Copyright

Monday, May 18, 2015 saw the Ninth Circuit Court of Appeals reversing itself in the closely watched case of Garcia v. Google.[ref]2015 WL 2343586 United States Court of Appeals, Ninth Circuit. All page references will be to the original opinion of the Court.[/ref] The earlier decision caused a lot of consternation around the copyright world, especially in Hollywood. The previous three judge panel ruled, for the first time, that an actor had a copyright in her individual performance in a motion picture.[ref]Garcia v. Google 743 F.3d 1258 amended by Garcia v. Google 766 F.3d 929, Ninth Circuit Court of Appeals 2014[/ref] So alarming was this ruling that the Ninth Circuit granted a motion from one of its own Judges[ref]Ninth Circuit Judge Asks for Panel Vote on Denial of Google's Request for Stay in "Innocence of Muslims" Copyright Case[/ref] to rehear the case en banc, i.e. before all the Judges of the Ninth Circuit.[ref]Garcia v. Google, 771 F.3d 647 Ninth Circuit Court of Appeals 2014[/ref] The en banc proceeding attracted no less than 13 "friend of the court" briefs[ref]2015 WL 2343586 at page 13[/ref] from companies like Netflix, Facebook, Gawker, Pinterest, and Twitter, media outlets like the Washington Post and New York Times, and labor unions like the Screen Actors Guild and the American Federation of Musicians.[ref]Id. at 4-6[/ref] The facts are simple enough and not in dispute: "In July 2011, Cindy Lee Garcia responded to a casting call for a film titled Desert Warrior, an action-adventure thriller set in ancient Arabia. Garcia was cast in a cameo role, for which she earned $500. She received and reviewed a few pages of script. Acting under a professional director hired to oversee production, Garcia spoke two sentences: "Is George crazy? Our daughter is but a child?" Her role was to deliver those lines and to "seem concerned." Garcia later discovered that writer-director Mark Basseley Youssef …had a different film in mind: an anti-Islam polemic renamed Innocence of Muslims. The film, featuring a crude production, depicts the Prophet Mohammed as, among other things, a murderer, pedophile, and homosexual. Film producers dubbed over Garcia's lines and replaced them with a voice asking, "Is your Mohammed a child molester?" Garcia appears on screen for only five seconds. …Youssef uploaded a 13 minute and 51 second trailer of Innocence of Muslims to YouTube, the video-sharing website owned by Google, Inc ... [T]he film fomented outrage across the Middle East, and media reports linked it to numerous violent protests… [A]n Egyptian cleric issued a fatwa against anyone associated with Innocence of Muslims, calling upon the "Muslim Youth in America and Europe" to "kill the director, the producer[,] and the actors and everyone who helped and promoted this film." Garcia received multiple death threats. …Legal wrangling ensued. Garcia asked Google to remove the film, asserting it was hate speech and violated her state law rights to privacy and to control her likeness. Garcia also sent Google five takedown notices under the Digital Millennium Copyright Act, 17 U.S.C. § 512, claiming that YouTube's broadcast of Innocence of Muslims infringed her copyright in her "audio-visual dramatic performance." Google declined to remove the film."[ref]Id. at 9-10[/ref] Garcia sued in federal Court on a variety of theories including fraud, libel and intentional infliction of emotional distress, but moved for a temporary restraining order against Google only on her copyright claim.[ref]Id. at 11[/ref] This would later prove to be significant. The District Court denied her request, "[i]n particular, the district court found that the nature of Garcia's copyright interest was unclear, and even if she could establish such a copyright, she granted the film directors an implied license to "distribute her performance as a contribution incorporated into the indivisible whole of the Film."[ref]Id.[/ref] A three Judge panel (in a 2-1 split) ruled that Garcia did have a copyright in her performance as an actor,[ref]Garcia v. Google 743 F.3d 1258 amended by Garcia v. Google 766 F.3d 929, Ninth Circuit Court of Appeals 2014[/ref] something that had never been ruled to be the case by any Court previously. The outcry over the ruling was immediate and widespread. According to Fortune magazine "[n]ews of the ruling led to a massive pushback by Google and civil liberties groups, who argued that the ruling was a dangerous prior restraint on free speech. Meanwhile, Hollywood also expressed alarm over the ruling since it was based on a principle that individual actors have a separate copyright in their performance—raising the possibility that almost anyone involved in a movie could claim ownership of the whole thing."[ref]In win for Google, court lifts ban on 'Innocence of Muslims' video[/ref] The U.S. Copyright Office refused to follow the Court's ruling. They rejected Garcia's copyright application stating that its "'longstanding practices do not allow a copyright claim by an individual actor or actress in his or her performance contained within a motion picture.' Thus, ‘[f]or copyright registration purposes, a motion picture is a single integrated work.... Assuming Ms. Garcia's contribution was limited to her acting performance, we cannot register her performance apart from the motion picture.'"[ref]2015 WL 2343586 at page 17[/ref] In reversing the decision of the previous panel, the en banc panel ruled as follows:

• The reasoning of the Copyright Office was persuasive.[ref]Id. at 18[/ref]
• Garcia expressly disclaimed that she was a "joint author" of Innocence of Muslims.[ref]Id. at 19[/ref]
• Garcia was not an "author" as her performance was not fixed "by or under" her authority.[ref]Id. at 22[/ref]
• The ruling of the District Court that she had given an "implied license to use her performance" was not clearly erroneous.[ref]Id. at 21 and at footnote 12[/ref]
• Treating every acting performance as an independent work would create thousands of copyrights where there should only be one, resulting in a "logistical and financial nightmare."[ref]Id. at 20[/ref]
• While the death threats certainly amounted to "irreparable harm" to Garcia, the harm was not caused by the violation of her rights in a copyright, which was the sole legal reason given for her initial motion for temporary restraining order.[ref]Id. at 24[/ref]

Needless to say, Judge Alex Kozinski, the author of the original opinion, disagrees. "Without Garcia's performance, all that existed was a script. To convert the script into a video, there needed to be both an actor physically performing it and filmmakers recording the performance. Both kinds of activities can result in copyrightable expression. (citation omitted) Garcia's performance had at least "some minimal degree of creativity" apart from the script and Youssef's direction. (citation omitted) One's "[p]ersonality always contains something unique. It expresses its singularity even in handwriting, and a very modest grade of art has in it something which is one man's alone." (citation omitted) To dispute this is to claim that Gone With the Wind would be the same movie if Rhett Butler were played by Peter Lorre."[ref]Id. at 37[/ref] All of this sounds good, except when you apply it to the actual facts of the case. Garcia's performance lasted all of five seconds. Her two lines of dialogue we removed and replaced by another actress dubbing in new dialogue. So her "performance" that Judge Kozinski wishes to grant her a copyright in, consists of facial expressions and body movement. I fail to see how these aspects, standing alone, create an original work of authorship. The act of walking not only fails to rise to the level of authorship but is hardly original. Are facial expressions, part instinct, partly a learned trait, really original enough to give copyright protection to it? Certainly body movements can be the subject of copyright, if they constitute a "dance." What Garcia did was in no way a dance. Similarly, actors can bring a great deal to a role, but the main job of the actor is to convincingly portray what is already present in the script. The words to be spoken have already been decided upon. The emotions to be portrayed are either in the script (explicitly or implicitly), or supplied by the director. If the actor does not convincingly portray what the director is looking for, the scene is done over. This is what the majority is saying when it rules that the five seconds of Garcia's performance was not done "by or under the authority" of Garcia as an author. Garcia had no input nor any ability to make decisions over what the final components of the film would be. Judge Kozinski counters by asking: "Did Jimi Hendrix acquire no copyright in the recordings of his concerts because he didn't run the recorder in addition to playing the guitar? Garcia may not be as talented as Hendrix—who is?—but she's no less entitled to the protections of the Copyright Act."[ref]Id. at 38[/ref] This argument leaps over several steps. Consider that the songs that Hendrix might perform in concert all have existing copyrights. Making a sound recording of them is a derivative work which requires permission.[ref]17 USC 101 see definition of "derivative work"[/ref] If the recordings were made without his consent, the recordings would be illegal bootlegs. Hendrix would not need to turn on the tape machine himself, but certainly his permission would be required. Here, the script has a copyright and the film is a derivative work made from it. Garcia had no pre-existing copyright to bring to the project. Her sole contribution was to recite lines already written for her and display emotions that were already given to her. In order to claim a copyright interest, she would have to bring some kind of original expression beyond that which has already been provided to her. I do not see that this has occurred. I would agree that if an actor brought significant new expression to a scene, there might be a copyright claim. This would be the case where the bare outlines of a scene are given to the actors, and the resulting scenes are improvised. (It is rumored that many of the scenes in the first Iron Man motion picture were improvised.) Again, this is not what happened with the Innocence of Muslims. Even in the situation where there is whole scale improvisation, the actor cannot escape the issue of implied license. Garcia showed up to the set, recited her lines, and collected $500. (The issue of work for hire was moot as some writing was executed but no one could locate it.[ref]2015 WL 2343586 at page 16, footnote 5[/ref]) There is with these actions a general implied license to use the fruits of her labors in the finished film. Garcia is not without any remedy. She has causes of action for breach of contract and fraud. But these do not grant her what she really wants, which is for the Innocence of Muslims film to be removed from YouTube. "It's her life that's at stake," growls Judge Kozinski.[ref]Id. at 42 emphasis in original[/ref] Yes, here is where the old adage of "hard cases make bad law" returns to center stage (sorry). This is the same Judge Kozinski who warned against the pernicious over-expansion of intellectual property rights. "Overprotecting intellectual property is as harmful as underprotecting it… The panel's opinion is a classic case of overprotection. Concerned about what it sees as a wrong done to [the Plaintiff], the panel majority erects a property right of remarkable and dangerous breadth."[ref]White v. Samsung Electonics 989 F.2d 1512 (dissenting opinion)[/ref] Sort of like saying there was a separate distinguishable copyright in a performance that lasts five seconds, with all the dialogue replaced by another actress.

This fall sees the return of Star Wars to the big screen, and begins a new era of stories with Star Wars: The Force Awakens. Star Wars is truly a cultural phenomenon. So much so that the release of trailers for the movie become internet events, and are dissected scene by scene by fans trying to learn every shred of information that they can. Not bad for a film that cost $11 million to make,[ref]Star Wars (film)[/ref] but generated a franchise the Walt Disney Company paid $4 billion to acquire.[ref]How Disney Bought Lucasfilm--and Its Plans for 'Star Wars'[/ref] The first three movies have grossed a combined $1.8 billion, and the Star Wars "universe" is said to have "17,000 characters …inhabiting several thousand planets over a span of more than 20,000 years."[ref]Id.[/ref] And it almost didn't happen at all. Because George Lucas' first plan was to remake Flash Gordon. According to Star Wars Producer Gary Kurtz, "[w]e tried to buy the rights to Flash Gordon from King Features [in 1971]. They weren't adverse to discussing it, but their restrictions were so draconian that we realized right away that it wasn't really a great prospect at the time."[ref]'Star Wars' Producer Blasts 'Star Wars' Myths[/ref] By that time, the first of the Flash Gordon serials would have been 35 years old,[ref]Flash Gordon[/ref] and already in its "renewal term" of copyright protection. This is where those who call for drastically shorter copyright terms (as short as 14 years) are missing the point. Those who wish to shorten copyright terms focus exclusively on the monetary reward that an author receives for their exclusive rights as their sole incentive to create. Since most copyrighted works soon exhaust their financial rewards, the argument goes that long copyright terms amount to a "perpetual copyright," and do not spur the creation of new works.[ref]Eldred v. Ashcroft 537 U.S.186 at 243, dissenting opinion of Justice Breyer[/ref] In reality, the benefit of long copyright terms is that certain stories and characters stay "off limits" for an extended period of time, forcing you to create something new. This is the other side of copyright that never gets mentioned. The long copyright term forces the creation of new works, since uncreative rehashing and retelling old works is not permitted. Because "copyright scarcity" exists, the creation of these new works is clearly a public benefit that "promotes the progress…of the useful arts," as required by the enabling clause of Article 1 Section 8. So, if Flash Gordon had gone into the public domain, Star Wars would have never existed. Would Lucas' Flash Gordon have been a good movie? All signs point to yes, but it would not have been the cultural phenomenon that Star Wars became. Ask yourself a question: which would you rather have? A good remake of Flash Gordon? Or Stars Wars and everything that goes with it? And this is not the first time this has happened. Ask yourself another question: which would you rather have? Oswald the Lucky Rabbit? Or Mickey Mouse? Yes, Walt Disney's first successful cartoon character was not Mickey, but Oswald the Lucky Rabbit.[ref]Neal Gabler, Walt Disney: The Triumph of the American Imagination, Alfred A Knopf, (2006) at 102-104[/ref] Yet, much to Walt's horror, he found out that when he tried to negotiate a higher fee for creating this successful property, the contract the distributor signed with the studio totally cut Walt out of any ownership interest in the character.[ref]Id. at 109[/ref] The distributor had also hired Walt's animators behind his back, and when Walt would not agree to a substantial reduction in the fees he would receive, the distributor basically fired Walt from working on his own creation.[ref]Id.[/ref] So, Walt went back to California, and needing a cartoon character to compete with the already popular Oswald, created Mickey Mouse.[ref]Id. at 114[/ref] Oswald continued to be popular until the mid-1940's, but he has been dwarfed (no pun intended) by the enormous world-wide success of Mickey Mouse. But wait! Isn't Walt Disney the great plunderer of the public domain? Not quite. Mostly forgotten when the public domain origins of Snow White and the Seven Dwarfs are discussed is what a monumental risk Disney took. The conventional wisdom of the day was that audiences would not sit through a feature length cartoon, with at least one newspaper calling Snow White "Disney's folly."[ref]Walt Disney: The Triumph of the American Imagination at 270[/ref] Originally budgeted at $250,000, Snow White cost over $1.5 million (an astronomical sum in 1936), all of it borrowed from the bank.[ref]Id. at 265[/ref] "Walt… told a reporter ‘I had to mortgage everything I owned, including Mickey Mouse and Donald Duck and everybody else' to make Snow White."[ref]Id.[/ref] Faced with all the naysayers and the enormous financial risk Disney was facing, it made sense that he go to a story that was already familiar to the public. "It was well known and I knew I could do something with seven screwy dwarfs."[ref]Id. at 216[/ref] Yes, Snow White and the Seven Dwarfs is a centuries old story and was obviously in the public domain, but before committing to the project, Disney acquired the rights to a stage version of the story, to avoid any adverse claims.[ref]Id. at 217[/ref] Certainly Pinocchio and Cinderella were in the public domain when Disney made movies of them, but Bambi [ref]Bambi, a Life in the Woods[/ref] and Dumbo[ref]Dumbo[/ref] were not, and Disney purchased the necessary rights to both of them. So remember, the public domain is supposed to benefit the public. Yet, as noted previously on this blog, the main beneficiaries of the public domain are the publishers and other resellers who will still charge you a fee for a copy of a work that it cost them nothing to acquire, and for which they pay no royalties to the author.[ref]Claiming Copyright in Public Domain Works: It's Time to Put an End to Publishing Sleight of Hand[/ref] So, if the "progress of the useful arts" is truly the goal, then pushing works into the public domain as quickly as possible is a mistake, as all this will generate is continuing profit to the publishers, and a series of rehashing and retelling old material under the false heading of "creativity."[ref]Copying Is Not Creativity! Why Creative Artists Don't Need the Public Domain[/ref] So "copyright scarcity," making certain expressions and stories "off limits," along with the financial reward to the author, is what is truly responsible for generating new works, new characters and new stories that enhance our world-wide shared culture.

On May 1, 2015, Grooveshark became "deadshark."[ref]Grooveshark music-sharing service closes down[/ref] The online music streaming service, which had at its' peak 35 million users,[ref]Id.[/ref] shut down and turned all of its intellectual property assets over to the major record companies that had sued it for copyright infringement.[ref]Grooveshark.com[/ref] Grooveshark was started in 2006, by Samuel Tarantino and Joshua Greenberg, two University of Florida students.[ref]UMG Recordings, Inc. et al v. Escape Media Group, 2014 WL 5089743, U.S. District Court for the Southern District of New York 2014 at 1 and 2[/ref] Grooveshark is a wholly owned subsidiary of Escape Media, LLC, a Delaware corporation. Since its inception, Grooveshark has operated in defiance of the copyright laws for nearly 10 years; that is until the courts found Tarantino and Greenberg to be personally liable for Grooveshark's infringements.[ref]Id. generally[/ref] It was only upon the eve of the start of the damages phase, after a "U.S. judge ruled… that Grooveshark's copyright violations on nearly 5,000 songs were "willful" and made "in bad faith,"[ref]Grooveshark copyright violations 'willful,' judge says before trial[/ref] and that the Court was going to instruct the jury that the maximum award was "$150,000, not $30,000,"[ref]UMG Recordings, Inc. et al v. Escape Media Group, Opinion and Order of April 23, 2015 at 6[/ref] that the various defendants threw in the towel. As well they should. Their potential liability on 4,907 songs ruled to be at issue,[ref]Id.[/ref] would have been over $736 million dollars. So how did Grooveshark stay open for almost ten years? Well, according to the two summary judgements issued against them by two different courts,[ref]UMG Recordings, Inc. et al v. Escape Media Group, 2014 WL 5089743, U.S. District Court for the Southern District of New York 2014 and Capitol Records, LLC v. Escape Media Group, Inc. 2015 WL 1402049 US District Court for the Southern District of New York, 2015[/ref] they obfuscated, destroyed evidence and hid behind the DMCA. Here's what Grooveshark claims they did: "Gainesville, Florida-based Grooveshark describes itself as "one of the largest on-demand music services on the Internet" with more than 30 million users sharing over 15 million files. The company says it has a policy to honor copyright holders' "takedown" requests that comply with the Digital Millennium Copyright Act."[ref]Grooveshark copyright violations 'willful,' judge says before trial[/ref] Here's what they actually did. The whole business model of Grooveshark was to "beg for forgiveness, not for permission." "Rather than wait to obtain licenses before launching Grooveshark, Escape decided to launch its service utilizing infringing content in order to grow faster and attempt to strike more favorable licensing deals with plaintiffs. (citation omitted) Escape's Chairman explained that defendants "bet the company on the fact that [it] is easier to ask forgiveness than it is to ask permission" to use plaintiffs' content. (citation omitted) Escape discussed the possibility that its strategy of illegally growing its user base before settling with plaintiffs might permit it to collect information about Grooveshark users' listening habits, which it could then sell to plaintiffs for more than Escape would have to pay in licensing fees. (citation omitted) This would create a scenario whereby Escape would never have to pay for the content it used to build its business."[ref]UMG Recordings, Inc. et al v. Escape Media Group, at 2[/ref] In other words, Grooveshark was yet another internet business that wants to use content without paying for it. According to the Copyright Act, the owner of the copyright in a sound recording controls the right to perform the recording when it occurs in a digital transmission.[ref]17 USC 106 (6)[/ref] If the performing entity making the digital audio transmissions is "interactive service," it is not eligible for statutory licensing,[ref]17 USC 114 (2) (A) (i)[/ref] and therefore must get licenses directly from the record companies, like Spotify does. So as an "on demand" streaming service they required licenses from the record companies from the very moment they started streaming. Did Grooveshark do this? Nope. As for the DMCA, Grooveshark was entitled to "safe harbor" from liability only if Grooveshark:

• does not have actual knowledge that the material or an activity using the material on the system or network is infringing;
• in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or
• upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material[ref]17 USC 512 (c) (1) (A) (i) (ii) (iii)[/ref]

Did Grooveshark do this? Nope. Instead, it's officers and employees themselves uploaded content to the site to the tune of over 150,000 separate files.[ref]UMG Recordings, Inc. et al v. Escape Media Group, at 5[/ref] In an email, Tarantino wrote: "If you have a home seeding point keep it on at all times. This is very important as we need to be seeding as many songs as possible. IF YOU ARE PART OF THIS COMPANY INSTALL/UPDATE GROOVESHARK ASAP. This is mandatory. If you don't have the time to install the software you are working for, then I don't know what you're doing here."[ref]Id. at 3[/ref] Not to be outdone, Greenberg stated in an email: "Please share as much music as possible from outside the office, and leave your computers on whenever you can. This initial content is what will help to get our network started-it's very important that we all help out! If you have available hard drive space on your computer, I strongly encourage you to fill it with any music you can find. Download as many MP3's as possible, and add them to the folders you're sharing on Grooveshark... There is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday ... IF I DON'T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU'RE ON MY OFFICIAL SHIT LIST. "[ref]Id. at 3[/ref] So, Grooveshark was never in compliance with the DMCA. They had actual knowledge from the inception of the business, that there were over one hundred thousand infringing files that were illegally uploaded to their website. Just a year after Grooveshark started, there were negotiations with UMG, Sony and Warner Bros. about obtaining licenses.[ref]Id. at 5[/ref] Did Grooveshark reveal that they had self-seeded the files on service? Nope.[ref]Id.[/ref] It was only through discovery in a lawsuit filed by UMG in New York that the self-seeding was revealed.[ref]Id.[/ref] So, Grooveshark's next step was to do what has now become a familiar practice by internet Defendants. They started destroying evidence.[ref]Id. at 7[/ref] "Greenberg received over thirty-nine DMCA notification letters from Escape for uploading 687 files to Grooveshark. (citation omitted) This means that Greenberg uploaded at least 687 sound recordings onto Grooveshark and that the UsersFiles should reflect these uploads. Greenberg confirmed during his 30(b)(6) position testimony that Escape maintained records in the UsersFiles of the dates, times, and identification numbers of all the files that he uploaded… However, when Escape produced a copy of the UsersFiles table to plaintiffs, it did not contain any records associated with Greenberg's user account. (citation omitted) Plaintiffs requested that Escape produce any archived copies of Greenberg's uploading records and explain why his data was missing. (citation omitted) Defendants confirmed that no archived copies of Greenberg's records exist."[ref]Id.[/ref] Grooveshark also deleted records pertaining to 320,000 files uploaded to its service, through a combination of automatic and manual deletions.[ref]Id. at 10[/ref] Grooveshark also destroyed large sections of its source code. "Escape confirmed that it had failed to preserve any non-corrupt version of source code repositories including the "Web" repository. (citation omitted) Escape explained that when its lease on a backup server used to store the relevant code expired several years ago, it chose not to preserve the source code. (citation omitted) However, as Escape knew from soon after the creation of Grooveshark that it could very well face copyright infringement litigation, it was under a duty to preserve all relevant evidence."[ref]Id. at 9[/ref] While all of this was going on, Grooveshark faced a separate lawsuit from Capitol/ EMI in 2009. Capitol settled the case in September of 2009 in exchange for $825,000 and the promise by Grooveshark not to "allow copying, reproduction, distribution, public performance and/or other exploitation of EMI recordings…except pursuant to a valid and binding agreement allowing such [uses] in accordance with the terms of such EMI content agreement."[ref]Capitol Records, LLC v. Escape Media Group, Inc. 2015 WL 1402049 US District Court for the Southern District of New York, 2015 at 9[/ref] This agreement did not last very long before Grooveshark breached it.[ref]Id. at 10[/ref] This led to the First Amendment to the Settlement Agreement on April 11, 2011.[ref]Id.[/ref] The ink was barely dry on the First Amendment before Grooveshark again breached the settlement agreement, leading to a Second Amendment to the Settlement Agreement on November 29, 2011.[ref]Id.[/ref] Once again, the ink was barely dry on the Second Amendment before Grooveshark again breached the settlement agreement. On March 22, 2012, EMI had seen enough to conclude that Grooveshark was never going to abide by the settlement agreements and notified Grooveshark of material breaches of the agreement and terminated the agreements.[ref]Id.[/ref] EMI/Capitol filed suit against Grooveshark in 2012. It was in this case that Grooveshark was revealed to be using the most ingenious trick to hide behind the DMCA: what the Court called "the Pez dispenser." "Grooveshark's site organizes multiple files containing the same song together, but only the "Primary File" can be streamed by Grooveshark users. (citation omitted) When Escape receives a DMCA takedown notice for files that infringe a copyrighted work, only the Primary File linked to a song is removed, and, if there are Non–Primary Files associated with that same song, the song remains available to Grooveshark users because a new Primary File will be selected automatically from the Non–Primary Files the next time the song is selected for streaming. (citation omitted) As aptly described by EMI's expert, the system acts as a technological Pez dispenser: Each time a Primary File for a song is removed due to a DMCA takedown notice, a Non–Primary File is slotted in to take its place." [ref]Id. at 5[/ref] Remember that Grooveshark is only entitled to DMCA safe harbor if:

• The material is posted by third parties
• Grooveshark does not have actual or constructive knowledge that the material is infringing
• Upon obtaining such knowledge, acts expeditiously to remove, or disable access to, the material

As seen above, Grooveshark knew from the moment it began business that it had thousands of illegal files on its service, because the officers and employees had uploaded the files themselves. In addition, once notified that a song file was infringing, they merely replaced one illegal song file with another illegal file containing the same song. Their obligation under the DMCA would have been to delete all of the files containing the same song because they had matched up several songs with an infringing one, and thus had actual knowledge. In addition, Grooveshark was required to have a policy to terminate repeat infringers.[ref]17 USC 512 (i)[/ref] Grooveshark said it had a "one strike" policy that terminated a user's upload privileges if that user was the subject of a DMCA notice.[ref]Capitol Records, LLC v. Escape Media Group, Inc at 6[/ref] Did Grooveshark do this? Nope. "[P]erhaps the strongest indicator of Escape's failure to terminate the uploading privileges of repeat infringers in appropriate circumstances is the undisputed facts showing that hundreds or thousands of users were not stripped of their uploading privileges after receiving notices of infringement. Notably, 1,609 users received DMCA takedown notices for an upload that occurred after the user had already received a prior DMCA takedown notice. (citation omitted) These 1,609 users submitted 2,339,671 files that are still available in Grooveshark's active library. (citation omitted) And at least 3,323 users for whom there is documentation of infringement in Escape's database still have their uploading privileges enabled. (citation omitted) The failure of Escape's purported one strike policy is all the more alarming when one considers that 21,044 users who have received multiple DMCA takedown notices account for 7,098,634 uploads, or 35% of all uploads to Grooveshark's active music library."[ref]Id.at 9[/ref] The Courts have held that the failure of a website to keep adequate records of users repeat infringements voids their safe harbor protection.[ref]Id. at 4 citing Capitol Records, Inc. v. MP3tunes, LLC, 821 F.Supp.2d 627, 637 (S.D.N.Y.2011) [B]ecause "[t]he purpose of subsection 512(i) is to deny protection to websites that tolerate users who flagrantly disrespect copyrights," courts have recognized that "service providers that purposefully fail to keep adequate records of the identity and activities of their users and fail to terminate users despite their persistent and flagrant infringement are not eligible for protection under the safe harbor." [/ref] However, there does not seem to be any statutory or case law that holds that a copyright owner has the right to inspect those records, absent a lawsuit. So, of all of the legal misdeeds of Grooveshark:

• Seeding their own website with illegal content
• Failing to terminate repeat infringers
• Replacing illegal content removed pursuant to a DMCA notice with the same illegal content
• Destroying evidence

None of this would have been discovered absent the filing of a lawsuit. This allowed Grooveshark to absolutely make a mockery of the copyright law and operate as a for profit business for almost ten years. It streamed the record company's recordings at least 36 million times, all without a proper license or payment.[ref]UMG Recordings, Inc. et al v. Escape Media Group, at 15[/ref] Grooveshark is the poster child as for why the time has come for the DMCA notice to become "take down and stay down." With take down and stay down, it would have been very obvious in a short period of time that Grooveshark was operating illegally, and was operating in open defiance of the law. It should not take years of expensive litigation to stop this illegal activity in its tracks. Not only do websites like Grooveshark cause economic harm to the record companies, but as a "free" service that conveniently pays no royalties on 36 million streams of songs, acts as a barrier to entry to legitimate streaming companies, that do play by the rules, and as previously noted on this blog, struggle to make a profit.[ref]More Money, No Profit: Is the "Free For All" Ethos of the Internet Killing Streaming?"[/ref]