Records

Music Labels Awarded Millions in Copyright Infringement Lawsuit Against Grande Communications Networks

Reni de la NuezNews & Insights

By Reni de la Nuez

In 2017, multiple record companies sued Texas internet service provider Grande Communications Network LLC for alleged copyright infringement under the Digital Millennium Copyright Act (the “DMCA”).[1] Recently, the United States District Court for the Western District of Texas reached a verdict and awarded the labels (including Universal Music Group, Sony Music Entertainment and Warner Records) a total of $46.7 million upon its decision that Grande willfully contributed to infringement by failing to take action against piracy among its subscribers.[2]

In its original complaint, Universal Music Group stated that between the years of 2010 and 2016, Grande received and ignored millions of notices regarding the copyright infringement perpetuated by its subscribers despite having an apparent policy against infringement in place.[3] Evidence indicated that Grande continued to disregard notifications even after acknowledging that their failure to enforce a policy against infringement would threaten their safe harbor status under the DMCA.[4] Title II of the DMCA provides safe harbor to an internet service provider (“ISP”) that has “adopted and reasonably implemented . . . a policy that provides for the termination in appropriate circumstances of subscribers and account holders…who are repeat infringers” and do not interfere with the “standard technical measures” that copyright owners use to identify or protect their works.[5] Prior cases on the issue make clear that an ISP has not “reasonably implemented” its policy if such policy is not, at a minimum, meaningfully enforced against repeat infringers.[6] ISPs might even retain protection if they can make a showing that there were no appropriate circumstances to justify the termination of the infringer.[7] However, this only applies if the failure to terminate is circumstantial rather than automatic.[8]

Given its commitment to ignoring infringement, Grande did not qualify for safe harbor protection and was found contributorily liable for the copyright infringement of over 1,400 works.[9] The DMCA applies contributory liability when a third party has knowledge of infringement and induces or materially contributes to the infringement.[10] Damages under contributory liability are scaled based on whether the infringement was willful or innocent, with willfulness reflecting the defendant’s knowledge.[11] Applying this standard to Grande, the court held that the company must pay the record labels between $750 and $150,000 per work, amounting to $46,766,200.00 in total.[12]

Grande argues generally that courts’ tendencies to hold ISPs liable in absence of safe harbor protection place an unfair burden on ISPs.[13] Grande asserted that the recording industry positions ISPs to function as “copyright police” when it should really take direct action against infringers themselves, but chooses not to in an effort to avoid bad publicity.[14] Regardless of who has a duty to take action in these situations, the core issue is whether the burden more reasonably falls on the ISPs or the labels given their relative proximity to the infringement and their ability to correct it in a timely and effective manner.

Courts addressing these types of cases have reasoned that the sheer amount of people using ISPs (and the ease with which these users might be able to commit infringement) makes it nearly impossible to enforce rights against all direct infringers.[15] These courts have held that in these situations, “the only practical alternative” to direct liability is holding ISPs liable for vicarious or contributory infringement.[16] Of course, those on the label side of the argument largely share this sentiment.

“The jury’s strong action here sends an important message to Internet Service Providers,” said CEO of the Recording Industry Association of America Mitch Glazier in response to the court’s verdict against Grande.[17] “Artists, songwriters, shareholders, fans and legitimate services all depend upon a healthy digital music ecosystem.”[18]

This verdict comes just a few years after a similar case between record labels and the ISP Cox Communications, in which Cox was charged with $1 billion worth of damages.[19] Rightscorp, the software service that deployed notices of infringement to both Cox and Grande on behalf of copyright owners, stated that the Cox case “set the precedent” and paved the way for “several follow-up cases, representing billion-dollar claims.”[20] Although it is still unclear whether Grande plans to appeal the District Court’s verdict, it looks as though courts will not be going easier on ISPs any time soon.


[1] Complaint, UMG Recordings, Inc. v. Grande Communications Networks, No. 1:17-cv-365 (April 21, 2017).

[2] Blake Brittain, Music Labels Win $46.7 Million from Internet Provider in Piracy Trial, Reuters (Nov. 4, 2022), https://www.reuters.com/legal/litigation/music-labels-win-467-mln-internet-provider-piracy-trial-2022-11-03/.

[3] Complaint at 2.

[4] UMG Recordings, Inc. v. Grande Communications Networks, LLC, 384 F. Supp. 3d 743, 768-9 (W.D. Tex. 2019).

[5] Digital Millennium Copyright Act, 17 U.S.C. § 512(i).

[6] UMG Recordings, Inc. v. Grande Communications Networks, LLC, No. A-17-CA-365-DAE, 2018 U.S. Dist. LEXIS 212592, at *6 (W.D. Tex. Dec. 18, 2018) (“This reading of the statute is in line with every court that has discussed the issue.”).

[7] Id.

[8] Id.

[9] Brittain, supra note 2.

[10] 17 U.S.C. § 512.

[11] UMG Recordings, Inc. v. Grande Communications Networks, LLC, 384 F. Supp. 3d 743, 769 (W.D. Tex. 2019).

[12] UMG Recordings, Inc. v. Grande Communications Networks, LLC, No. 1:17-cv-00365 (W.D. Tex 2022).

[13] Winston Cho, Major Music Labels Awarded $47 Million Over Piracy Suit, The Hollywood Reporter (Nov. 4, 2022), https://www.hollywoodreporter.com/business/business-news/major-music-labels-awarded-47m-over-piracy-suit-1235255934/.

[14] Id.

[15] Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 929-30 (2005).

[16] Id.

[17] Lauren Berg, ISP Owes Record Cos. $47M Over Song Piracy, Jury Says, Law360 (Nov. 3, 2022), https://www.law360.com/articles/1546618/isp-owes-record-cos-47m-over-song-piracy-jury-says.

[18] Id.

[19] Brittain, supra note 2.

[20] Legal Momentum Continues, Accesswire (Nov. 17, 2022), https://www.accesswire.com/726425/Legal-Momentum-Continues.