ISP Grande Communications piracy case

Photo Credit: Carlos Alfonso

Major record labels are urging a federal Texas court to uphold its $47 million piracy liability judgement against internet provider Grande Communications.

When a Texas federal jury found internet service provider Grande Communications guilty last year of willful contributory copyright infringement and ordered the company to pay $47 million in damages, major record companies like Warner and Sony breathed a collective sigh of relief.

But in September, Grande filed an appeal, arguing that the court came to the wrong conclusion — that internet providers should not be held liable for the piracy of customers based on third-party allegations. Now, record companies are urging the court to uphold its original ruling.

In an 89-page response brief, record labels counter Grande’s appeal and insist that the jury reached a sound verdict that should be upheld on appeal. The alternative, they posit, would make it nearly impossible to address online piracy. Internet service providers play a central role in torrent-based piracy, explain the music companies, as the only ones who can identify a subscriber based on their IP address.

Therefore, when rights holder or anti-piracy partners send infringement notifications to internet service providers like Grande, the ISP becomes the only party able to address the conduct. By not terminating pirating subscribers, the music companies argue that Grande violated its legal obligation under United States law.

“At trial, Plaintiffs demonstrated that Grande understood these legal obligations, but consciously ignored them,” write the labels. “Instead, Grande decided in 2010 to maximize its revenues by continuing to collect subscription fees from subscribers it knew were repeat copyright infringers and providing them with the tools necessary to continue infringing, namely Grande’s high-speed internet services.”

The rights holders have argued that Grande’s decision not to terminate infringing subscribers was financially motivated; the company reportedly terminated the accounts of subscribers who failed to pay their bills, but took no action against repeat copyright infringers.

“For nearly seven years, Grande enabled and facilitated massive copyright infringements by subscribers of its internet services as a result of its conscious decision to provide subscribers (that) it knew where using those services to infringe with the very tools they needed to continue doing so.”

While Grande hopes to overturn the ruling, the record labels assert that the ISP’s arguments carry no weight. Grande’s appeal draws heavily on the Twitter vs Tammneh ruling. There, the US Supreme Court held that social media platforms aren’t liable for terrorists who use their services to recruit and raise funds, rejecting the claim that Twitter aided and abetted terrorist activity because it didn’t “consciously and culpably” participate. Grande claims that ISPs are even further distanced from wrongdoing.

The record labels argue that this ruling should not be directly translated into the context of copyright infringement, that if the court were to apply that ruling in this case, it would alter the concept of contributory copyright infringement based on a case entirely unrelated to copyright. The US Court of Appeals will ultimately make its decision; should the original ruling not be upheld, the music companies plan to raise a counter-appeal.