCA and disregard its manifest purpose by endorsing a construction of the statute that would, in the words of United States District Judge William Pauley, eviscerate the DMCA s critical safe harbor provisions and lead to an absurd or futile result. Capitol Records, Inc. v. MP3tunes, LLC, 821 F. Supp. 2d 627, 641 (S.D.N.Y. 2011). If endorsed by this Court, UMG s strained construction of the DMCA would threaten the viability not only of respondent Escape Media Group, Inc. ( Escape ), but of dozens, if not hundreds of other internet service providers - - including YouTube, Google, Facebook and Twitter - - that rely upon the DMCA s safe harbor in their business operations.

8 Escape owns and operates the proprietary internet-based service Grooveshark.com, which permits users to upload digital audio files to Escape s internet server and then search for and playback or stream (i.e., listen to, but not download or copy) the user-uploaded recordings from the resulting, centrally available archive. In its Complaint filed before the lower court, UMG asserted claims against Escape for common law copyright infringement and unfair competition based on Escape s alleged streaming, at the request of users, of UMG s sound recordings uploaded to Escape s Grooveshark internet service. UMG s claims are addressed solely to sound recordings recorded prior to February 15, (Compl. 1, 2 [A74, A75].) This myopic focus is not the result of any particular business concerns of UMG that are limited to the protection of pre-1972 recordings, as opposed to the numerous more modern recordings in its massive catalog. Rather, it reflects an unabashed attempt by UMG to force Escape (and other similarly situated internet service providers) out of business by exploiting what UMG perceives to be a loophole in the federal statutory scheme that provides safe harbor protection to internet service providers such as Escape. Repeating the arguments that it unsuccessfully raised before the lower court, UMG once again asserts that the language of the DMCA s safe harbor does not apply to pre-1972 recordings. In making this argument, UMG avers that the term infringement of copyright, as used in the DMCA, is a defined term under the 2

9 Copyright Act that is expressly limited to acts that infringe federal copyright interests. This argument is disingenuous, at best; the phrase infringement of copyright is not, as UMG would have this Court believe, a defined term in the Copyright Act, and, as will be more fully explicated below, there is nothing in the language, legislative history or intent of the DMCA that counsels, let alone mandates, that its safe harbor protections be limited to post-1972 recordings. Indeed, the plain language of the statute, and the Act s history and articulated intent, confirm precisely the opposite, i.e., that the DMCA s safe harbor is available to internet service providers without regard to the date on which a particular sound recording might have been created. In an attempt to avoid that inescapable conclusion, UMG repeatedly invokes 17 U.S.C. 301(c) of the Copyright Act, which UMG contends forecloses application of the DMCA safe harbor to pre-1972 sound recordings. Section 301(c), passed more than two decades before the DMCA, provides that With respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, UMG argues that application of the DMCA s safe harbor to pre-1972 sound recordings somehow limits UMG s rights and remedies under New York State common law governing the infringement of copyright, and thus runs afoul of Section 301. As Judge Pauley observed in 3

10 rejecting this very argument, Section 301(c) does not prohibit all subsequent regulation of pre-1972 recordings, and as UMG s profferred interpretation of Section 301(c) would eviscerate the purpose of the DMCA.... that interpretation should be rejected. MP3tunes, LLC, 821 F. Supp. 2d at The fact is that application of the DMCA to pre-1972 recordings does not limit UMG s rights or remedies under state law. Notwithstanding application of the DMCA safe harbor, UMG still retains all of its copyright interests attendant to its ownership of pre-1972 recordings, and still possesses all of its remedies, i.e., it can bring an infringement action against any individuals who infringe its copyrights by uploading UMG s works to websites such as Escape s Grooveshark service. In such circumstances, UMG s rights and remedies remain intact; the DMCA simply affords a safe harbor to a discrete category of innocent intermediaries who store at the direction of a user the allegedly infringing material. If this Court nonetheless were still to have any remaining concern that application of the DMCA to pre-1972 recordings might limit UMG s state law rights and remedies, the record on this appeal would not be sufficient to permit the Court to resolve that question. UMG s Section 301 analysis fails to articulate the parameters of New York State law on this issue. The reason for this omission is self-evident: the courts of this state have not yet determined the rights and 4

11 remedies of copyright holders or, conversely, the nature and scope of the protections available to internet service providers, in respect of content uploaded to a service provider s website by third parties. As New York law remains undefined on this critical issue, in the event that this Court, despite the analysis summarized above, has some lingering uncertainty concerning the applicability of Section 301(c) in this context, the Court should remand the issue to the lower court for determination of the state law rights and remedies of UMG on a fully developed record. For those and the other reasons discussed below, this Court should affirm the lower court s decision on the DMCA and permit this matter to proceed to its just resolution in the lower court, with Escape receiving the benefit of its proffered DMCA defense. In the alternative, this Court should remand this matter to the lower court to afford it the opportunity to articulate the parameters of New York State common law governing the rights and remedies of copyright owners and the liability vel non of internet service providers in respect of content uploaded to their websites by third parties. QUESTIONS PRESENTED 1. Whether the safe harbor provisions of the DMCA apply to sound recordings created prior to February 15, 1972, as is confirmed by the language, 5

12 history and intent of the DMCA. The lower court answered this question in the affirmative. 2. Whether the application of the DMCA s safe harbor provisions to pre recordings is consistent with and does not contravene the proscriptions of 17 U.S.C. 301(c). The lower court answered this question in the affirmative. FACTUAL BACKGROUND AND PROCEDURAL HISTORY 1 Escape s Business Escape developed, owns and operates the internet service Grooveshark, which is accessible on the World Wide Web at (the Grooveshark website ). (Compl. 2 [A74]; Answer 2 [A84].) Through Escape s Grooveshark service, third-party internet users may upload files containing audio recordings to Escape s internet servers - - including (as is true with the widely used YouTube website) the users own self-produced recordings of their own works. (Answer 10 [A85].) The resulting archive of recordings is searchable through the Grooveshark website, thus allowing users to locate particular recordings on the central server and stream them over the Internet - - i.e., play (but not download) them through their individual computers. (Answer 1 As is proper in the context of a motion to dismiss an affirmative defense, the factual recitation set forth above is taken from the parties pleadings, including Escape s Answer, and the submitted proof proffered by Escape, 182 Fifth Ave., LLC v. Design Dev. Concepts, Inc., 300 A.D.2d 198, 199, 751 N.Y.S.2d 739 (1st Dep t 2002); Grunder v. Recckio, 138 A.D.2d 923, 923, 526 N.Y.S.2d 267, 268 (4th Dep t 1988), which must be accepted as true for purposes of the motion and construed in the light most favorable to Escape, the party asserting the defense, 182 Fifth Ave., LLC, 30 A.D.2d at

13 11, 14 [A86].) Grooveshark is a new form of music distribution service at the forefront of digital innovation - - i.e., a service that provides storage and distribution at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider. 17 U.S.C. 512(c). As a condition of permitting users to upload sound recordings to Grooveshark, Escape requires them to confirm that they are the owners or authorized licensees of the copyrights in any sound recordings they are attempting to add to the service. (Affidavit of Josh Greenberg in Support of Defendant s Opposition to Plaintiff s Motion to Dismiss Affirmative Defenses ( Greenberg Aff. ) 7 [A159].) In addition, in furtherance of its efforts to protect copyright, Grooveshark has obtained licenses or other contractual authorization for its service from numerous large-scale owners and licensees of catalogues of sound recordings (both pre- and post-1972 recordings) (the Grooveshark Partners ), including (instructively in the present context) INgrooves, a distribution company that represents, inter alia, a significant portion of UMG s extensive catalogue. (Id.) Escape does not charge for its basic service, but obtains the most significant portion of its revenues - - which, in turn, are shared with the Grooveshark Partners - - by selling advertising space on the Grooveshark website. (Id. 8 [A160].) Because it is Grooveshark s users and the Grooveshark Partners who add the content to the Grooveshark database, at any given time, that database contains 7

14 millions of sound recordings, undoubtedly including both pre- and post-1972 recordings. (Id. 6 [A159].) Escape s Compliance with the DMCA As is discussed in more detail below, the DMCA is intended to foster the robust growth of the internet by recognizing that it would place an undue, and indeed impossible, burden on an internet service provider to verify and confirm the copyright status of the thousands and thousands of works that are uploaded to the service provider s website by third parties. In order to permit internet service providers such as Escape (and YouTube, Google, Facebook and many others) to survive, the DMCA places the burden on the copyright owner to notify the internet service provider when copyrighted material is being infringed. In response to its receipt of such a notice - - generally referred to as a takedown notice - - the internet service provider is required to disable access to the offending material. As long as a service provider complies with the DMCA s requirements, it has a safe harbor from liability for copyright infringement for content uploaded to its website by third parties. The DMCA strikes an appropriate balance between protecting the rights of copyright owners (while placing the responsibility to protect their own property on themselves) and the ability of internet service providers to develop, grow and flourish. MP3tunes, LLC, 821 F. Supp. 2d at

15 Contrary to UMG s self-serving assertion that Escape is a pirate website (UMG Br. at 3) - - for which UMG (not surprisingly) offers no factual support or record reference - - Escape operates strictly in conformance with the DMCA. The Present Litigation UMG is one of the world s largest owners and exclusive licensees of musical recordings. (Compl. 7 [A76].) UMG commenced the present action on January 6, 2010, through its filing of a Complaint that asserts two causes of action arising under New York common law: (1) Common Law Copyright Infringement ; and (2) Unfair Competition. [A74-A83.] Despite the undisputed fact that UMG s enormous catalogue of recordings includes many thousands, if not hundreds of thousands, of recordings created after February 15, 1972, the sole focus of UMG s allegations and claims in this action is on pre-1972 recordings, which is reflective and confirmatory of its true motivation in commencing this litigation: to create bad law by exploiting a perceived loophole in the DMCA that UMG hopes will force Escape and other similarly situated internet service providers out of business. On June 16, 2010, Escape filed an Amended Answer to UMG s Complaint, in which Escape asserted, inter alia, two affirmative defenses related to its status as an internet service provider: (1) that UMG s claims are barred by the safe harbor immunity granted to service providers by 17 U.S.C i.e. the DMCA 9

16 defense (Fourteenth Affirmative Defense); and (2) that UMG s state common law claims are preempted by the Communications Decency Act, 47 U.S.C. 230(c)(1) and (e)(3), which provides broad immunities to internet service providers for content uploaded by third parties - - i.e., the CDA defense (Fifteenth Affirmative Defense). [A84-A91.] On August 31, 2010, UMG filed a motion to dismiss both of these Affirmative Defenses. In doing so, UMG advanced internally inconsistent positions on each of these issues. As to the DMCA defense, UMG argued that an implicit qualifier should be read into the DMCA s use of the phrase infringement of copyright in describing the DMCA s safe harbor protections, so that those protections are limited solely to the infringement of federally protected rights and do not apply to pre-1972 recordings. In addressing Escape s CDA defense, however, UMG took precisely the opposite position, arguing that the CDA s exemption of any law pertaining to intellectual property from the immunity it otherwise provides to internet service providers should be interpreted expansively to embrace both federal and state law. Through its assertion of these inconsistent positions, UMG plainly hoped to manufacture a loophole in Congress statutory framework (which includes both the CDA and the DMCA) and thereby deprive Escape (and similarly situated internet service providers) of any protection from infringement claims based on the actions of third parties in uploading pre

17 sound recordings. Escape opposed UMG s motion to strike these dual defenses, highlighting to the lower court the inconsistency in UMG s asserted position. 2 The MP3tunes Decisions On August 22, 2011, while UMG s motion to dismiss Escape s defenses remained pending before the lower court, the United States District Court for the Southern District of New York, through Judge William H. Pauley III, entered a Memorandum and Order in a litigation pending between, inter alia, EMI, Inc. ( EMI ) (through its Capitol Records division) and MP3tunes, LLC, that addressed the very issue raised by the present appeal, i.e., the applicability vel non of the DMCA s safe harbor provisions to pre-1972 recordings. Capitol Records, Inc. v. MP3tunes, LLC, S.D.N.Y. Case No. 07 Civ (WHP) at p. 12 n.1. Instructively, EMI - - which is about to be acquired by UMG - - is represented in the MP3tunes litigation by the same counsel that represents UMG in the present proceeding. In his decision, Judge Pauley held that the plain meaning of the statutory language makes the DMCA safe harbor applicable to both state and 2 In its Answer (as later amended) Escape also asserted Counterclaims against UMG for tortious interference (with both contract and business relations) and violations of the Donnelly Act, N.Y. Gen. Bus. Law 340, the New York State antitrust statute. In those Counterclaims, Escape described a consistent and unlawful pattern of conduct by UMG in interfering with Escape s relationships with a number of its contractual counterparties and other business associates - - including Hewlett Packard, Apple, INgrooves, Google and the Spanish company MusicAds - - by, inter alia, threatening to cease doing business with those parties if they continued to pursue their relationships with Escape. UMG responded to Escape s Counterclaims with a motion seeking their dismissal. Neither Escape s Counterclaims nor UMG s motion to dismiss are at issue in this appeal. 11

18 federal copyright claims. Thus, the DMCA applies to sound recordings fixed prior to February 15, Id. EMI moved for reconsideration of Judge Pauley s determination on the DMCA issue. On October 25, 2011, Judge Pauley denied that motion in an Amended Memorandum and Order, which comprehensively and dispositively addressed the issue. MP3tunes, LLC, 821 F. Supp. 2d at Rejecting the precise arguments that UMG repeats before this Court, Judge Pauley analyzed and dissected the language of the DMCA and determined that the plain meaning of the DMCA s safe harbors, read in light of their purpose, covers both state and federal copyright claims. Thus, the DMCA applies to sound recordings fixed prior to February 15, Id. at 642. In making this determination, Judge Pauley observed that EMI s proffered interpretation of the statute - - the precise construction now pressed by UMG - - would eviscerate the purpose of the DMCA. Id. at 641. The Copyright Office Report With UMG s motion to dismiss still pending before the lower court, on December 28, 2011 the Register of Copyrights issued a report regarding federal copyright protection for pre-1972 sound recordings (the Report ). In its present brief, UMG makes much of the Report s commentary on Judge Pauley s decision in the MP3tunes case. But the Report is of little or no significance to this Court s 12

19 determination of the issues raised by this appeal. In the first instance, as New York courts have made clear (as further discussed below), the Copyright Office has no authority to give opinions or define legal terms, and its interpretation on an issue... should not be given controlling weight. Elektra Entm t Grp. v. Barker, 551 F. Supp. 2d 234, 243 (S.D.N.Y. 2011). In any event, UMG s obsessive focus on a two-page portion of the 178-page Report vastly overstates the significance of the Report s disagreement with Judge Pauley s decision. In fact, the core of the Report - - which UMG fails to mention - - is the Register s recommendation that federal copyright protection should apply to sound recordings fixed before February 15, (Report at 175.) Indeed, the Report specifically notes that the [Copyright] Office sees no reason - - and none had been offered - - why the Section 512 safe harbor from liability from monetary and some injunctive relief should not apply to the use of pre-1972 sound recordings, and that there is no policy justification to exclude older sound recordings from Section 512. (Report at 130.) The Lower Court s Decision On July 10, 2012, the lower court (Kapnick, J.), entered a 28-page Decision and Order ( Decision ) jointly addressing UMG s motion to dismiss Escape s DMCA and CDA defenses and UMG s motion to dismiss Escape s tortious interference and antitrust Counterclaims. See n. 2. In its Decision, the lower court 13

20 first addressed Escape s DMCA defense. After performing a comprehensive analysis of the issue, the lower court rejected each of the arguments advanced by UMG, the same arguments that it repeats in the present appeal. In denying UMG s request to strike Escape s DMCA defense, the lower court held that there is no indication in the text of the DMCA that Congress intended to limit the reach of the safe harbors provided by the statute to just post-1972 recordings. (Decision at 8 [A15].) Accordingly, the lower court determined (as had Judge Pauley) that the DMCA safe harbor protections apply with equal force to pre- and post-1972 sound recordings. The lower court next addressed UMG s motion to dismiss Escape s CDA defense. Just as it had done in construing the DMCA, the lower court looked to the language of the CDA and held that the CDA s exemption of any intellectual property laws from its grant of immunity to internet service providers embraced state, as well as federal, intellectual property laws. (Id. at [A17-A20].) As such, the lower court granted UMG s motion to dismiss the CDA Defense. 3 3 Turning to UMG s motion to dismiss Escape s Counterclaims against UMG, the lower court noted that UMG s alleged conduct constituted an economic attack on the whole of Escape s business (Decision at 20 [A27]), and consequently denied UMG s request that Escape s dual claims for tortious interference be dismissed. The Court dismissed Escape s antitrust Counterclaim - - not because the allegations of UMG s misconduct were insufficient, but, rather, because Escape alleges only an injury to itself, rather [than] an adverse effect on competition. (Id.) 14

21 The Notice of Appeal On July 25, 2012, UMG provided notice of its appeal of the lower court s decision denying its motion to strike Escape s DMCA defense. UMG filed its brief in support of its appeal on August 6, 2012, and Escape proffers this submission in response thereto. ARGUMENT I. Standard of Review. In reviewing the lower court s refusal to dismiss Escape s DMCA defense, this Court applies the same standard as governed in the lower court. See Bishop v. Maurer, 33 A.D.3d 497, 498, 823 N.Y.S.2d 366, 366 (1st Dep t 2006). In considering a motion to dismiss an affirmative defense, the court must liberally construe the pleadings - - including the defendant s answer - - in favor of the party asserting the defense. Fireman s Fund Ins. Co. v. Farrell, 57 A.D.3d 721, 723, 869 N.Y.S.2d 597, 599 (2d Dep t 2008). Reflective of the settled preference to resolve affirmative defenses on the merits instead of at the preliminary pleading stage, the defendant must receive the benefit of every reasonable inference from both the allegations of the pleadings and any submitted proof. 182 Fifth Ave., LLC v. Design Dev. Concepts, Inc., 300 A.D.2d 198, 199, 751 N.Y.S.2d 739 (1st Dep t 2002) (upholding denial of motion to dismiss an affirmative defense because the allegations of the answer, viewed, as they must be 15

22 ..., in the light most favorable to defendants... state cognizable defenses ); Grunder v. Recckio, 138 A.D.2d 923, 923, 526 N.Y.S.2d 267, 268 (4th Dep t 1988) (requiring all reasonable inferences to be drawn from the submitted proof ). The moving party - - here, UMG - - bears the burden of demonstrating that the defenses are without merit as a matter of law. Butler v. Catinella, 58 A.D.3d 145, 148, 868 N.Y.S.2d 101, 104 (2d Dep t 2008). If there is any doubt as to the availability of a defense, it should not be dismissed. Id. (emphasis added); accord Fireman s Fund Ins. Co., 57 A.D.3d at 723. II. The Relevant Statutes. In 1971 (effective as of February 15, 1972), Congress amended the Copyright Act of 1909 to expressly include [s]ound recordings within the classes of artistic and intellectual works entitled to federal copyright protection (17 U.S.C. 5 added by Pub L , 85 U.S. Stat 391 [Act of Oct. 15, 1971]). Capitol Records, Inc. v. Naxos of Am., 4 N.Y.3d 540, 555, 830 N.E.2d 250, 260 (2005). But the 1971 amendments were prospective only, so recordings created before February 15, the effective date of the Amendment - - were not protected by federal law (see Pub L [1971]). Id. at 555. Rather, pre-1972 recordings continued to be protected by State statute or common law. Id. at

23 In order to resolve a dispute between the House and the Senate concerning the appropriate duration of state common law copyright protection for pre-1972 recordings (id.), in 1976, Congress added Section 301(c) to the Copyright Act, which (as later amended), provides as follows: With respect to sound recordings fixed before February 15, 1972, any rights or remedies under the common law or statutes of any State shall not be annulled or limited by this title until February 15, In more than twenty years after it adopted Section 301(c) - - Congress amended an entirely distinct section of the Copyright Act, i.e., Chapter 5 dealing with copyright infringement and remedies, by adopting Section 512 thereof, the so-called Digital Millennium Copyright Act. Section 512 provides a safe harbor under which an internet service provider (assuming compliance with certain conditions and procedures set forth in the statute) is protected against liability for infringement of copyright for, inter alia, the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider. 17 U.S.C. 512(c). In adopting the DMCA safe harbor, Congress expressly recognized the substantial burden that would be imposed on an internet service provider - - and the concomitant chilling effect it would have on the growth and development of the internet - - if service providers were somehow required to verify the copyright 17

24 status and ownership of every one of the thousands or millions of works that are uploaded to their websites by third parties over whom the service provider exercises no control. As such, the DMCA places the burden on the copyright holder - - the individual or entity in the best position to know whether it owns a particular work and whether the placement of that work on an internet website violates its rights therein - - to identify when infringing content has been uploaded to an internet service provider and to then give notice to that provider of the infringing nature of the uploaded content. See Wolk v. Kodak Imaging Network, Inc., 10 Civ (RWS), 2011 U.S. Dist. LEXIS 27541, at *11-*13 (S.D.N.Y. 2011) ( the underlying purpose of the notice requirements is to place the burden of policing copyright infringement... squarely on the owners of the copyright ) (quoting UMG Recordings, Inc. v. Veoh Networks Inc., 665 F. Supp. 2d 1099, 1110 (C.D. Cal. 2009)). Upon its receipt of a proper takedown notice, the service provider is required to promptly disable access to the protected content. The construct created by the DMCA thus reflects a balance that Congress felt was appropriate between the right of copyright holders to police and protect their copyrights, and the ability of internet service providers to develop and expand their internet websites unfettered by potentially crippling risks of liability. In general, the DMCA safe harbor protections apply to internet service providers who offer[ ] online tools permitting users to interact with user- 18

25 submitted content. Id. at *8. Section 512(c) sets forth a detailed notification scheme that requires service providers to designate[ ] an agent to receive notification of claimed infringement, [17 U.S.C.] 512(c)(2), and specifies the components of a proper notification, commonly known as a takedown notice, to that agent, see id. 512(c)(3). Viacom Int l Inc. v. YouTube, Inc., 676 F.3d 19, 27 (2d Cir. 2012). Thus, it is the copyright holder (such as UMG) who is required to provide notification to the internet service of allegedly infringing content: the fundamental principle underlying the DMCA safe harbor [is] that the burden is on the copyright holder [i.e., UMG], not the service provider [i.e., Escape], to identify copyright violations. Veoh Networks Inc., 665 F. Supp. 2d at To a service provider that complies with the requirements of section 512, the DMCA gives a safe harbor, even if otherwise he would be held as a contributory infringer under the general law. Viacom Int l Inc. v. YouTube, LLC, 718 F. Supp. 2d 514, 526 (S.D.N.Y. 2010), rev d on other grounds, Viacom Int l Inc., 676 F.3d 19 (2d Cir. 2012). Escape deserves the opportunity, as this action proceeds, to demonstrate its compliance with section 512 and to enjoy the DMCA s safe harbor protections against UMG s state common law claims. III. The Language, Legislative History and Intent of the DMCA Confirm Its Applicability to Both Pre- and Post-1972 Recordings. UMG makes two separate, but interrelated arguments in support of its strained position that the DMCA - - despite its plain language, legislative history 19

26 and intent - - does not grant safe harbor to internet service providers in respect of pre-1972 recordings. Reversing the logical order of its arguments - - in apparent sub silentio recognition that, in fact, by its very terms the DMCA plainly does apply to pre-1972 recordings - - UMG first argues that application of the statute to such recordings is violative of 17 U.S.C. 301(c), the provision of the Copyright Act concerning the annulment or limitation of state law rights and remedies in respect of pre-1972 recordings. Following that argument, UMG next avers that, based on its language, the DMCA does not apply to pre-1972 recordings. UMG is incorrect on both counts: the plain language of the DMCA clearly embraces both pre- and post-1972 recordings without drawing any distinction between the two; and application of the DMCA to pre-1972 recordings does not contravene Section 301(c). Addressing UMG s arguments in a more logical order than the order in which they are presented in its brief, Escape will first address the applicability of the DMCA to pre-1972 recordings, and then refute UMG s argument that such an application runs afoul of Section 301(c). A. The Language of the DMCA Makes No Distinction Between the Application of Its Safe Harbor Provisions To Claims of Infringement Based on Pre- and Post-1972 Recordings. 17 U.S.C. 512(c)(1) provides that, assuming compliance with the other requirements of the statute, an internet service provider shall not be liable... for infringement of copyright by reason of the storage at the direction of a user of 20

27 material that resides on a system or network controlled or operated by or for the service provider. (Emphasis added.) In his decision addressing these issues, Judge Pauley specifically observed that The text of the DMCA limits immunity for the infringement of copyrights without drawing any distinction between federal and state law. MP3tunes, LLC, 821 F. Supp. 2d at 641. Justice Kapnick similarly noted in her opinion that the term infringing, found in 17 U.S.C. 512(c)(3)(A)(iii), is no less applicable to common-law copyright than to statutory copyright. (Decision at 7 [A14].) As these two courts found, the DMCA, by its plain and unambiguous language, offers its safe harbor protection from copyright infringement to internet service providers irrespective of whether the infringement is predicated on state statutory or common law, or the United States Copyright Act. In an unavailing attempt to avoid the plain meaning of the phrase infringement of copyright, UMG misleadingly advises the Court that Chapter 5 of the Copyright Act begins with the definition of the term infringement of copyright, namely, the violation of any of the exclusive rights of the copyright owner as provided by Sections 106 through 122 of the Copyright Act. 17 U.S.C. 501(a). (UMG Br. at 24; emphasis added.) Building on this faulty premise (a matter that is discussed below), UMG then argues that since Sections 106 through 122 of the Copyright Act do not confer rights on the owners of pre

28 recordings, by definition, the term infringement of copyright as used in the Copyright Act only includes violation of federal rights.... (Id.) This argument is predicated upon UMG s purposeful mischaracterization of the very provision upon which it relies, i.e., 17 U.S.C. 501(a). 4 In fact, the phrase infringement of copyright is not defined in Section 501(a) - - or in the Definitions section of the Copyright Act (17 U.S.C. 101), or, for that matter, anywhere else in the statute. Rather, Section 501(a) simply provides, unremarkably, that Anyone who violates any of the exclusive rights of the copyright owner as provided by Sections 106 through is an infringer of the copyright or right of the author, as the case may be. As Judge Pauley observed in rejecting the identical argument raised by EMI in the MP3tunes case, Section 501(a) does not provide a comprehensive definition of copyright infringement. It simply states that anyone violating the rights established by Sections 106 through 122 is an infringer, without suggesting it is all inclusive. 4 UMG s strained construction of the term infringement of copyrights is inconsistent with the position that it offered in arguing that Escape s CDA defense should be stricken. As discussed above, while the CDA provides broad immunity to internet service providers for content uploaded by third parties, it exempts from that protection any law pertaining to intellectual property. 47 U.S.C. 230(e)(2). UMG argues in support of its present position on the DMCA defense that the phrase infringement of copyright, though plainly susceptible of interpretation to include both state and federal infringement claims, should be limited to federal rights only. UMG s argument in support of its motion to strike the CDA defense, however, was precisely to the contrary, i.e., that the words any law pertaining to intellectual property should embrace both state and federal laws. By advancing these internally inconsistent arguments, UMG plainly hoped to deprive Escape of any possible immunity under both the CDA and the DMCA, a position that would defeat Congress intent in adopting those dual statutory schemes. Not surprisingly, the lower court was unpersuaded. 22

29 MP3tunes, LLC, 821 F. Supp. 2d at 641. Stated another way, that the violation of certain enumerated rights provided by the federal Copyright Act may constitute copyright infringement plainly does not compel the conclusion that every reference in Title 17 to infringement of copyright refers solely to those rights. As UMG argues elsewhere in its brief, New York has a developed body of common law regarding copyright infringement, see, e.g. UMG Br. at 17-19, and there is nothing in Section 512(c) s use of the term infringement of copyright that suggests, let alone mandates, the limitation of that phrase solely to federal rights. It is well established that a common law term comes with a common law meaning, absent anything pointing another way. MP3tunes, LLC, 821 F. Supp. 2d at 641. As both Judge Pauley and Justice Kapnick noted, the term infringement of copyright is such a term, and thus is infused with a meaning that embraces both state common law and federal rights. UMG has offered nothing that would counsel abandoning that broader, well-settled construction by cabining the unqualified phrase infringement of copyright as it is used in the DMCA to mean solely the violation of rights provided by the federal Copyright Act. In fact, Judge Pauley - - the only federal jurist to address this question of federal law - - considered it beyond dispute that the common law meaning of the term copyright 23

30 infringement encompasses violations of both federal and state protections. Id. (emphasis added). 5 UMG continues in its effort to contort the plain language of the DMCA to fit UMG s self-serving construction of the statute by similarly suggesting that the DMCA s use of the unqualified phrase copyright owner somehow refers only to the ownership of federal copyright interests and thus compels the conclusion that the DMCA s safe harbor protection is unavailable to pre-1972 recordings. It is true that the DMCA makes reference to the copyright owner, i.e., it provides (again unremarkably) that a party submitting a DMCA takedown notice to an internet service provider must confirm his good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law. 17 U.S.C. 512(c)(3)(A)(v). UMG s strained argument that this reference to a copyright owner somehow creates an otherwise non-existent limitation on the DMCA s safe harbor provisions is once again predicated on a mischaracterization of the definition of the term copyright owner as it appears in the Copyright Act. 17 U.S.C. 101 provides that a copyright owner, with respect to any of the exclusive rights comprised in a copyright, refers to the owner of that particular 5 While Judge Pauley s analysis of the issue is unquestionably compelling, even if this Court did entertain some doubt on the matter - - and Escape offers that there is none - - in the context of a motion to dismiss an affirmative defense, that doubt must be resolved in favor of permitting Escape s DMCA defense to stand. Butler, 58 A.D.3d at

31 right. Plainly, there is nothing in that definition that limits the owner of a copyright solely to the possession of rights under federal law. Rather, the definition simply confirms the obvious, i.e., that a copyright owner is the party that owns any exclusive rights in copyright, without distinguishing between such rights created by state law and federal law. Indeed, in distorting the Copyright Act s supposed (albeit non-existent) definition of the term infringement of copyright, as discussed above, UMG noted the specific reference in 17 U.S.C. 501(a) to any of the exclusive rights of the copyright owner as provided by Sections 106 through 122 of the Copyright Act. (UMG Br. at 24; emphasis added.) Had Congress intended to limit the term copyright owner to the owner of only federal copyright interests, it readily could (and would) have similarly qualified its definition of that term to a party possessed of the exclusive rights created by federal law, i.e., those embodied in Sections 106 through 122 of the Copyright Act. Its decision not to do so is dispositive, i.e., the fact that the definition of the term copyright owner in the Copyright Act is not limited in any fashion can only be construed to mean that no such limitation was intended. See Small v. Gen. Nutrition Co., 388 F. Supp. 2d 83, 93 (E.D.N.Y. 2005) ( It is well-settled that when Congress uses different language in different sections of a statute, it does so intentionally. ). 25

32 Most simply stated, and as Justice Kapnick observed in rejecting UMG s argument on the issue, the phrase copyright owner, found in 17 U.S.C. 512(c)(3)(A)(v), is applicable to the owner of a common law copyright, no less than to the owner of a copyright under the Copyright Act. (Decision at 7 [A14], citing MP3tunes, LLC, 821 F. Supp. 2d at 641; Naxos of Am., 4 N.Y.3d at 558; Fleischer Studios, Inc. v. A.V.E.L.A., Inc., 654 F.3d 958, 964 (9th Cir. 2011)). As such, the appearance of that unremarkable phrase in the DMCA does nothing to advance UMG s asserted position. UMG s linguistic contortions notwithstanding, the fact is that the plain language of the DMCA - - which, as UMG itself concedes, is the fundamental predicate for the construction of any legislative provision (UMG Br. at 23) - - confers, broadly and without limitation, safe harbor protections to an internet service provider against any claims for infringement of copyright, regardless of whether those claims arise under state or federal law. The DMCA draws no distinction between state and federal rights, and there is nothing in the language of the DMCA that counsels that its safe harbor provision should arbitrarily be limited to post-1972 sound recordings. B. The Statutory Intent and Legislative History of the DMCA Further Undermine UMG s Asserted Position. Although the DMCA s plain language is dispositive of the matter (Polan v. State Ins. Dep t, 3 N.Y.3d 54, 58, 814 N.E.2d 789, 790 (2004)) (holding that the 26

33 text of New York s Insurance Law is the best evidence of the Legislature s intent, and accordingly, dispositive ) it is also manifest that construing the DMCA in the manner that UMG urges, i.e., exempting pre-1972 recordings from its safe harbor provisions, would eviscerate the very statutory protections that the DMCA created, ignore its legislative history and defeat its purpose. Section 512 is intended to protect qualifying service providers from liability for all monetary relief for direct, vicarious and contributory infringement. Viacom Int l Inc., 718 F. Supp. 2d at 520 (quoting Senate Judiciary Committee Report, S. Rep. No , at 40 (1998); House Committee on Commerce Report, H.R. Rep. No , pt. 2, at 50 (1998) (emphasis added)). In passing the DMCA, Congress explicitly acknowledged that: In the ordinary course of their operations service providers must engage in all kinds of acts that expose them to potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting information over the Internet. Certain electronic copies are made in order to host World Wide Web sites.... [B]y limiting the liability of service providers, the DMCA ensures that the efficiency of the Internet will continue to improve and that the variety and quality of service on the Internet will continue to expand. Id. at 527 (quoting S. Rep. No , at 8 (1988)). In adopting the DMCA, Congress also recognized that there have been several cases relevant to service provider liability for copyright infringement. Id. at 519 (quoting S. Rep. No , at 19 (1998)). Nonetheless, Congress 27

34 decided, rather than embarking upon a wholesale clarification of these [copyright] doctrines,... to leave current law in its evolving state and, instead, to create a series of safe harbors, for certain common activities of service providers. Id. In order to provide this protection to internet service providers, Congress determined that the burden would reside on the copyright owner, not the service provider, to identify potentially infringing works posted on a particular website by a third party, and to take affirmative steps, i.e., the provision of a takedown notice to the service provider, to ensure that unauthorized access to the copyrighted works was disabled. As such, the DMCA is explicit that it shall not be construed to condition safe harbor protection on a service provider monitoring its service or affirmatively seeking facts indicating infringing activity.... Id. at 524 (quoting 17 U.S.C. 512(m)(1); and citing S. Rep. No , at 44 (1998); H.R. Rep. No , pt. 2 at 53). The requirement that it is the copyright holder who is obligated to provide a takedown notice in respect of allegedly infringing content underscores the fundamental principle underlying the DMCA safe harbor, i.e., that the burden is on the copyright holder, not the service provider, to identify copyright violations. Veoh Networks, Inc., 665 F. Supp. 2d at UMG s suggestion that this Court make unavailable to service providers the DMCA safe harbor protections in respect of pre-1972 recordings would lead to an absurd result, and would entirely undermine the purpose of the statute, i.e., to 28

35 facilitate, nurture and promote the development of services for the exchange of information on the internet. In passing Section 512, Congress explicitly recognized that it is impossible for internet service providers like Escape to monitor the content uploaded by their users in order to determine the copyright status of that content or confirm whether the user is an owner or authorized licensee of the copyright therein. Internet service providers such as Escape (and YouTube, Google, Facebook and many others) regularly receive hundreds of thousands, if not millions, of uploads of user-delivered content. (Greenberg Aff. 6 [A159].) If, as UMG contends, Escape is not protected by the DMCA safe harbor for pre-1972 sound recordings, it would be forced to investigate individually each of the millions of user-posted sound recordings uploaded to its service to somehow confirm (1) whether the recording being posted was created before or after February 15, 1972 (which information may not even be available from public sources); (2) whether the work has entered the public domain; and (3) if created after February 15, 1972 and not a public domain work, whether the user posting the sound recording actually is the owner or licensee of the copyright in that work. It is obviously impossible for internet service providers to shoulder such a burden for each of the millions of instances of user-posted content uploaded to their services. (See id. 9 [A160].) This is precisely why Congress, in enacting 29

36 Section 512, placed the burden on owners and licensees of copyrights (like UMG) to identify and substantiate infringement. If the availability of the safe harbor is somehow made contingent on whether a recording uploaded by a particular user was created before or after February 15, 1972, the purpose of the safe harbor would be defeated, and the protections afforded by Section 512 would be rendered entirely illusory, as internet services like Escape would be put to a burden that Congress expressly recognized they would be unable to meet, i.e., to police the copyright status of every item of content added by their users. Judge Pauley - - in a compelling passage of his decision that was also endorsed by Justice Kapnick - - perhaps best summarized the issue when he observed that the position presently advanced by UMG (the identical position urged by EMI in the MP3tunes case) would lead to an absurd or futile result: The DMCA was enacted to clarify copyright law for internet service providers in order to foster fast and robust development of the internet. Limiting the DMCA to recordings after 1972, while excluding recordings before 1972, would spawn legal uncertainty and subject otherwise innocent internet service providers to liability for the acts of third parties. After all, it is not always evident (let alone discernible) whether a song was recorded before or after The plain meaning of the DMCA s safe harbors, read in light of their purpose, covers both state and federal copyright claims. Thus, the DMCA applies to sound recordings fixed prior to February 15, MP3tunes, LLC, 821 F. Supp. 2d at 642; see also Decision at 8 [A15] (same). 30