Not a quiet sea for the Grooveshark

With the start of the new year, copyright is already back in courts.

Popular digital music service Grooveshark's parent company, the Escape Media Group, was sued on Wednseday before the New York State Supreme Court in Manhattan for, inter alia, breach of contract and an accounting (the case is EMI Entertainment World Inc v Escape Media Group Inc, New York State SupremeCourt, New York County, No. 650013/2012) . 

EMI claims that, since entering a licensing agreement to stream music in 2009, Escape has "made not a single royalty payment to EMI, nor provided a single accounting statement."

The complaint refers to alleged written and oral estimates by Grooveshark that it owes at least $150,000, but EMI said it believes the actual sum "greatly exceeds" such estimates.

As recalled by Reuters, the filing came less than a month after three other major record companies -- Vivendi SA's Universal Music Group, Sony Corp and Warner Music Group -- filed a lawsuit before the U.S. District Court, Southern District of New York, accusing Grooveshark of pirating thousands of songs (UMG Recording Inc et al v Escape Media Group Inc et al, U.S. District Court, Southern District of New York, No. 11-08407).

Grooveshark allows users upload songs to its servers, which other users can then stream free. It calls itself the world's largest on-demand and music discovery service, with 30 million monthly active users, more than 15 million songs, and 14 billion streams a year. 

A shark operating in a gray zone

According to its DMCA Takedown Policy, Grooveshark is committed "to honor all takedown requests that comply with the requirements of the Digital Millennium Copyright Act (DMCA) and other applicable intellectual property laws" In any case, and "[t]o be clear, as long as your infringement claim complies with the terms of the DMCA we will honor it, however we would much rather pay you than remove your content."

As pointed out by the New York Times, "[w]ith the music industry coming to rely more and more on fully licensed services like Spotify and Rhapsody that stream music by subscription, EMI’s suit highlights the legal gray zone in which Grooveshark operates."

In a statement, Grooveshark said: “This is a contract dispute that we expect to resolve.”

Let's wait and see then.

A Rose by Any Other Name

No matter what you call it or how you try to frame it, internet streaming is internet streaming.

Zediva tried to claim otherwise, setting up a rather elaborate system that attempted to get around the copyright law requirements for licensing movies streamed over the internet.  A lot of times this is how the law is figured out, attempts to get around it lead to law suits and court-issued clarifications.  (See the Napster/Grokster/Limewire string of cases.)  But in this case, the Zediva folks missed an important part of copyright law history, and the District Court for the Central District of California issued an injunction.

How Zediva tried to avoid licensing fees

First, I want to acknowledge that I was not able to locate a copy of the decision so my information is coming from various news sources, all listed at the end of this post.

Zediva set-up the service to mimic a video rental store.  Users rented a dvd that Zediva had purchased and the dvd was played in a remote dvd player also purchased by Zediva and shown to the customer via the internet.  One article mentions that users would sometimes get messages that movies were out of stock.  I’m guessing this occurred when customers had rented out all of the DVDs Zediva had purchased of that film. 

Rather than finding this system as a way of remotely renting purchased DVDs, the court found that this was just an annoyance and potential source of confusion for customers learning about video streaming. 

Zediva wasn’t paying licensing fees, trying to rely on the first sale doctrine saving their rental model.  But, as one law professor pointed out, Zedvia seemed to have missed the case where renting a video to be watched in a booth inside the store was infringement.  (That case was Columbia Pictures Indus. v. Redd Horne, Inc. from 1984.)  Even if Zediva could persuade the court that it was renting and not streaming movies, the facts are more similar to Redd Horne than to a regular video rental store.

However, the court did not buy the rental concept and instead found that Zediva was transmitting the performance to the public and thus infringing copyright.  Wonder if they’ll be another attempt at a work around…

Media Post News: http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=155164

Read Write Wed: http://www.readwriteweb.com/archives/citing_copyright_law_judge_orders_movie_streaming_service_shut_down.php

CNET: http://news.cnet.com/8301-31001_3-20050579-261.html?tag=mncol;2n

US Senate looks to make illegal streaming a felony

The U.S. Senate Judiciary Committee has approved a bill that would make it a felony to stream copyrighted movies and TV episodes online. Sponsored by Senators Amy Klobuchar (D-Minn.) and John Cornyn (R-Texas), the Commercial Felony Streaming Act is actively supported by the entertainment industry and the trio of the Motion Picture Association of America (MPAA), the Independent Film & Television Alliance (IFTA) and the National Association of Theatre Owners (NATO) issued a joint press release with some deeply insightful comment. Drum roll please ....... Jean Prewitt, IFTA President & CEO said “The illegal streaming of motion pictures and television programming is as financially devastating for our industry as is illegal downloading” adding “Stealing is stealing, regardless of the means in which the product is being received. This legislation is a critical step forward in the piracy fight and we commend the Committee for their support. NATO President and CEO John Fithian said “We commend the Committee for moving this important piece of legislation for consideration by the Senate. It will close a gaping hole in the law and go far in protecting the livelihoods of theater employees from the threat posed by illegal streaming” adding the move would protect jobs in the sector. Finally Michael O’Leary, Executive Vice President, Government Affairs for the MPAA said “This bill will help ensure that the punishment for these site operators fits the crime, and we look forward to continuing to work with Members in the Senate and House towards its swift passage

In other news, Torrentfreak reports that a Canadian man who failed to appear to defend himself in a U.S. court has been found guilty of copyright infringement for uploading two adult films to a file-sharing network, and ordered to pay $60,000 in damages. And in China, three people have been jailed after being found guilty of infringing trade secrets regarding Apple’s iPad 2 six months before its release was publicly announced. The case concerned the head of a company that makes accessories for Apple’s iPad and other devices who offered a former employee and another then-active employee at iPad manufacturer Hon Hai incentives for information regarding the iPad 2. The trio were sentenced to jail terms of 18 months, 14 months, and 12 months, respectively.

http://mpaa.org/resources/76421ba8-c3e9-40de-bc0d-c39cedccb7f3.pdf