UMG Recordings, Inc. et al v. Grande Communications Networks LLC et al

Filing 241

REPORT AND RECOMMENDATIONS re 127 Motion for Summary Judgment, filed by Roc-A-Fella Records, LLC, Roadrunner Records, Inc., Elektra Entertainment Group Inc., Zomba Recording LLC, Atlantic Recording Corporation, Warner Bros. Records In c., Fueled by Ramen LLC, Sony Music Entertainment, Nonesuch Records Inc., Arista Music, Tooth & Nail, LLC, LaFace Records LLC, UMG Recordings, Inc., Fonovisa, Inc., Rhino Entertainment Company, Capitol Christian Music Group, Inc., Capitol Records, LLC, Arista Records LLC. Signed by Judge Andrew W. Austin. (dm)

Case 1:17-cv-00365-DAE-AWA Document 241 Filed 12/18/18 Page 1 of 13

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
UMG RECORDINGS, INC., et al.,
V.
GRANDE COMMUNICATIONS
NETWORKS, LLC, and PATRIOT
MEDIA CONSULTING, LLC

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§
§
§

CAUSE NO. A-17-CA-365-DAE

REPORT AND RECOMMENDATION
OF THE UNITED STATES MAGISTRATE JUDGE
TO:

THE HONORABLE DAVID EZRA
SENIOR UNITED STATES DISTRICT JUDGE
Before the Court are UMG Recording, Inc., et al’s Motion for Partial Summary Judgment

as to Safe Harbor Defense (Dkt. No. 127); the Response (Dkt. No. 143); and the Reply (Dkt. No.
167). The District Court referred the above motion to the undersigned Magistrate Judge for a report
and recommendation pursuant to 28 U.S.C. §636(b) and Rule 1(c) of Appendix C of the Local Rules.
I. BACKGROUND
As noted in prior orders, this is a suit seeking to hold an internet service provider liable for
copyright infringement allegedly committed by the ISP’s customers.

The ISP—Grande

Communications—has raised as a defense to the suit one of the “safe harbor” defenses created by
the Digital Millennium Copyright Act. Under the DMCA, a “provider of online services or network
access” may not be held monetarily liable for claims arising out of the provider transmitting, routing,
or providing connections for material through a system or network controlled or operated by or for
it, as long as the provider has:
adopted and reasonably implemented, and informed subscribers and accountholders
of the service provider’s system or network of, a policy that provides for the
termination in appropriate circumstances of subscribers and account holders of the
service provider’s system or network who are repeat infringers.

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17 U.S.C. §§ 512 (i)(1)(A); (c); (k)(1)(B). In the present motion, Plaintiffs request that the Court
grant summary judgment that Grande is not entitled to the defense as a matter of law.
II. SUMMARY JUDGMENT STANDARD
“Summary judgment is required when ‘the movant shows that there is no genuine dispute as
to any material fact and the movant is entitled to judgment as a matter of law.’” Trent v. Wade, 776
F.3d 368, 376 (5th Cir. 2015) (quoting FED. R. CIV. P. 56(a)). “A genuine dispute of material fact
exists when the ‘evidence is such that a reasonable jury could return a verdict for the nonmoving
party.’” Nola Spice Designs, LLC v. Haydel Enters., Inc., 783 F.3d 527, 536 (5th Cir. 2015) (quoting
Anderson v. Liberty Lobby, 477 U.S. 242, 248 (1986)). “The moving party ‘bears the initial
responsibility of informing the district court of the basis for its motion, and identifying those portions
of [the record] which it believes demonstrate the absence of a genuine issue of material fact.’ ” Id.
(quoting EEOC v. LHC Grp., Inc., 773 F.3d 688, 694 (5th Cir. 2014)); see also Celotex Corp. v.
Catrett, 477 U.S. 317, 323 (1986).
“Where the non-movant bears the burden of proof at trial, the movant may merely point to
the absence of evidence and thereby shift to the non-movant the burden of demonstrating by
competent summary judgment proof that there is an issue of material fact warranting trial.” Id.
(quotation marks omitted); see also Celotex, 477 U.S. at 325. “A fact is ‘material’ if its resolution
in favor of one party might affect the outcome of the lawsuit under governing law.” Sossamon v.
Lone Star State of Texas, 560 F.3d 316, 326 (5th Cir. 2009) (quotation omitted). “If the moving party
fails to meet [its] initial burden, the motion [for summary judgment] must be denied, regardless of
the nonmovant’s response.” United States v. $92,203.00 in U.S. Currency, 537 F.3d 504, 507 (5th
Cir. 2008) (quoting Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc) (per
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curiam)). “Once the moving party [meets its initial burden], the nonmoving party must ‘go beyond
the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and
admissions on file, designate specific facts showing that there is a genuine issue for trial.’” Nola
Spice, 783 F.3d at 536. In deciding a summary-judgment motion, the court draws all reasonable
inferences in the light most favorable to the nonmoving party. Connors v. Graves, 538 F.3d 373,
376 (5th Cir. 2008); see also Nola Spice, 783 F.3d at 536.
III. ANALYSIS
Plaintiffs assert that the undisputed facts demonstrate that Grande does not qualify for the
DMCA safe harbor, because from October 2010 to June 2017, it did not “reasonably implement”
a policy providing for the termination of repeat offenders. They contend that the policy Grande had
was a policy in name only, was never enforced, and for more than six years Grande did not terminate
a single subscriber for infringement. Grande responds by contending there are fact questions
precluding summary judgment, regarding both the reasonableness of its policy implementation, and
the sufficiency of the infringement notices it received from Rightscorp.
The most recent courts to examine in detail what is needed to establish the DMCA safe
harbor defense in a suit against an ISP for contributory copyright infringement were those which
have presided over the BMG v. Cox litigation in the Fourth Circuit. See BMG Rights Mgmt. (US)
LLC v. Cox Commc’ns, Inc., 149 F. Supp. 3d 634, 657 (E.D. Va. 2015), aff’d in part, rev’d in part,
881 F.3d 293 (4th Cir. 2018). The claims in that suit are very similar to those here. BMG sued Cox
Broadcasting, contending that Cox was liable for its subscribers’ copyright infringement, as it had
received millions of notices of infringement, and had allegedly failed to take appropriate action. At
the trial court level, BMG moved for summary judgment on the safe harbor defense raised by
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Cox—the very same defense raised by Grande here. BMG’s argument was much like the Plaintiffs’
here—though Cox purported to have a policy, it was weakly enforced, and resulted in strikingly few
terminations, notwithstanding evidence that Cox did not doubt the validity of the notices of
infringement it received. BMG, 881 F.3d at 303-305. The trial court agreed with BMG, and granted
summary judgment. Cox challenged that ruling on appeal, and raised many of the same arguments
Grande has raised here.
The BMG court started by stating the basics of what is required to be able to raise a safe
harbor defense. It explained that, at a minimum, a “reasonably implemented” policy had to at least
be occasionally enforced:
We are mindful of the need to afford ISPs flexibility in crafting repeat infringer
policies, and of the difficulty of determining when it is “appropriate” to terminate a
person’s access to the Internet. At a minimum, however, an ISP has not “reasonably
implemented” a repeat infringer policy if the ISP fails to enforce the terms of its
policy in any meaningful fashion. See In re Aimster Copyright Litig., 252 F.Supp.2d
634, 659 (N.D. Ill. 2002), aff'd, 334 F.3d 643 (7th Cir. 2003) (“Adopting a repeat
infringer policy and then purposely eviscerating any hope that such a policy could
ever be carried out is not an ‘implementation’ as required by § 512(i).”).
Id. at 303 (citation omitted). This reading of the statute is in line with every court that has discussed
the issue. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1109 (9th Cir. 2007) (implementation
“requires that a service provider terminate users who are ‘repeat infringers,’” and an ISP must
“terminate[] users who repeatedly or blatantly infringe copyright”); Capitol Records, LLC v. Vimeo,
LLC, 972 F. Supp.2d 500, 515 (S.D.N.Y. 2013) aff’d in part, rev’d in part, 826 F.3d 78 (2d Cir.
2016) (allowing safe harbor because “user accounts violating the Terms of Service were often
terminated upon the receipt of the first DMCA takedown notice,” and “Vimeo disabled user accounts
upon discovery of infringing conduct”); Capitol Records, LLC v. Vimeo, LLC, 826 F.3d 78, 83 (2d

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Cir. 2016), cert. denied, 137 S. Ct. 1374 (2017) (agreeing with trial court that defendant “must have
adopted and reasonably implemented a policy that, essentially, bans users who repeatedly infringe
copyright”); Capitol Records, LLC v. Escape Media Grp., Inc., 2015 WL 1402049 at *10 (S.D.N.Y.
Mar. 25, 2015) (“the relevant question is whether [the ISP] actually terminates the uploading
privileges of repeat infringers under appropriate circumstances”).
As far as the evidence is concerned, the Fourth Circuit found Cox was not entitled to the safe
harbor defense because Cox “made every effort to avoid reasonably implementing [its] policy,” and
“Cox very clearly determined not to terminate subscribers who in fact repeatedly violated the
policy.” BMG, 881 F.3d at 303. In reaching this conclusion, the Fourth Circuit made a thorough
analysis of the summary judgment evidence. Notably, though it was still far short of what was
required to take advantage of the DMCA safe harbor, Cox actually did more to enforce its
termination policy than Grande. The evidence showed that Cox had a “thirteen-strike” approach:
its receipt of one DMCA notice resulted in no action, receipt of six more notices resulted in Cox
sending a warning email to the customer, receipt of two notices after that led to the customer
receiving a screen requiring him to “acknowledge” receipt of warnings before being able to access
the internet, receipt of tenth and eleventh notices led to Cox suspending service until the subscriber
called a technician, who would reinstate service after a verbal warning, receipt of a twelfth notice
required the customer to call yet another technician who, after another verbal warning would
reinstate service, and, finally, after a thirteenth notice the subscriber would be “considered” for
termination. Id. at 299. The evidence reflected that even after all of this, Cox rarely if ever
terminated users.

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In this case, Grande had nothing even approximating the system Cox used, as for the six
years before this lawsuit was filed, it never warned a customer they might be terminated, regardless
of how many infringement notices Grande received about that customer. Grande’s corporate
representative on this very issue admitted it had no policy calling for the termination of infringing
subscribers during this time:
Q.

You would agree with me that Grande did not have a policy that
provided for the termination of subscribers and account holders who
were repeat copyright infringers in 2010, right?

A.

To my knowledge, yes.

Q.

Same answer for 2011?

A.

Yes.

Q.

2012?

A.

Yes.

Q.

2013?

A.

Yes.

Q.

2014?

A.

Yes.

Q.

2015?

A.

Yes.

Q.

And 2016?

A.

Yes.

Dkt. No. 127-21 at 8-9. Grande’s Vice President for Network Engineering and Operations admitted
this as well. He explained that prior to 2010, Grande’s practice was to terminate repeat infringers,
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and to discuss with them the reasons for the termination when they called about it. Dkt. No. 127-3
at 13. As he described it, “we had a policy of turning off all subscribers upon copyright violation
notice, requiring the customer to then contact Grande to discuss the issue, understand what
happened, inform the customer of why they’d been shut off, and take appropriate action from there.”
Id. at 12. Then, beginning in October 2010, the practice of terminating customers ceased, Dkt. No.
127-3 at 12-13, and Grande did not terminate a single infringing customer from October 2010
through May 2017, Dkt. No. 127-7 at 6. This is despite the fact that Grande received “millions” of
notices of copyright infringement from 2010 to 2016, it was tracking over 9,000 customers on its
DMCA “Excessive Violations Report” by late 2016, and it specifically tracked users by the number
of notices Grande received about them. Dkt. Nos. 127-9 at 5; 127-3 at 9. Grande’s corporate
representative further admitted that until 2017, it would not terminate a user for infringement
“regardless of the source of any notice,” “regardless of the content of any notice,” and “regardless
of the volume of notices . . . for a given customer.” Dkt. No. 127-7 at 6-7.
During the six year period, the only policy that addressed repeat infringement was Grande’s
general Acceptable Use Policy, which among many other things, stated that repeat copyright
infringers could have their service terminated. Dkt. Nos. 143-3( 2012 Policy, including language
that “Grande may terminate the Service provided to any customer or user who is either found to
infringe third party copyright or other intellectual property rights, including repeat infringers. . .” );
143-4 (2013 Policy); 143-5; and 143-8 at 3. Then, in November 2016, for the first time, Grande
posted on its website a specific DMCA policy. Dkt. 143-8 at 4; Dkt. No. 143-7. More than six
months after posting the DMCA policy, and two months after this case was filed, Grande terminated

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its first customer for infringement in nearly seven years. Through the date of the filing of the instant
motion, Grande has terminated a total of 12 users—eleven in 2017, and one in 2018.
As noted earlier, after it reviewed the evidence of Cox’s implementation of its policy, the
Fourth Circuit described those facts as demonstrating that Cox “made every effort to avoid
reasonably implementing [its] policy,” and “very clearly determined not to terminate subscribers who
in fact repeatedly violated the policy.” BMG, 881 F.3d at 303 (emphasis original). The evidence
here is even stronger. Notwithstanding the terms of the AUP in place until October 2016, the reality
was, in Grande’s own words, it would not terminate a user for infringement “regardless of the source
of any notice,” “regardless of the content of any notice,” and “regardless of the volume of notices
. . . for a given customer.” Dkt. No. 127-7 at 6-7. This amounts to absolutely no implementation
of the policy Grande had allegedly adopted. And, as in BMG, the policy that was actually in effect
for this time was that Grande was determined never to terminate a subscriber, no matter what
information Grande received about that customer allegedly infringing a copyright. It is hard to
imagine a case in which it is more clear that the DMCA safe harbor is not available.
Notwithstanding this evidence, in an attempt to avoid summary judgment Grande makes two
primary arguments: (1) because it did eventually terminate a handful of customers, there is a fact
question regarding the “reasonableness” of the implementation of its policy; and (2) because there
are numerous deficiencies in Rightscorp’s notices, there is at least a fact question regarding whether
those notices evidenced “appropriate circumstances” for the termination of users. Neither of these
arguments has merit.
The fact that Grande finally terminated a few subscribers, all after the Plaintiffs sued it, is
plainly not enough evidence to show that Grande had implemented its policy in a consistent or
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meaningful way. Cox, for example, had terminated more customers, and had done so before being
sued, and that was not enough to create a fact issue for trial. BMG, 881 F.3d at 304 (“Before
September 2012, Cox was terminating (and reactivating) 15.5 subscribers per month on average;
after September 2012, Cox abruptly began terminating less than one subscriber per month on
average.”). Further, the evidence is that Grande went for more than six years with a de facto policy
of never terminating a user no matter how many copyright complaints it received about that user;
terminating a dozen users—only after it was sued—is not enough to rehabilitate its complete failure
to implement a policy for the prior six years. The fact is, Grande had no policy in effect for the vast
majority of the relevant time period, and its last minute conversion is too little too late.
Grande’s complaints about the Rightscorp notices also miss the mark, for a host of reasons.
First, the very same sort of Rightscorp notices at issue here made up a large portion of the notices
that BMG relied on in their suit against Cox. Cox made very similar attacks on those notices, and
also argued that the evidence failed to “prove actual knowledge of repeat infringement.” Id. at 305.
As the Fourth Circuit explained, that argument was misplaced, because “Cox bears the burden of
proof on the DMCA safe harbor defense; thus, Cox had to point to evidence showing that it
reasonably implemented a repeat infringer policy.” Id. The court found Cox failed to show that it
had ever actually followed through and implemented its policy as written, and without such
evidence, there was not a triable issue. Id. The same is the case here. Grande has pointed to no
evidence that it ever considered terminating a user during the relevant period, despite the fact that
there is ample evidence, including internal emails, indicating that it believed many of its customers
were repeat infringers. Without at least some evidence of this sort, it cannot create a fact dispute
related to its defense.
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Grande also argues that because the Rightscorp notices fail to show actual infringement, there
is no evidence there were “appropriate circumstances” that justified terminating any customers. But
this argument ignores the actual facts. Just as Cox did, Grande has
failed to provide evidence that a determination of “appropriate circumstances” played
any role in its decisions to terminate (or not to terminate). [Grande] did not, for
example, point to any criteria that its employees used to determine whether
“appropriate circumstances” for termination existed. Instead, the evidence shows
that [Grande’s] decisions not to terminate had nothing to do with “appropriate
circumstances”. . . .
BMG, 881 F.3d at 305. Grande has admitted that it would not have terminated any subscribers, no
matter what the circumstances were, prior to June 2017, as the policy in place from 2010 to mid2017 was that it would not terminate a user for infringement “regardless of the source of any notice,”
“regardless of the content of any notice,” and “regardless of the volume of notices . . . for a given
customer.” Dkt. No. 127-7 at 6-7. Moreover, the evidence in the record from Grande’s own
documents reflects the opposite of what it now argues—Grande took the Rightscorp (and other)
notices as evidence of infringement. For example, in one email exchange in April 2013, a senior
Grande official asked: “Question - we have users who are racking up DMCA take down requests
and no process or remedy in place. I don’t know if I’m seeing a broken process or compliance with
the letter of the law. Do you guys have insight or knowledge on this?” Dkt. No. 127-22. In the
ensuing conversation, another manager reported back regarding what a Grande affiliate was doing:
Who is responsible for the DMCA notification process?
customers?

Do we call

Bartlett just answered my email, and, as you said, they contact the customer
and let them know they will disconnect them if they continue to receive those notices.
If we do nothing more tha[n] emails (as I think you mentioned) we might lose
our safe harbor status.
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Dkt. No. 127-28. When Grande customers (or IT specialists of customers) contacted Grande
management employees about copyright infringement notices Grande had forwarded to them, the
internal exchanges among Grande employees also make it plain that Grande viewed the notices as
evidence that the customer had infringed on a copyright. See Dkt. Nos. 127-17; 127-30; 127-31.
The criticism of the Rightscorp system and the notices it generated was never made until Grande was
sued, and its lawyers raised these issues. What the lawyers thought of the notices in 2017 is
irrelevant to the question of what Grande thought of them between 2010 and 2017. It is Grande’s
employees’ knowledge that matters, and the evidence is undisputed that those employees believed
the notices reflected that many of Grande’s customers were repeatedly infringing on copyrights.1
Yet another failure with Grande’s argument about the Rightscorp notices is that it does not
address the several hundred thousand copyright infringement notices it received from companies
other than Rightscorp. The undisputed evidence is that many of the roughly 1.2 million notices of
infringement Grande received between 2011 and 2016 (Dkt. No. 127-7 at 10) came from entities
other than Rightscorp. Thus, for example, in 2015 alone, Grande received 365,569 infringement

1

Grande’s argument about the Rightscorp notices is, in practical effect, very much like an
argument Cox raised in the BMG case. Cox contended that “repeat infringer” as used in the statute
meant an adjudicated repeat infringer, not just one who had been accused of repeat infringement,
and Cox only needed to terminate the internet access of adjudicated repeat infringers to be eligible
to raise the DMCA safe harbor defense. Id. at 301. The Fourth Circuit rejected this argument, based
on an analysis of the Copyright Act and existing case law, noting that Cox had not cited “a single
case adopting its contrary view that only adjudicated infringers can be ‘repeat infringers’ for
purposes of the DMCA.” BMG, 881 F.3d at 302-303. Grande’s argument that its failure to take
action in response to Rightscorp notices does not disqualify it from raising the safe harbor defense,
because the Rightscorp system is “incapable of identifying . . . actual copyright infringement,” Dkt.
No. 143 at 13, is very close to the argument rejected in BMG. Though Grande never explains what
it means by “actual” infringement, it would seem that, practically speaking, it is what Cox called
“adjudicated” infringement.
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notices; 246,322 were from Rightscorp, and 119,247 were from other sources. Dkt. No. 172-18 at
2. Grande has presented no summary judgment evidence undermining the reliability of any of these
other notices. Thus, even if the Court were to accept Grande’s argument that the Rightscorp notices
did not create “appropriate circumstances” for termination, summary judgment would still be
appropriate, as the undisputed evidence shows that Grande failed to terminate a single customer as
a result of its receipt of the several hundred thousand other copyright infringement notices it
received. As noted earlier, the DMCA safe harbor is an affirmative defense, and the burden is on
Grande to demonstrate it has met the threshold needed to raise the defense. Without any evidence
undermining the hundreds of thousands non-Rightscorp notices Grande received from 2010 to 2017,
Grande has not carried that burden.
In summary, Grande cannot meet the threshold test required by the DMCA to gain the benefit
of the safe harbor. The undisputed evidence shows that though Grande may have adopted a policy
permitting it to terminate a customer’s internet access for repeat infringement, Grande affirmatively
decided in 2010 that it would not enforce the policy at all, and that it would not terminate any
customer’s account regardless of how many notices of infringement that customer accumulated,
regardless of the source of the notices, and regardless of the content of a notice. Consistent with this,
Grande did not terminate a single repeat infringer from October 2010 to June 2017. A “reasonably
implemented” termination policy requires that the policy be enforced, and not just adopted. Because
the evidence is undisputed that Grande never enforced its policy during the relevant time period, it
is precluded from raising the DMCA safe harbor defense in this case.

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IV. RECOMMENDATION
For the reasons set forth herein, the undersigned RECOMMENDS that the district judge
GRANT UMG Recording, Inc., et al’s Motion for Partial Summary Judgment as to Grande
Communication Networks LLC’s DMCA Safe Harbor Defense (Dkt. No. 127).
V. WARNINGS
The parties may file objections to this Report and Recommendation. A party filing objections
must specifically identify those findings or recommendations to which objections are being made.
The District Court need not consider frivolous, conclusive, or general objections. See Battle v.
United States Parole Comm’n, 834 F.2d 419, 421 (5th Cir. 1987).
A party’s failure to file written objections to the proposed findings and recommendations
contained in this Report within fourteen (14) days after the party is served with a copy of the Report
shall bar that party from de novo review by the District Court of the proposed findings and
recommendations in the Report and, except upon grounds of plain error, shall bar the party from
appellate review of unobjected-to proposed factual findings and legal conclusions accepted by the
District Court. See 28 U.S.C. § 636(b)(1)(c); Thomas v. Arn, 474 U.S. 140, 150-53 (1985); Douglass
v. United Servs. Auto. Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc).
SIGNED this 18th of December, 2018.

_____________________________________
ANDREW W. AUSTIN
UNITED STATES MAGISTRATE JUDGE

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