GrayZone - Quarterly Digest - July 2009

Headline News

RIAA Wins Copyright Case Against Usenet

On June 30, 2009, the Recording Associated of America (RIAA) was victorious in their copyright litigation against Usenet.com.

U.S. District Court Judge Harold Baer of the Southern District of New York ruled in favor of the RIAA and the music industry. He agreed that Usenet took part in direct, contributory, and vicarious copyright infringement. It was determined that Usenet.com was not able to claim protection under the Sony Betamax decision, which stated that a business was not liable for contributing to infringement if their device is used significantly for non-infringing purposes.

The difference between Usenet.com and Sony, it was pointed out, is that once a Betamax video tape recorder is sold, the relationship between buyer and seller ends and Sony has no control over what the buyer does with the machine. Unlike Sony, Usenet’s relationship with their customer continues and they have control over how someone uses their service.

In existence for 20 years, the Usenet network was originally used for the distribution of communications and binary files, before the modern internet and peer-to-peer (P2P) networks. Through Usenet.com, online users were able to access the Usenet network. In October 2007, the RIAA sued the company for enticing new users with access to free copyrighted music for a $19 per month fee.

It’s an unusual case due to Usenet.com’s misconduct. The company apparently destroyed copyright infringement evidence and several times, refused to produce witnesses. They were accused by the RIAA of intentionally destroying evidence contained on various hard drives, giving false information and trying to keep workers from taking part in depositions by sending them overseas to Europe during the discovery phase.

During the lawsuit, the company fired most of their staff, letting them bring company computers home without preserving material. According to the court, two of Usenet.com’s employees returned home and evaded service. Their boss misled investigators as to the witnesses’ employment status and contact information.

This evidence was deemed credible by the judge but the court would not award RIAA with a victory based on the company behavior alone. Usenet.com was sanctioned and prevented from asserting protection under the Digital Millennium Copyright Act’s safe harbor rule. The DMCA safe harbor keeps internet service providers from being held responsible for criminality that was perpetrated by its online users. Since they were not able to use the Betamax defense, and were not protected by the safe harbor rule, Usenet.com was left without a defense.

RIAA General Counsel Steven Marks said, “We’re pleased that the court recognized not just that Usenet.com directly infringed the record companies’ copyrights but also took action against the defendants for their egregious litigation misconduct.” This decision shows that the court respects the value of music copyright and is willing to act against individuals and companies that engage in infringement.

RIAA press release, July 1, 2009

ARS Technica, July 1, 2009 (Nate Anderson)

CNET News, June 30, 2009 (Greg Sandoval)

Artists’ Corner

Did MEN AT WORK Steal “Down Under”?

Australian pop group MEN AT WORK has been accused of stealing a riff from a well-known children’s song for their huge 1980s hit “Down Under.”

Larrikin Music publisher has filed a lawsuit against Sony BMG Music Entertainment and EMI Songs Australia, asking for royalty compensation that the hit song earned for its writers, Ron Strykert and Colin Hay. In its claim, Larrikin says that the song’s flute melody was copied from the 1934 children’s tune, “Kookaburra Sits in the Old Gum Tree.” This song was written by Marion Sinclair, a Melbourne music teacher, for a Girl Guides contest.

According to Larrikin, they bought the copyright after Sinclair died in 1988. The case was argued in Australia’s federal court in Sydney on June 25, 2009. EMI and Sony informed the court that when Sinclair submitted the song for the contest, she gave its copyright to the Girl Guides Association of Victoria. Representing the music labels, lawyer David Catterns pointed out that printed details about the competition, in the Girl Guide magazine Matilda and in a distributed circular, stated that all submitted material automatically became the property of the organization.

in 1983, the song “Down Under” and its album, “Business as Usual,” reached the top position on the U.S, U.K. and Australian pop charts. This Men at Work song continues to be an unofficial Australian anthem, ranked #4 ‘best Australian songs’ in a music industry survey.

CBCNews.ca June 27, 2009

TIMBALAND Served with Lawsuit for NELLY FURTADO’s “Do It”

A Finland record company has sued multi-platinum producer TIMBALAND and pop star Nelly Furtado. They allege that the pair blatantly borrowed from a song by Finnish musicians for their song “Do It,” which was written by Canadian singer Furtado and produced by Timbaland. The song appeared on the singer’s third album, Loose, which was released June 2006.

The plaintiff in the lawsuit, Kernel Records, claims that “Do It” uses the main identifying melodic, harmonic and rhythmic parts of the composition “Acidjazzed Evening.” The complaint was filed in the U.S. District Court’s Southern District of Florida, Miami-Dade Division., on June 11, 2009. As stated in the suit, “Acidjazzed Evening” was recorded by Norwegian artist Glenn Rune Gallefoss in 2002, in Commodore 64 SID format. The track was acquired by Kernel Records in 2007.

The label alleges that when the famous producer created the central beat for “Do It” in 2006, he relied on a program that emulates the Commodore 64 SID chip, knowing that he was stealing Gallefoss’s work. “Do It” has been released on the best-selling, multi-platinum “Loose: The Concert” live CD and DVD, as well as a single. Kernel Records has included Interscope-Geffen-A&M, the Mosley Music Group and Universal Music Distribution as lawsuit co-defendants.

All defendants are charged with copyright infringement, with the request that copyright ownership, currently held by Mosley Music, LLC and Geffen, be transferred back. Kernel is also asking for an injunction to prohibit further reprinting, release, sale and performance of “Do It.”

AllHipHop.com June 16, 2009 (Tai Saint Louis)

LIL WAYNE in Copyright Infringement Battle with Producer

On April 29, 2009, rapper LIL WAYNE filed a lawsuit against Rebel Rock Productions Inc.

Originally, in May 2008, Lil Wayne himself was sued for copyright infringement. It was alleged that he illegally sampled Karma-Ann Swanepoel’s “Once” song for his single, “I Feel Like Dying.” In Lil Wayne’s lawsuit, he claims that it was the responsibility of Rebel Rock Productions to obtain a licensing agreement for the sample, taken from Karma-Ann’s song.

The rapper was recently ordered to turn over the financial records for his Grammy award-winning “Tha Carter II” album to Karma-Ann’s publisher, Urband & Lazar Music Publishing. Although the album does not contain the track, Karma-Ann’s lawyers claim that there’s a connection between the song and the album. They maintain that Lil Wayne used the song for the promotion of the album, performing it live at his shows.

In a related action, Lil Wayne’s new “Rebirth” album had its release delayed, from June 16 to June 23, 2009. This was due to issues with clearing samples.

Ace Show Biz April 29, 2009

U.S. Busts

See the Recording Industry Association of America’s (RIAA) monthly newsletter “RIAA Anti-Piracy Seizure Information,” for information about piracy, counterfeit and bootleg raids across the U.S.

Authorities Nab Biggest Theater Pirate

The Motion Picture Association of America (MPAA) paid tribute on June 11, 2009, to the South Barrington, Illinois police department for helping to bring down one of the world’s top movie piracy operations. Police first spotted a man taping a film at the AMC 30 Movie Theater and thought it was a routine case. However, they discovered that he was wanted as one of the top three leaders of a massive movie piracy outfit.

Gerardo Arellano, 32, was arrested by police on April 10, 2009. He was caught “red-handed” recording the “Hannah Montana” movie, in the South Barrington AMC 30 theatre, located in a Chicago suburb. At Arellano’s residence, they discovered 44,000 DVDs and CDs, in addition to duplicating devices. The police charged him with criminal use of a motion picture facility, unlawful use of a recording device, computer fraud and online sale of stolen goods. His wife, 32-year-old Maribell Fernandez, was also arrested, for bringing the camera to the theater for her husband to use.

According to investigators, Arrellano is suspected of not just filming the movies, but also making copies and selling them as both hard copies and digital downloads. The MPAA honored nine South Barrington officers for their efforts in catching Arellano. The arrests were celebrated as marking significant progress in their anti-piracy efforts.

NBC Chicago, June 12, 2009 (Zach Christman)

Daily Herald, June 12, 2009 (Eric Peterson)

Houston Piracy Raid Nabs Six

A well-known flea market in Houston, Texas, in the Long Point area, was raided by investigators on June 20. They confiscated over 25,000 illegal CDs and DVDs during their noontime sting operation. Houston Police Department undercover officers purchased music and movies that were illegally downloaded and copied onto discs from the suspects, who sold the unauthorized merchandise out of the back of their cars. Since the vehicles were running when officers approached them, they were able to get away.

With a tip-off in 2008, RIAA investigators discovered this illegal operation, and the district attorney’s office helped to plan the raid. Law enforcement arrested six suspects, who are charged with unlawful labeling and being engaged in organized crime. They each face as much as a $250,000 fine and up to five years in jail.

KHou.com, June 24, 2009 (Jeff McShan)

Worldwide Update

Argentina

Qsound Brought Down

File-sharing site Qsound.com.ar, which distributed unauthorized music files among its1,500 registered users, was shut down by CAPIF (Argentine Chamber of Phonograms and Videograms Producers) for copyright infringement. This organization, a member of the IFPI, represents Argentina’s recording industry. Prior to being shut down, Qsound was host to over 2,000 posts that linked to 3,000 illegal music files.

The website was removed from the internet on June 22, 2009, following notifications. The service was marketed to users of file-sharing forums and sites that were shuttered by CAPIF in their regional anti-piracy efforts. As to the location of site users, 59.4% were based in Argentina, 12.5% in Spain and 9.4% in Uruguay. CAPIF investigators researched the site, ID’d the infringement activity and then informed the operators.

IFPI press release, July 7, 2009

France

SPPF Files Suit Against YouTube, Eyes Neighboring Rights Royalties

SPPF, French royalty collection organization representing independent record companies, has filed a lawsuit against YouTube (owned by Google) for copyright infringment. SPPF is asking for $13.9 million to be paid in damages for videos that were removed from YouTube at their request last year, since they are once again available.

YouTube states that SPPF hasn’t signed up for the company’s Content ID service. This allows copyright owners to send YouTube copies of their compositions, which are then blocked from being uploaded to YouTube.

In addition, SPPF has put its efforts into neighboring rights royalties. In 2007 and 2008, fees for state-owned and commercial radio channels were increased, and since then, SPPF has been considering a rate change for the amount paid by public areas that play recorded music. Currently, these rates are set by a group that is overseen by a government representative.

Digital Media Wire, June 18, 2009 (Mark Hefflinger)

Germany

Rapidshare Loses Court Case, Must Filter Content

On June 23, 2009, Hamburg’s Regional Court ordered Rapidshare to “proactively filter” 5000 tracks from German copyright society GEMA’s catalog.

This follows another court case in January 2008, where a Düsseldorf court ruled that Rapidshare was responsible for what users uploaded to their service. The file-sharing site implemented screening and kept hashes of files pulled for infringement. But GEMA wasn’t satisfied and decided to go back to court.

GEMA’s new software searches web forums and extracts links to copyright infringing content. Rapidshare, however, claims that this software doesn’t work. Bobby Chang, Rapidshare’s CEO, questions the application’s ability to open encrypted files, prevent the scraping of links, find links within forums that search engines can’t access, and accurately identify audio files.

This recent court decision implies that German-based user-generated content sites, in the future, may need to be proactive in finding efficient ways to screen for copyrighted material. Meanwhile, Rapidshare says they will appeal the verdict.

European Digital Rights, July 1, 2009

Ireland

ISPs Are Responsible, Says Major Labels

The ‘big four’ labels have set in motion a lawsuit against Ireland’s number two telecommunications firm, BT Ireland, and UPC Ireland, the biggest cable operator. With this legal action, they hope to force the companies to take a stronger stand against their subscribers’ unauthorized music downloads.

This action is after a January 2009 out-of-court settlement between Eircom, a major broadband company, and the four labels (Universal, Sony, Warner Music and EMI). The company agreed to establish a “three strikes and you’re out” policy for downloaders who regularly infringe copyrights.

In the agreement, the recording companies agreed that they would require the same from all ISPs (internet service providers), to prevent Eircom from being put at a competitive disadvantage.

Ireland’s High Court issued the latest proceedings on June 16, 2009.

Irish Times, June 20, 2009 (John Collins)

Italy

Music Pirates Must Forfeit Funds

In Italy on June 18, 2009, an investigation found that online music site operators were guilty of copyright infringement, and the judge ordered them to pay more than $3.3 million

This ruling comes after legal cases against several Italian sites that offered unlicensed music to their users for illegal downloading. The investigation back in 2003 was spearheaded by the Italian Fiscal Police (GDF), with support from the FPM (Federation against Music Piracy). The focus was on these unlawful websites.

The GDF investigation culminated in more than 54 people in Italy being charged, but charges were dropped since the relevant limitation period had expired. The Judge for Preliminary Investigations ruled that it was proven that the defendants had committed the offenses. It was ordered that their computers be seized and destroyed and they be forced to forfeit the $3.3 million, which had been frozen on the authority of the Office of the Public Prosecutor.

IFPI press release, June 18, 2009

Japan

Japan Says No to Pirates

Japan’s upper house of Parliament, the House of Councillors, has unanimously voted in favor of a copyright law revision that makes it illegal to download pirated content. This revision was approved on June 16, 2009, and takes effect on January 1, 2010.

It is already illegal to upload pirated video and music content, but downloading has, until now, been acceptable if it is just for personal use. However, this new law makes it illegal for individual users to download material that was uploaded without authorization from the copyright owners.

Penalties for illegal downloading have not yet been specified by lawmakers. They are banking on a strong aversion against breaking the law to keep online users in compliance. However, the illegal upload of video files is widespread on file-sharing sites in Japan, which has led to huge losses for copyright holders in that country and elsewhere in the world.

Variety, June 17, 2009 (Mark Shilling)

Turkey

Police Pulverize Piracy in Turkey

Turkish authorities have conducted important anti-piracy actions against four organized criminal networks. These recent operations have effectively brought down the illegal enterprises due to the large number of arrests and quantity of products seized.

The first action took place on May 7, 2009, targeting 83 addresses in 17 Turkish cities. Twenty-nine people were arrested and more than seven million counterfeit and pirate items were seized. Much of this merchandise was sold or distributed through online sites that required special codes and keywords, police confirmed.

On June 1, 2009, authorities carried out the second operation, where 84 Istanbul sales points were simultaneously raided. That action netted more than two million counterfeit products and 46 individuals were charged with copyright infringement. Police arrested 11 people believed to be the illegal operations’ gang leaders.

Turkish police estimated the total value of the seizures to be more than $105 million. Because of these police actions, the main counterfeit network was disrupted and its key members were placed under arrest. Authorities also believe that the largest pirate marketplace, the Tahtakale, has been permanently shut down.

IFPI press release, June 17, 2009

Legal Beagle

The Pirate Bay Continues to Sink as Retrial is Denied

A Swedish appellate court, on June 25, 2009, ruled against a retrial in the Pirate Bay legal case. This is despite the trial judge being accused of bias against the founders of the notorious BitTorrent tracking site.

In April 2009, Pirate Bay directors Peter Sunde, Gottfrid Svartholm Warg and Fredrik Neij were convicted for enabling copyright infringement, in addition to Carl Lundstörm, who was found guilty of funding the operation for five years. Each individual faces a year in prison and fines of $3.8 million. Days after the convictions, lawyers for the four defendants charged that the judge who presided over the trial, Tomas Norstrom, was hostile to their clients, since he was affiliated with the Swedish Association for the Protection of Industrial Property and the Swedish Copyright Association.

In addition, they accused the Stockholm trial court administrators of quietly steering the case to Norstrom, a charge that the court denied. The verdict against the Pirate Bay angered Swedish youth and triggered a political backlash. The Swedish Pirate Party added 20,000 members to its ranks, doubling its size to 40,000 and surprisingly winning a European Parliament seat.

The political fortunes of the Pirate Party were also a response to the implementation of the Intellectual Property Rights Enforcement Directive (IPRED) by the Swedish government in April of this year. The purpose of this law is to help copyright owners obtain information that identifies those who engage in unauthorized file-sharing–data that was previously private.

In related news, on June 30, Swedish gaming firm Global Gaming Factory X AB bought The Pirate Bay for $7.7 million. They plan to transform the troubled file-sharing platform into a legal peer-to-peer service. They state that they wish to develop models that ensure that rights holders get paid for downloaded content. Recording industry executives remain “cautiously optimistic” that this spells the end of Pirate Bay’s illicit history.

Wired.com, June 25, 2009 (David Kravets)

Minnesota Woman Loses Download Case

A Minneapolis federal jury ruled, on June 18, that a Minnesota woman was guilty of violating several music copyright laws. This is the only file-sharing case in the U.S. that has ever advanced to a trial.

Jammie Thomas-Rasset was found to have willfully violated copyright laws for 24 songs. The jury awarded $80,000 per composition, for a total of $1.92 million, to the recording companies.

This June 18 case was a retrial. It was also found in 2007 that Thomas-Rasset was guilty of illegally sharing music files. It was determined by the judge in that case that he had provided incorrect jury instructions, and therefore, the new trial was ordered.

The subsequent outcome was even worse than the first. In the initial trial, the jury awarded just $222,000 in compensation. The entities that sued Thomas-Rasset are subsidiaries of the ‘Big Four’ labels–EMI Group PLC, Warner Music Group Corp., Sony Music Entertainment and Universal Music Group.

Chron.com, June 18, 2009 (Steve Karnowski, AP)

SIDEBAR

YouTube Dodges a Bullet in Yet Another Legal Case

A U.S. District Judge has handed YouTube a legal victory by dismissing a copyright infringement lawsuit and damages claims against the popular video sharing platform and its parent company Google, Inc. However, the court leaves open the ability of non-U.S. copyright holders to seek damages for live broadcasts, should they win a case.

The plaintiffs, which comprised music and sports copyright owners and was headed by the UK’s Football Association Premier League, argued that foreign videos did not have to be registered under the U.S. Copyright Act. But it was ruled that damages are not payable for foreign works not registered in the U.S., unless they fall under the “live broadcast exception” outlined in the Copyright Act. United States District Judge Louis Stanton wrote in his July 3 order that punitive damages were not available for all of the group’s claims. This was a reiteration of his previous ruling for a Viacom Inc. case.

In 2007, Viacom, owner of MTV Networks and film studio Paramount, filed a $1 billion infringement action against YouTube and Google. This lawsuit accused YouTube of piracy of Viacom content. Since this class action suit was filed in the same year, in the U.S. District Court, Southern District of New York, the two cases have been combined for the purpose of discovery.

Reuters, July 7, 2009 (Gina Keating)
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Quick Bits and Bytes

Virgin Media and Universal Announce New Music Service

The largest music company in the world, Universal, and cable TV operator Virgin Media, owned by entrepreneur Richard Branson, have joined together to launch a new type of music download service. In their June 15, 2009 statement, they announced that this new subscription service would be “a world first,” allowing Virgin Media’s broadband users in the U.K. to download or stream as many albums and songs as they want to, for a fee, from Universal’s extensive catalog.

Virgin has been in discussions with other major as well as independent music companies and publishers in Britain, about their artists being included in this new service. Music can be downloaded in MP3 format, which allows buyers to listen on various devices, such as mobile phones, PCs, iPods and MP3 players.

Their subscription service, which they plan to roll out later in 2009, expands unlimited download services on mobile phones, such as Nokia’s “Comes With Music.” These services provide an enormous selection of music, and this comes at a time when the music industry is engaged in a continuing war against unauthorized downloads.

USA Today, June 15, 2009 (Jane Wardell, AP)

LA Gangs Discover Piracy as a Way to Make a Buck

Previously, gangs have made their income by dealing drugs, but they’re now pivoting to music and film piracy. Law enforcement says that this is due to the lower criminal penalties. As police lieutenant Patrick Shields explained recently to the Los Angeles Public Safety Committee, they’ve seen increased gang involvement in piracy since punishment is less severe than for drug crimes.

Possession of pirated goods is now a felony for 100 or more CDs or DVDs, but courts usually give probation for first-time offenses. For marijuana possession with intent to sell, there’s a maximum sentence of three years in jail.

Since 2002, Shields and his unit have confiscated $61 million worth of pirated merchandise. Their focus is on Santee Alley in downtown Los Angeles, which is a popular location for vendors to hawk many counterfeit products. Many of these sales are gang-related, and Shields maintains that “it’s a big business.” Discs that cost 50 cents to a dollar to make can be sold for $5, netting them a large profit. If it looks like there’s gang involvement, the Gang Enforcement Details is notified, so they can help to shut down illegal activity.

Daily News, July 6, 2009 (Rick Orlov)