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Grooveshark: the latest test of online safe harbors

December 15, 2011 |  2:40 pm

Grooveshark
Online music service Grooveshark is swimming in murky legal waters, as evidenced by the copyright-infringement lawsuit that three major record companies are now bringing against the site's owners and several of its executives. Judging from the amended complaint filed Thursday by Universal Music Group, Warner Music Group and Sony Music Entertainment, however, that lawsuit won't be the last in a series of epic battles between tech companies and the entertainment industry over third-party liability. Instead, the case may hinge on the company's employees own efforts to stock the online jukebox.

Grooveshark lets people stream tracks from an online library of millions of songs. Some of those songs -- the ones the company has licensed from EMI, a major record company, and numerous independent labels -- were uploaded by Grooveshark. The rest -- including thousands of unauthorized hits owned by Universal, Warner and Sony -- were uploaded by users in violation of the site's terms of service, company executives say.

The company has long argued that it's not liable for the unauthorized songs because it's protected by the 1998 Digital Millennium Copyright Act. The law provides a safe harbor for companies that give the public a place to store or share material online, provided that they don't know about or benefit financially from the infringements and that they take down infringing material when it's pointed out to them.

If Grooveshark is right, the lawsuit may turn out to be a meaningful battle over a DMCA-compliant site's duties in the face of rampant piracy -- in effect, a rematch of Viacom's unsuccessful lawsuit against YouTube. (Viacom's appeal is pending at the 2nd Circuit Court of Appeals.). But the major labels' complaint seeks to avoid that fight by alleging that Grooveshark doesn't comply with the DMCA and isn't eligible for a safe harbor.

They base their claim on e-mails, internal documents and online comments by someone claiming to be a Grooveshark employee, all of which suggest that Grooveshark executives knew about and profited from the infringements. For example, the supposed whistleblower alleged that the company ordered employees to upload songs from the major labels, including the ones taken down in response to the copyright owners' complaints.

That sort of allegation has been a standard feature of the entertainment industry's lawsuits against online piracy hotbeds. In some cases, such as the suits against Limewire and Grokster, those internal documents helped convince judges. In others, such as Viacom versus YouTube, they didn't.

The YouTube ruling alarmed entertainment companies, who fear that its broad interpretation of the DMCA safe harbor gives sites too much freedom to build businesses around infringing material uploaded by the public. They're fighting to narrow the safe harbor's reach, both in court and in Congress.

Grooveshark epitomizes what copyright holders think is wrong with the DMCA. They complain that even when the site responds to their request to take down unauthorized tracks, the songs pop right back up. To get a feel for this, read the comments on this Digital Music News post about King Crimson's long fight to remove its material from the site. Copyright holders have pressed the courts and Congress for years to require sites to monitor uploads and block copyrighted material. So far, however, jurists and lawmakers have resisted, leaving the burden on copyright holders to identify specific instances of infringement and ask that they be removed.

What qualifies as knowledge is a matter of some dispute, but it's not enough for a company to be aware generally that some of its users are infringing. According to the statute, they must have "actual knowledge" that material on their site is infringing, or they must be "aware of facts or circumstances" that make the infringements apparent. Of course, ordering one's employees to upload unlicensed songs would be a pretty clear instance of "actual knowledge."

Even if the evidence supplied by the major labels isn't what it seems, Grooveshark has been pushing the limits of the safe harbor's protections. Its most recent redesign added an "Explore" section to help users discover more music they might like. Although the most prominent part of the section promotes songs and artists who have deals with Grooveshark, it also includes links to the most popular songs on its site -- most of which are from artists and labels who don't have deals with the company.

John Ashenden, a senior vice president at Grooveshark, said the existence of the page doesn't mean the company knows that the listed tracks actually are what the links say they are. "This is an automated list of songs, based on day-to-day activity on our site," Ashenden said in an interview before the lawsuit was filed. "This isn’t a list that we are going out of our way to put together. We have really no direct control of the songs that pop up in the 'popular' section."

The lawsuit is the second that Universal has filed against Grooveshark. After EMI settled its claim against the site and granted it a license, Universal brought an infringement claim against Grooveshark in state court in New York, alleging violations of the state-law copyrights on songs recorded before 1972. That suit, which is still pending, will probably have to address Grooveshark's safe-harbor claims as well. As Digital Music News has pointed out, at least one federal judge in New York has opined that the safe harbor protects sites against claims under state law too.

RELATED:

Grooveshark and virtual music collections

Grooveshark: The other free music service

Tinysong: Injecting music into the conversation

-- Jon Healey

Healey writes editorials for The Times' Opinion Manufacturing Division. Follow him @jcahealey

Image: Grooveshark.com

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