In March several major music companies sued Charter Communications, one of the largest Internet providers in the US with 22 million subscribers.
Helped by the RIAA, Capitol Records, Warner Bros, Sony Music, and others accused Charter of deliberately turning a blind eye to its pirating subscribers.
Among other things, they argued that the ISP failed to terminate or otherwise take meaningful action against the accounts of repeat infringers, even though it was well aware of them. As such, it is liable for both contributory infringement and vicarious liability, the music companies claim.
The ISP disagreed and filed a motion at a Colorado federal court, asking it to dismiss the vicarious liability claims. Charter argues that it doesn't directly profit from copyright-infringing subscribers, nor does it have the ability to control them.
Previously, other Internet providers have been successful in getting vicarious infringement claims dropped, but Charter's case appears to go in the other direction. Last month Magistrate Judge Michael Hegarty recommended the court to deny the motion to dismiss.
According to the Judge, Charter's "failure to stop or take other action in response to notices of infringement is a draw to current and prospective subscribers to purchase and use Defendant's internet service to 'pirate' Plaintiffs' copyrighted works."
Charter objected to this recommendation and hopes that the court will not accept it. The company fears that this will subject the company, and pretty much all other ISPs, to a wide range of piracy liability claims.
They are not alone in this assessment. Yesterday, a group of 23 copyright law professors submitted an amicus curiae brief in support of the company. According to the legal scholars from prominent institutions including Harvard and Stanford, the recommendation would set a dangerous precedent.
The copyright professors point out that, based on the complaint, it can't be concluded that Charter enjoyed direct financial benefits from the alleged infringements, as vicarious liability prescribes.
Vicarious liability requires ISPs' actions to serve as a "draw" to potential infringers. However, the professors argue that this isn't the case here. Instead, the potential to use Charter to pirate should be seen as an "added benefit."
The draw, in this case, is access to the entire Internet, with the potential to pirate being an added benefit.
"Access to this universe of content and services is the draw for subscribers, and the use by some subscribers of some portion of that service to download infringing material can only plausibly be seen as an added benefit of the service.
"This is especially true with ISPs, like Charter, because subscribers pay the same flat monthly rate for a particular level of service irrespective of whether, or how often, they infringe," the professors add.
The Judge's recommendation fails to properly make this distinction according to the professors. Neither does it show the necessary causal link between infringements and the financial benefit. As a result, it would expose Charter and other ISPs to "unprecedented risks of liability."
The fact that Charter advertises "blazing-fast" speeds that allow users to download "just about anything" efficiently is not relevant either. According to the professors, these features are valued by all Internet users whether they engage in infringement or not.
"The Recommendation's misapplication of the direct financial benefit analysis would cause considerable harm to other ISPs, consumers, and the public," they write.
Blazing-fast
The immediate threat to ISPs is more lawsuits where dozens of millions of dollars in damages are at stake. If the recommendation stands, providers would have a hard time defending them. In addition, many would have to change their piracy policies, which could hurt consumer privacy.
In order to avoid vicarious liability claims, Charter and others would have to be more active against potential repeat infringers. This could lead to more Internet terminations and possible monitoring of legitimate users, the professors warn.
"Consumers, whether they personally engage in infringing conduct or not, could be subject to wholesale termination of their Internet access based on unproven allegations of infringement occurring at the IP address through which they connect to the Internet.
"Moreover, ISPs could be forced to engage in privacy-invasive monitoring of their subscribers' Internet activity," they add.
The brief explains that ISPs that don't host any content should pass all Internet traffic along in a neutral manner. These companies should not be forced to become copyright enforcers based on mere allegations.
Based on the above, the copyright law professors urge the court not to adopt the Magistrate Judge's recommendations. First, however, the court must decide whether it will accept the brief and add it to the record.
Given what's at stake, it wouldn't be a surprise to see submissions from more third-parties on this matter in the coming days.
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A copy of the professors' amicus curiae brief, which has yet to be accepted, is available here (pdf).
Loi Krathong is an annual festival celebrated in Thailand and some neighboring countries during which 'krathong' (decorated baskets) are floated on a river.
These beautiful items are often made by locals looking to generate relatively small sums to help support their families and in some cases fund their education. Sadly, there are others who see the creations as an opportunity to generate cash for themselves in an entirely more sinister fashion.
According to local media reports, earlier this month a 15-year-old girl known as 'Orm' or 'Orn' (we'll settle on the former) was contacted on Facebook by a stranger who placed an order for 136 krathong floats. The order carried specific instructions for them to be adorned with faces of cartoon characters owned by Japanese company San-X.
When Orm took 30 completed floats to a local mall, at the request of a supposed "copyright agent" she was reportedly arrested by police for 'copyright infringement'. She was told to pay a fine of 50,000 baht, around US$1,650, a figure that was later negotiated down to 5,000 baht, US$1,650, by her grandfather, a former policeman.
"After receiving the order, I made krathong baskets from 8am to 1.30am the next day so that I could fill the order, only to be arrested," Orm said.
"Normally I do not make any basket with a copyrighted character. This customer stressed they wanted copyrighted characters. After being arrested I cried all night because I have never faced such legal action before."
The action against the teenager provoked outcry in the community after the chief of a local police station said it had worked with the 'copyright agent' on the sting operation, Bangkok Post reported.
However, all was not what it seemed. TAC Consumer PLC, which represents San-X, issued a statement stating that it had not participated in the operation against the teenager and had assigned one of its lawyers to the case. But worse was to come.
After news of the scandal spread, other victims of the scam came forward, saying they too had been arrested and settled for even larger amounts having borrowed the money from family members. They identified the 'copyright agent' as the same man who targeted the teenager.
When news reached local TV, a reporter helped to track down the 'copyright agent', who was discovered to be a local motorcycle taxi driver called 'Nan' whose wife sells meatballs in the area.
Yesterday, as pressure mounted against local police, a commander announced that after 40 similar complaints were filed against the 'copyright agent', they would be seeking arrest warrants by the end of the week. While that news will be celebrated in its own right, the knock-on effect of all the publicity is doing wonders for Orm's work.
After making 360 floats to sell during the Loy Krathong festival, people queued up to buy them. They sold out in an hour, making herself around 8,110 baht in profit, around US$267.00. She told local media she was "delighted" by the response having sold just 30 in previous years.
Half of the money will go towards her school fees and the rest will go to her family to help with household expenses.
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