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Are Cloud Music Services Legal?

Over a decade ago, a teenage Sean Parker took on the music establishment with his basement project Napster and the industry has never been the same since. While Napster was ultimately shut down, various online music download services have continued to sprout up. The latest trend involves “Cloud Music Services” such as Amazon’s Cloud Drive and Cloud Player and Google’s Music Beta, both of which launched within the last 6 months.

Music “clouds” are services that store your music on the Web and allow you to stream those songs to any computer or mobile device, such as a computer or a smartphone. And like almost any online service that makes it cheaper, free, or easier to access music, these cloud services have had to deal with some legal fallout. However, a recent case dealing with one of the original cloud services, MP3tunes (a company launched in San Diego), may have paved a lawsuit-free path for both current and future cloud-based music service providers.

The legality of these services remains an open question, but a recent court ruling provided some insights.

EMI’s Case

Music giant EMI brought a case alleging that MP3tunes committed a variety of copyright infringement and piracy offenses. For those with a thirst for deep legal knowledge, the judge’s opinion can be found here.

EMI’s primary argument was that MP3tunes received several takedown notices from EMI identifying hundreds of song titles and web addresses that allegedly infringed EMI’s copyrights. And since MP3tunes only removed the links to the web addresses, but did not remove the infringing songs from its users’ cloud “lockers,” MP3tunes was liable for infringement. Note that before users activate an MP3tunes locker, they must agree to abide by MP3tunes’ policy prohibiting the storage of content that infringes copyrights. Users must also acknowledge MP3tunes’ right to sever its relationship with repeat infringers.

The judge disagreed with EMI, ruling in part that MP3tunes qualified for a “safe harbor exemption” under the Digital Millennium Copyright Act (DMCA) because such immunity was designed to protect internet service providers from being held liable for copyright violations committed by its users, and MP3tunes actively banned site users from posting links to or uploading illegally pirated music.

The opinion states:

The DMCA seeks to balance the interests of copyright owners and online service providers by promoting cooperation, minimizing copyright infringement, and providing a higher degree of certainty to service providers…Toward that goal the DMCA provides certain safe harbors , but only to qualifying service providers…In sum, there is no genuine dispute that MP3tunes may claim safe harbor protection for EMI works stored on MP3tunes.com.

However, there was a silver lining for EMI – the judge also ruled that (1) MP3tunes did have to remove the songs mentioned in EMI’s takedown notices from their users’ lockers, and (2) that the company’s founder, Michael Robertson, could be laible for songs that he personally uploaded to his locker from unauthorized sites.

What Does This All Mean?

Essentially, this ruling, if it were to be applied nationwide, would create a system in which companies like MP3tunes would be protected from copyright infringement litigation as long as they actively deleted any suspected pirated songs from their users’ accounts. However, this leaves open the question of how these types of services are supposed to determine which songs are pirated. This is almost certain to be the subject of future litigation.

The two biggest takeaways from this case are: 1.) Monitor and 2.) Takedown.

1.) If your company operates a service similar to MP3tunes, you may be able to reduce your liability for what your users do by actively monitoring the content being uploaded and deleting suspicious activity, even if some user accounts are lost as a result. Claiming ignorance (“How were we to know that the Beatles’ songs were copyrighted?”) is not going to get you too far in most courts.

2.) Respond promptly to all takedown notices. This will provide at least some protection against having to pay legal fees and damages down the line. Err on the side of caution.

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