Record Labels Say ISP Should Pay More for User Piracy

After a court victory against an internet provider, record labels want more, demanding that the ISP should pay per song and not per album.

Universal, Warner, and Sony secured another win against internet provider Grande Communications, but the big three aren't happy an appeals court only granted them per-album damages instead of damages per song.

Now, the music publishing firms are seeking an en banc rehearing of the case, asserting Grande Communications should be forced to pay per-song damages for its failure to terminate the accounts of internet users committing piracy. According to the record labels, making Grande pay only for each album and not each song “threatens copyright owners' ability to obtain fair damages.”

The three-judge panel at the US Court of Appeals for the Fifth Circuit ruled unanimously last month that Grande violated the law by failing to terminate the subscriber accounts of those accused of being repeat copyright infringers. Subscribers were flagged for infringement based on their IP address being connected to torrent downloads.

The Fifth Circuit panel also ordered a new trial for damages, ruling that $46.8 million was far too high. The appeals court judges found the district court “erred in granting [judgment as a matter of law] that each of the 1,403 songs in suit was eligible for a separate award of statutory damages,” amounting to $33,333 per song. Specifically, the record labels are seeking to reverse the per-album portion of the ruling, leaving the rest intact.

According to the Copyright Act, “all the parts of a compilation or derivative work constitute one work,” the Fifth Circuit panel cited. Therefore, they concluded that “the statute unambiguously instructs that a compilation is eligible for only one statutory damage award, whether or not its constituent works are separately copyrightable.”

But the record labels argue that the “one work” portion of the law “serves to prevent a plaintiff from alleging and proving infringement of the original authorship in a compilation,” and that they should be entitled to collect separate statutory damages for each of the compilation's constituent parts. “That rule should have no bearing on this case, where Plaintiffs alleged and proved the infringement of individual sound recordings, not compilations.”

Meanwhile, Grande Communications filed a petition for a rehearing because it seeks to escape liability — whether it's for each song or each album is irrelevant, they say. “Providing internet service is not actionable conduct,” they argue. “The Panel's decision erroneously permits contributory liability to be based on passive, equivocal commercial activity: the provision of internet access.”

It's not dissimilar to the case involving Cox Communicationswhich is waiting to see whether the Supreme Court will overturn a ruling in a copyright infringement lawsuit brought by Sony. That case saw a US Court of Appeals for the Fourth Circuit affirm a jury's decision that Cox was guilty of “willful contributory infringement,” but did not award the requested $1 billion in damages and instead ordered a new trial to determine damages owed. Sony also petitioned the court in order to request the $1 billion verdict be reinstated.