UMG RECORDINGS, INCORPORATED; CAPITOL RECORDS, L.L.C.; WARNER BROS. RECORDS, INCORPORATED; SONY MUSIC ENTERTAINMENT; ARISTA RECORDS, L.L.C.; ARISTA MUSIC; ATLANTIC RECORDING CORPORATION; CAPITOL CHRISTIAN MUSIC GROUP, INCORPORATED; ELEKTRA ENTERTAINMENT GROUP, INCORPORATED; FONOVISA, INCORPORATED; FUELED BY RAMEN, L.L.C.; LAFACE RECORDS, L.L.C.; NONESUCH RECORDS, INCORPORATED; RHINO ENTERTAINMENT COMPANY; ROADRUNNER RECORDS, INCORPORATED; ROC-A-FELLA RECORDS, L.L.C.; TOOTH & NAIL, L.L.C.; ZOMBA RECORDING, L.L.C. v. GRANDE COMMUNICATIONS NETWORKS, L.L.C.
No. 23-50162
United States Court of Appeals for the Fifth Circuit
October 9, 2024
Lyle W. Cayce Clerk. Appeal from the United States District Court for the Western District of Texas USDC No. 1:17-CV-365
versus
GRANDE COMMUNICATIONS NETWORKS, L.L.C.,
Defendant—Appellant/Cross-Appellee.
Before HIGGINBOTHAM, STEWART, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:
On appeal, Grande challenges the district court‘s rulings reflected in (1) the order denying Grande‘s renewed motion for JMOL or a new trial, including its reference back to legal questions previously resolved at summary judgment; (2) the jury instructions; and (3) the final judgment. Plaintiffs’ conditional cross-appeal challenges one ruling made by the district court in its jury instructions.
We hold that the district court did not err in concluding the jury‘s verdict finding Grande liable for contributory copyright infringement was supported both as a matter of law and by sufficient evidence, so we do not reach Plaintiffs’ conditional cross-appeal. However, the district court erred in granting JMOL that each of the 1,403 songs in suit was eligible for a separate award of statutory damages. Accordingly, we AFFIRM the jury‘s verdict finding Grande liable for contributory copyright infringement; VACATE the jury‘s damages award and REMAND for a new trial on damages; and DISMISS Plaintiffs’ conditional cross-appeal as moot.
A.
This appeal follows a judgment entered in Plaintiffs’ favor following a three-week jury trial. After hearing all the evidence, ten jurors unanimously found Grande liable for willful contributory copyright infringement. The jury awarded Plaintiffs $46,766,200 in statutory damages pursuant to the Copyright Act. That award was based on Plaintiffs’ presentation of the facts below, which we must “credit” just as the jury did. Abraham v. Alpha Chi Omega, 708 F.3d 614, 620 (5th Cir. 2013) (citation omitted).
1.
Peer-to-peer (“P2P“) file-sharing networks have existed for decades and enable internet users to copy and distribute digital files directly to each other. Notable examples over the years include Napster, Grokster, KaZaA, and LimeWire. P2P networks have been used to facilitate the unauthorized distribution of copies of copyrighted works. Each of the P2P networks mentioned above was sued by copyright owners for secondary copyright infringement, adjudicated to be liable, and shut down as a result.
P2P networks have evolved over time, making them increasingly difficult for copyright owners to police. Plaintiffs argued at trial that the P2P network BitTorrent substantially limits the ability of copyright owners to protect their rights in two important ways. First, BitTorrent is decentralized, meaning that no single company or entity manages the distribution of its software. Thus, there is no “BitTorrent” entity that can be sued like Napster or Grokster were. Second, BitTorrent is “anonymous,” meaning that its users cannot be identified by their names or physical addresses. Rather, BitTorrent identifies users only by their “IP addresses,” which are unique strings of characters identifying particular devices connected to networks run
To crack down on copyright infringement, third-party companies have developed technologies to infiltrate BitTorrent and identify infringing users by their IP addresses. One such company is Rightscorp, Inc. (“Rightscorp“). Rightscorp‘s proprietary technology:
- Interacts with BitTorrent users and obtains their agreement to distribute unauthorized copies of copyrighted works
- Records the relevant available details of that agreement, such as the user‘s IP address and what the infringed content is
- Cross-references the user‘s IP address against publicly available databases to identify which ISP is affiliated with that IP address
- Generates and sends infringement notices to the relevant ISPs so that they can identify their infringing subscribers and take appropriate action; and
- Frequently reconnects with the identified infringing IP addresses and downloads copies of the copyrighted works at issue directly from those users
In other words, Rightscorp identifies infringing conduct on BitTorrent by engaging with BitTorrent users, documents that conduct, and uses the information available to it to notify ISPs of its findings so that the ISP can take appropriate action.1
The efficacy of Rightscorp‘s technology is dependent on the participation of the ISP. Only the ISPs possess the records necessary to match specific IP addresses to specific individual subscribers. Thus, when Rightscorp sends its notices to ISPs informing them of the IP addresses of their subscribers engaging in specific infringing conduct, the ISPs are the only parties capable of identifying the infringing subscribers and addressing their misconduct.
Because ISP involvement is critical to stemming the tide of copyright infringement, copyright law incentivizes ISPs to participate in addressing the conduct of their infringing subscribers. Specifically,
In the early 2000s, Grande began addressing copyright infringement by its subscribers through an “abuse process,” which the company employed to address illicit activity conducted on its network. At that time, when Grande received an infringement notice about one of its subscribers, Grande disconnected that subscriber‘s service. Grande then informed the subscriber and applied “punitive measures” if the conduct continued. One of Grande‘s trial witnesses agreed that subsequent infringements by the same subscriber “led to account termination.”2
However, in 2009, the private equity firm ABRY Partners purchased Grande and installed a different company to manage Grande‘s operations. In October 2010, that company changed Grande‘s policy. Under Grande‘s new policy, Grande no longer terminated subscribers for copyright infringement, no matter how many infringement notices Grande received. As Grande‘s corporate representative at trial admitted, Grande “could have received a thousand notices about a customer, and it would not have terminated that customer for copyright infringement.” Further, under Grande‘s new policy, Grande did not take other remedial action to address infringing subscribers, such as suspending their accounts or requiring them to contact Grande to maintain their services. Instead, Grande would notify subscribers of copyright infringement complaints through letters that described the nature
In 2011, Rightscorp began sending notices via email to Grande (and other ISPs), pursuant to an agreement it had with certain music publishing companies. Between 2011 and when Plaintiffs filed this lawsuit in April 2017, Rightscorp sent more than 1.3 million infringement notices to Grande, approximately 317,000 of which concerned works in this suit. Each notice documented a specific instance of a Grande subscriber agreeing to distribute a copy of a copyrighted work without authorization. These emails asked the ISP to forward the notice to the relevant subscriber and included a link for the subscriber to contact Rightscorp and settle the claim for a small sum (e.g., $30). Rightscorp also sent periodic “roll-up reports” to Grande, each of which summarized the infringement notices that Rightscorp had previously sent to Grande. The jury learned that in one year alone, Grande had been advised that more than forty of its subscribers had infringed over 1,000 times and that one subscriber had infringed nearly 14,000 times.
During the period when Grande was receiving Rightscorp‘s notices but had a policy not to terminate subscribers’ accounts for copyright infringement, one of Grande‘s employees wrote an email to his colleagues explaining that Grande‘s policy had “no limits” and that some of Grande‘s subscribers were “up to their 54th notice” with “no process for remedy in place.” That employee testified at trial that, in April 2013, he “was concerned” that Grande was not in compliance with the law. But Grande did not change its policy.
Nor did Grande change its policy after learning in December 2015 that a different ISP, Cox Communications (“Cox“), had been found liable for secondary copyright infringement based on its continued provision of
Shortly thereafter, Grande undertook an internal investigation to determine how many Rightscorp notices it had received over the years and had internal discussions about a letter Rightscorp sent to Grande a year earlier seeking a meeting to discuss how they could work collaboratively to address infringements by Grande‘s subscribers. Yet Grande chose not to change its policy or meet with Rightscorp. It was not until after Plaintiffs initiated this lawsuit that Grande resumed terminating subscribers for copyright infringement.
Grande‘s policy during the nearly seven years at issue in this case not to terminate subscribers for copyright infringement contrasted with its policy during the same time period regarding subscribers who did not pay Grande‘s monthly fees. The trial record established that Grande consistently terminated the accounts of all subscribers who stopped paying Grande‘s fees during that period. One of Grande‘s witnesses admitted that Grande terminated non-paying subscribers 100% of the time and that, during the time period relevant to this case, Grande terminated “thousands” of subscribers for nonpayment.
1.
In April 2017, Plaintiffs filed suit against Grande, alleging claims for both contributory and vicarious copyright infringement under the Copyright Act. The district court dismissed the vicarious-infringement claim at the pleading stage and Plaintiffs do not dispute its dismissal on appeal.
After discovery, the parties cross-moved for summary judgment. Grande asserted that it qualified for the DMCA safe-harbor defense, but the district court held that Grande was not entitled to that defense as a matter of law. Grande does not dispute that ruling on appeal.
The district court otherwise denied the parties’ cross-motions on liability, concluding that fact issues precluded the resolution of Plaintiffs’ contributory-infringement claim as a matter of law. Accordingly, that claim went to trial.
2.
A jury of ten jurors was impaneled in Austin, Texas in October 2022. Trial was held from October 12, 2022, through November 1, 2022.
During trial, Grande moved orally for JMOL on the issue of its liability, which the district court denied. After deliberating for a day and a half, the jury returned a verdict, finding that Grande was liable for contributory copyright infringement of 1,403 of Plaintiffs’ sound recordings. The jury also found that Grande‘s infringement was willful.3 The jury awarded $46,766,200 total in statutory damages, or $33,333 per song. See
The district court entered a final judgment in January 2023. In February 2023, Grande renewed its motion for JMOL and, alternatively, a
3.
Grande‘s appeal challenges the district court‘s rulings reflected in (1) the order denying Grande‘s renewed motion for JMOL or a new trial, including its reference back to legal questions previously resolved at summary judgment; (2) the jury instructions; and (3) the final judgment. Plaintiffs’ cross-appeal, which is conditional on a determination that this case must be remanded to the district court for a new trial, challenges one ruling made by the district court in its jury instructions.
II.
We have jurisdiction over Grande‘s appeal from a final judgment under
“We review a district court‘s denial of a motion for judgment as a matter of law de novo, applying the same standards as the district court.” Id. “Under Rule 50, a court should render judgment as a matter of law when ‘a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.‘” Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 149 (2000) (quoting
Our court has not decided the standard for reviewing what constitutes a “work” for statutory damages purposes, but other circuits treat it as a mixed question of fact and law subject to de novo review. See, e.g., VHT, Inc. v. Zillow Grp., Inc., 918 F.3d 723, 739 (9th Cir. 2019); Yellow Pages Photos, Inc. v. Ziplocal, LP, 795 F.3d 1255, 1277 (11th Cir. 2015); Bryant v. Media Right Prods., Inc., 603 F.3d 135, 140 (2d Cir. 2010). Where, as here, legal questions (such as statutory interpretation) predominate, we review mixed questions
“Jury instructions are reviewed for abuse of discretion.” Janvey, 856 F.3d at 388. While the scope of review requires us to consider the charge as a whole, Mid-Continent Cas. Co. v. Petroleum Sols., Inc., 917 F.3d 352, 357 (5th Cir. 2019), “[t]he abuse-of-discretion standard includes review to determine that the discretion was not guided by erroneous legal conclusions,” Koon v. United States, 518 U.S. 81, 100 (1996). “A district court by definition abuses its discretion when it makes an error of law.” Id. Thus, when a challenged jury instruction hinges on a question of law, review is de novo. GE Cap. Com., Inc. v. Worthington Nat‘l Bank, 754 F.3d 297, 302 (5th Cir. 2014). However, an erroneous jury instruction is reversible only if it “affected the outcome of the case.” Mid-Continent, 917 F.3d at 357 (citation omitted).
III.
Pursuant to longstanding principles of secondary copyright liability, Plaintiffs’ claim against Grande for contributory copyright infringement had four elements. In order to prove direct infringement by Grande‘s subscribers, Plaintiffs had to show (1) that Plaintiffs own or have exclusive control over valid copyrights and (2) that those copyrights were directly infringed by Grande‘s subscribers. See BWP Media USA, 852 F.3d at 439. To further prove that Grande was secondarily liable for its subscribers’ conduct, Plaintiffs had to demonstrate (3) that Grande had knowledge of its subscribers’ infringing activity and (4) that Grande induced, caused, or materially contributed to that activity. See Alcatel USA, Inc. v. DGI Techs., Inc., 166 F.3d 772, 790 (5th Cir. 1999). The district court did not err in upholding the jury‘s unanimous liability verdict because Plaintiffs satisfied each element legally and factually. The court correctly interpreted the law and instructed the jury on the relevant legal standards in light of the factual
A.
To establish ownership, a “plaintiff must prove that the material is original, that it can be copyrighted, and that he has complied with statutory formalities.” Lakedreams v. Taylor, 932 F.2d 1103, 1108 (5th Cir. 1991). The requisite statutory formalities are receipt of the application for registration, fee, and deposit by the copyright office. Id.
At summary judgment, Plaintiffs submitted declarations establishing the chains of title by which they came to own or exclusively control the copyrights in each work in suit. Grande did not dispute the validity of this evidence on the merits. Accordingly, the district court reasoned that Plaintiffs’ unrebutted evidence was “sufficient to prove ownership” as a matter of law and did not include ownership as an issue of fact remaining to be resolved in the case.
The district court reaffirmed this ruling multiple times. In its ruling on the parties’ motions in limine before trial, the district court confirmed that it had “already ruled on ownership” and held that “[o]wnership is not a remaining issue for trial.” In its jury instructions, the district court instructed that the “issue [of ownership] has already been resolved, and you do not need to decide it.” The district court also indicated at the jury-charge conference that there was “no question” that Plaintiffs own or control the works in suit. And when addressing Grande‘s oral motion for JMOL, the district court reaffirmed these prior rulings, determining that “there‘s not been one shred of evidence anywhere that . . . plaintiffs in this case don‘t own those copyrights.”
B.
To prove the second element—that the defendant copied constituent elements of the plaintiff‘s work that are original—a plaintiff must establish “(1) factual copying and (2) substantial similarity.” Baisden v. I‘m Ready Prods., Inc., 693 F.3d 491, 499 (5th Cir. 2012) (citation omitted). Factual copying can be proven by either direct or circumstantial evidence. Armour v. Knowles, 512 F.3d 147, 152 (5th Cir. 2007) (per curiam). Substantial similarity requires proof that “the copyrighted expressions in the two works are sufficiently alike that the copyright to the original work has been infringed.” Id.
The district court instructed the jury that, to prove direct infringement, Plaintiffs needed to establish that each work in suit was “infringed by distributing any part of the copyrighted work without Plaintiffs’ authorization.” To find an unauthorized distribution, the jury could consider “direct or circumstantial evidence,” including “evidence that copyrighted content was offered or distributed to a third party who is investigating or monitoring infringing activity.”
Plaintiffs provided substantial evidence that Grande‘s subscribers committed direct infringement. For each work in suit, Plaintiffs introduced testimony and documentary evidence that (1) Rightscorp reached an agreement with a Grande subscriber to distribute the work; (2) Rightscorp
Grande‘s key defense at trial was that Plaintiffs’ evidence of direct infringement was unreliable. On appeal, Grande does not challenge any of the evidence of direct infringement that Plaintiffs offered. Grande instead asserts that because Plaintiffs did not introduce the copyrighted songs at issue into evidence, the jury could not conduct a side-by-side comparison of the works, and thus could not find that the allegedly infringing works were substantially similar to the works owned by Plaintiffs.
To support its argument, Grande relies principally on this court‘s decisions in Bridgmon v. Array Systems Corp., 325 F.3d 572 (5th Cir. 2003) and King v. Ames, 179 F.3d 370 (5th Cir. 1999).
King involved a copyright-infringement claim in which the plaintiff “failed to produce the copies of the sound recordings she deposited with the United States Copyright Office.” King ex rel. King v. Ames, No. 3:95-CV-3180, 1997 WL 327019, at *5 (N.D. Tex. June 4, 1997). On appeal, this court explained that “[t]o determine whether an instance of copying is legally actionable, a side-by-side comparison must be made between the original and the copy to assess whether the two works are substantially similar.” King, 179 F.3d at 376. Because “copying is an issue to be determined by comparison of works, not credibility,” and the plaintiff failed “to adduce evidence for such a comparison,” her claim was “vitiate[d].” Id.
This court applied King in Bridgmon. There, the plaintiff brought a copyright-infringement claim against a corporation for its use and sale of a computer program known as ICUS, which he alleged infringed his copyright in another computer program called ADS, of which he was the author. Bridgmon, 325 F.3d at 575. However, the plaintiff was “unable to produce a
It‘s true that King and Bridgmon contemplate “side-by-side comparison” of the works at issue. King, 179 F.3d. at 376; Bridgmon, 325 F.3d at 577. But in those cases, the parties meaningfully disputed whether the defendants’ alleged copies were substantially similar to the plaintiffs’ alleged works, and the only evidence about the contents of the plaintiffs’ works was the oral testimony of the plaintiffs themselves. See King ex rel. King, 1997 WL 327019, at *5-6; Bridgmon, 325 F.3d at 576. As a result, the plaintiffs could not satisfy their burdens to prove that the defendants’ alleged copies were substantially similar to the plaintiffs’ alleged works merely by asking the jury to credit the plaintiffs’ oral testimony. See King, 179 F.3d at 375-76; Bridgmon, 325 F.3d at 576. Those circumstances differ markedly from the record here, where Plaintiffs introduced extensive, forensically reliable evidence proving that the files Rightscorp downloaded were exact copies of Plaintiffs’ sound recordings. The jury was entitled to rely on the records generated by Audible Magic, which themselves evinced a “side-by-side comparison” between Plaintiffs’ copyrighted sound recordings and Rightscorp‘s BitTorrent downloads, see King, 179 F.3d. at 376; Bridgmon, 325 F.3d at 577, as well as the unrebutted testimony offered by Plaintiffs that Audible Magic‘s error rate is approximately one in three billion. Particularly in light of evolving technology—and the side-by-side comparison now permitted by software
C.
As to the third element, the district court applied the correct legal standard and Plaintiffs presented sufficient evidence to show that Grande had knowledge of, or was willfully blind to, its subscribers’ infringing activity.
Pursuant to the district court‘s jury instruction, Plaintiffs were required to demonstrate that Grande “knew of specific instances of infringement or was willfully blind to such instances of infringement,” where willful blindness meant that Grande “believe[d] there [was] a high probability of a fact but deliberately [took] steps to avoid learning it.”8
The district court also correctly concluded that the jury had a legally sufficient basis to find knowledge or willful blindness. Grande does not challenge the sufficiency of evidence supporting the jury‘s finding that Grande had knowledge of, or was willfully blind to, its subscribers’ infringing activity. Grande has therefore abandoned any argument concerning the insufficiency of its knowledge or willful blindness. See Rollins, 8 F.4th at 397.
D.
Grande‘s challenge to the district court‘s application of material-contribution liability—the fourth element—is the crux of its appellate challenge to the judgment below. Although Grande makes several strong arguments, they are ultimately unavailing for the reasons we explain.
First, we conclude that the district court applied the correct legal standard by determining that Grande could be secondarily liable if it induced, caused, or materially contributed to its subscribers’ infringing activity.
The district court explained at summary judgment and again post-judgment that “the purveyor of a technology capable of both infringing and non-infringing uses cannot hide behind the technology‘s non-infringing uses to shield itself from liability when the purveyor has induced, caused, or materially contributed to the infringer‘s activity.”
Grande contends the district court‘s reasoning was erroneous because “[t]he Supreme Court has recognized two—and only two—types of contributory copyright infringement“: (1) where “the defendant distribute[s] a product or service without any commercially significant, non-infringing use,” and (2) where there is “clear expression or other affirmative steps taken to foster infringement” by the defendant. Plaintiffs respond that this court “has expressly embraced [the material-contribution] theory of liability” and the three Supreme Court opinions cited by Grande “did not write material contribution out of the law.”
In 1999, our court recognized the validity of material-contribution claims for contributory copyright infringement. See Alcatel, 166 F.3d at 790. In doing so, we adopted the elements of the contributory-copyright claim from the Second Circuit‘s seminal decision in Gershwin Publishing Corp. v. Columbia Artists Management, Inc., 443 F.2d 1159 (2d Cir. 1971). See id. at 790 n.71. Gershwin recognized that contributory-infringement claims stem from “the common law doctrine that one who knowingly participates [in] or furthers a tortious act is jointly and severally liable with the prime tortfeasor.” Gershwin, 443 F.2d at 1162 (citation omitted). The court in Gershwin synthesized that common-law principle into a rule that “one who, with
Grande contends that material contribution is not a valid basis for contributory copyright liability, based on its reading of three United States Supreme Court opinions: Sony Corp. of America v. Universal City Studios, Inc., 464 U.S. 417 (1984), Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), and Twitter, Inc. v. Taamneh, 598 U.S. 471 (2023). However, none of those decisions holds that knowingly providing material contribution to infringement is an inadequate basis for a finding of contributory copyright liability. See United States v. Lipscomb, 299 F.3d 303, 313 n.34 (5th Cir. 2002). We consider each case in turn.
a.
As an initial matter, in both Sony and Grokster, the Court expressly embraced the common-law standards for contributory infringement and acknowledged more generally that cases based on different factual circumstances would require different applications of those standards.
In Sony, the Court addressed the issue of when the manufacturer and distributor of a product (there, the Betamax video tape recorder) could be held secondarily liable for subsequent copyright infringements committed by users of that product. See 464 U.S. at 420. The question presented to the Court was whether selling a product that facilitated infringement, standing alone, was sufficient to impose contributory copyright liability. The Court held it was not, so long as the product was “capable of substantial noninfringing uses.” Id. at 442. This mirrors the standard for contributory liability under patent law, which “is confined to the knowing sale of a component especially made for use in connection with a particular patent.” Id. at 440.
b.
Like Sony, Grokster dealt with a defendant that distributed a product which facilitated infringement—specifically, software that enabled users to share digital files through a P2P network.9 See 545 U.S. at 919-20. Purporting to apply Sony, the Ninth Circuit had held that the defendant was entitled to summary judgment because the software was capable of non-infringing uses. See id. at 932-34.
By holding that the distributor of a product that facilitates infringement can be liable when it induces future infringements after the moment of sale, Grokster expanded the doctrine of contributory infringement. Before Grokster, the distributor of a product could not be liable for future infringements so long as the product was capable of “substantial non-infringing uses.” Sony, 464 U.S. at 442. But after Grokster, an inducement claim could succeed against the distributor of a product if the distributor affirmatively induced future infringements, even if the product was capable of substantial non-infringing uses. See Grokster, 545 U.S. at 936-37; see also BMG Rts. Mgmt. (US) LLC v. Cox Commc‘ns, Inc., 881 F.3d 293, 306 (4th Cir. 2018) (“In fact, providing a product with ‘substantial non-infringing uses’ can constitute a material contribution to copyright infringement.“).
Here, Grande provides its subscribers with internet services on a continuous basis in exchange for regular monthly subscription fees. Those actions create an “ongoing relationship” between Grande and its infringing subscribers that extends beyond a single moment of sale. Sony, 464 U.S. at 437. Accordingly, Plaintiffs’ theory of liability in this case is not based on Grande‘s knowledge about its subscribers’ likely future activities after the moment of sale, but rather on Grande‘s knowledge of its subscribers’ actual infringements based on its ongoing relationship with those subscribers.
It‘s true, as Grande points out, that Grokster omitted any mention of material contribution when it cited Gershwin, instead referring solely to liability based on “intentionally inducing or encouraging direct infringement.” 545 U.S. at 930. However, nothing required the Court to list every possible basis for relief, rather than the grounds directly relevant to the dispute at hand. See 6 PATRY ON COPYRIGHT § 21:48 (“The issue of material contribution was not reached by the Supreme Court in vacating and remanding this decision since the Court found liability based on inducement.“). Moreover, Grokster endorsed the broader common-law theories of contributory liability articulated in Gershwin and other authorities; it didn‘t constrict them. See 545 U.S. at 934-35 (explaining that “nothing in Sony requires courts to ignore evidence of intent if there is such evidence, and the case was never meant to foreclose rules of fault-based liability derived from the common law“).
Grande further argues that if a party can be contributorily liable for copyright infringement simply by “materially contributing” to the conduct—without any purposeful, culpable conduct of its own—then Grokster and Sony are “meaningless.” Grande contends that no copyright plaintiff would ever need to prove inducement of infringement as in Grokster—requiring “clear expression or other affirmative steps taken to foster infringement,” 545 U.S. at 936-37—if they could simply show material contribution instead. Plaintiffs respond that the distinction between the material-contribution and inducement standards of liability is evident in David v. CBS Interactive Inc., where a district court considered a claim against
c.
As to Twitter, we note at the outset that it was litigated pursuant to the
Twitter underscores the general importance, in all cases of secondary liability, of demonstrating a direct nexus between the defendant‘s conduct and the underlying tort at issue. While that nexus was absent in Twitter, it is present here as Grande‘s conduct directly enabled and facilitated continued copyright infringement by its subscribers.
In Twitter, family members of a victim of an ISIS terrorist attack in Istanbul, Turkey sued three U.S. social media companies, alleging that the companies aided and abetted ISIS by permitting its members to use the platforms for “recruiting, fundraising, and spreading their propaganda.” 598
The Court concluded that aiding-and-abetting claims are strongest when there is a “direct nexus” between the defendant‘s conduct and the underlying tort. Id. at 506. When such a “direct nexus” exists, courts and juries alike can “more easily infer” that the defendant‘s conduct—especially if done with knowledge of the tort—was “culpable.” Id. By contrast, when no direct nexus exists, plaintiffs alleging aiding-and-abetting claims must instead show “participation through intentional aid” in order to generate the same inference of culpability. Id. The Court rejected the notion that “defendants’ ‘recommendation’ algorithms go beyond passive aid and constitute active, substantial assistance.” Id. at 499. Instead, the defendant‘s public social-media platforms are simply “infrastructure,” and “[o]nce the platform and sorting-tool algorithms were up and running, defendants at most allegedly stood back and watched.” Id. Because the plaintiffs in Twitter could not allege a direct nexus between the social media companies’ services and the particular terrorist attack for which they sought relief, their claim could not survive absent evidence the companies intentionally supported ISIS, which they did not.
In contrast to Twitter, the nexus between Grande‘s conduct and the tort for which Plaintiffs seek redress is direct. The underlying tort at issue here is copyright infringement—specifically, the unauthorized distribution of Plaintiffs’ copyrighted sound recordings by Grande‘s subscribers. Grande provided those subscribers with the tools necessary to conduct those
2.
Next, we consider the district court‘s jury instruction on material contribution. The district court instructed the jury that Grande is contributorily liable if it “induced, caused, or materially contributed to the infringing activity,” and that “[t]his standard is met” if Grande could have “take[n] basic measures to prevent further damages to copyrighted works, yet intentionally continue[d] to provide access to infringing sound recordings.” Grande challenges that instruction on two principal grounds.
First, Grande takes issue with the court‘s instruction based on its adoption of the “simple measures” standard.11 In several cases involving online infringements with new technologies, the Ninth Circuit has imposed an additional step before allowing a finding of contributory copyright liability. In these cases, even when the defendant provides the tools necessary for infringement, the court also inquires whether the defendant “can take simple measures to prevent further damage to copyrighted works.” Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1172 (9th Cir. 2007) (internal quotation marks and citation omitted). If such measures are available and the defendant does not take them, liability is appropriate. See id. at 1172-73; A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1021-22 (9th Cir. 2001). Conversely, if such measures are unavailable to the defendant, liability is inappropriate. See VHT, 918 F.3d at 745; Perfect 10, Inc. v. Giganews, Inc., 847 F.3d 657, 671-72 (9th Cir. 2017).
Grande contends that the line of “simple measures” cases is inapposite because it applies only to defendants “who directly control content online” because only such defendants “can readily remove or disable access to specific infringing content.” However, the Ninth Circuit in Amazon.com clarified that it designed this test broadly for “the context of cyberspace” and for any defendant that provides “Internet access or services.” 508 F.3d at 1171. That breadth was reflected in the test itself, which does not ask narrowly whether the defendant can remove access to the infringing content online, but more generally whether the defendant possesses “reasonable and feasible means” to “prevent further damage to
More importantly, as Plaintiffs correctly note, this standard favors defendants over copyright plaintiffs by offering defendants a way out if they have no “simple” (or “basic“) means of avoiding secondary liability.12 That‘s why in Giganews, the court ruled for the defendant—not because it failed to provide the tools necessary to infringe or lacked knowledge of infringing conduct—but because it found that plaintiff‘s proposed method by which the defendant could have prevented further damage to copyrighted works was “onerous and unreasonably complicated.” 847 F.3d at 671. Similarly, the defendant in VHT prevailed not because it failed to provide tools for or lacked knowledge of direct infringement, but because while the plaintiff made three different proposals as to how the defendant could have prevented further damage to copyrighted works, the court found them all insufficiently practical. See 918 F.3d at 745-46.
The district court‘s “basic measures” instruction thus did not “lower[] the bar” of liability, as Grande contends; the instruction made clear that Grande was liable if it “intentionally continue[d] to provide access to infringing sound recordings,” unless Grande was incapable of “taking basic measures to prevent further damages to copyrighted works.” See Amazon.com, 508 F.3d at 1172. And here, Grande had available to it at least one basic measure: it could have terminated high-speed internet services to known, repeat infringers, as it did when subscribers failed to pay Grande‘s
b.
Second, Grande disputes whether the district court‘s instruction—that “intentionally continu[ing] to provide access to infringing sound recordings” constitutes material contribution—was correct as a matter of law. Grande contends that this instruction flouts Grokster and Twitter and was therefore erroneous because “[u]nder the district court‘s view, reflected in its jury instruction, a jury could permissibly find liability even in the absence of affirmative, culpable conduct.” Plaintiffs respond by citing what they call “the established principle that ISPs provide a material contribution to infringements by their subscribers when they knowingly provide infringing customers with the necessary tools to infringe—in particular, a high-speed connection to the internet.” We acknowledge this is a closer question, but we nonetheless conclude the instruction was not erroneous.
The closest on-point authorities considering the application of a material-contribution theory to ISPs are the Fourth Circuit‘s decisions in BMG (2018) and Cox (2024). In BMG,13 the court considered a contributory-infringement claim essentially on all fours with this one, arising out of Cox‘s continued provision of internet services to known infringing subscribers. See 881 F.3d at 298-300. The Fourth Circuit held that in a case involving “subscription services” like those provided by an ISP, liability could be imposed if the service provider learns that its customers are using its services to infringe and “nonetheless renews the lease to those infringing customers.” Id. at 308. Under such circumstances, the continued provision of services
In Cox, as here, the Fourth Circuit affirmed a jury‘s finding that Cox was willfully liable for contributory copyright infringement because it intentionally continued to provide its internet services to infringing subscribers. In so doing, the Fourth Circuit squarely rejected the primary liability arguments made by Grande in this appeal. Specifically, the court applied the principle established in BMG that material contribution is an appropriate basis for a finding of contributory copyright liability. See Cox, 93 F.4th at 235-37. The court concluded that where, as here, an ISP knew of specific instances of repeated infringement by specific users and “chose to continue” providing services to them, a jury is entitled to find material contribution because the ISP‘s conduct exceeds “mere failure to prevent infringement.” Id. at 236. That reasoning is incompatible with Grande‘s primary arguments that material contribution is insufficient to prove contributory infringement and that Grande did not materially contribute as a matter of law. Moreover, the court had the benefit of letter briefing on Twitter before it reached its decision. See Cox‘s 28(j) Letter, Sony, No. 21-1168 (4th Cir. May 23, 2023), ECF No. 87; Plaintiffs’ Response to Cox‘s 28(j) Letter, Sony, No. 21-1168 (4th Cir. May 30, 2023), ECF No. 88. Although the court ultimately didn‘t cite Twitter in its decision, it held that imposing contributory liability on ISPs on the facts at issue there (which closely resemble those in this case) comports with the traditional principles
Grande maintains that those decisions—like the jury instruction here—stray from the principles set forth in Grokster and Twitter. Specifically, Grande points to language in Grokster providing that “in the absence of other evidence of intent, a court would be unable to find contributory infringement liability merely based on a failure to take affirmative steps to prevent infringement, if the device otherwise was capable of substantial noninfringing uses.” 545 U.S. at 939 n.12. Grokster held that “mere knowledge of infringing potential or of actual infringing uses” is not enough for liability. Id. at 937. And Twitter explained that a “communication provider” cannot be liable under an aiding-and-abetting theory “merely for knowing that [] wrongdoers were using its services and failing to stop them.” 598 U.S. at 503.
These are not weak arguments. But the Fourth Circuit heard these same arguments about Grokster in BMG and about Twitter in Sony. Applying the “rules of fault-based liability derived from the common law” explicitly endorsed by Grokster, 545 U.S. at 934-35, the court in BMG found the requisite intent in the ISP‘s continued provision of services that were “substantially certain to result in infringement,” 881 F.3d at 308. Cox, too, recognized Grokster‘s rule that “mere[] . . . failure to take affirmative steps to prevent infringement” does not establish contributory liability “in the absence of other evidence of intent,” 545 U.S. at 939 n.12, but nonetheless concluded that “supplying a product with knowledge that the recipient will use it to infringe copyrights is exactly the sort of culpable conduct sufficient for contributory infringement,” Cox, 93 F.4th at 236. That‘s because such conduct “accords with principles of aiding and abetting liability in the criminal law.” Id.; see id. (“Lending a friend a hammer is innocent conduct;
Moreover, for the reasons explained above, Twitter does not control because it was litigated pursuant to the
Applying the same material-contribution standard, the court‘s instruction was proper in light of the factual disputes in this case. See Louis Vuitton Malletier, S.A. v. Akanoc Sols., Inc., 658 F.3d 936, 944 (9th Cir. 2011) (holding the district court did not err “by narrowing the instruction on material contribution to the only genuine question as to that element“). At summary judgment, the district court determined that Grande‘s material contribution—its provision of the tools necessary for its subscribers to infringe—was “clear” and that the real “question” was whether Grande provided its services knowing that its customers were using them to infringe. There was therefore no factual dispute on that issue for the jury to resolve. The only issue left was whether Grande could have taken simple measures to
3.
The evidence at trial demonstrated that Grande provided its subscribers with the tools necessary to infringe (i.e., high-speed internet access) and that Grande‘s subscribers used those tools to infringe Plaintiffs’ copyrights.14 See BMG, 881 F.3d at 306-08. Based on the consistency of the trial evidence, the district court determined that there was “no question that [Grande] intentionally continued to provide Internet service” to its infringing subscribers.
Grande‘s affirmative choice to continue providing its services to known infringing subscribers—rather than taking simple measures to prevent infringement—distinguishes this case from Cobbler Nevada, LLC v. Gonzalez, 901 F.3d 1142 (9th Cir. 2018), on which Grande relies. There, the Ninth Circuit considered a claim alleging that a subscriber of internet services who received infringement notices failed to “secure, police and
The evidence at trial demonstrated that Grande had a simple measure available to it to prevent further damages to copyrighted works (i.e., terminating repeat infringing subscribers), but that Grande never took it. On appeal, Grande and its amici make a policy argument—that terminating internet services is not a simple measure, but instead a “draconian overreaction” that is a “drastic and overbroad remedy“—but a reasonable jury could, and did, find that Grande had basic measures, including termination, available to it. See Amazon.com, 508 F.3d at 1172. And because Grande does not dispute any of the evidence on which Plaintiffs relied to prove material contribution, there is no basis to conclude a reasonable jury lacked sufficient evidence to reach that conclusion.
* * *
IV.
Next, we consider Grande‘s damages argument, which presents a question of first impression in this circuit.16 The district court determined that each of Plaintiffs’ 1,403 sound recordings that was infringed entitled Plaintiffs to an individual statutory damages award. Grande contends that the text of the
Under
an award of statutory damages for all infringements involved in the action, with respect to any one work, . . . in a sum of not less than $750 or more than $30,000 as the court considers just. For the purposes of this subsection, all the parts of a compilation or derivative work constitute one work.
The Supreme Court has “ma[d]e clear that the starting point for our analysis is the statutory text.” Desert Palace, Inc. v. Costa, 539 U.S. 90, 98 (2003). “And where, as here, the words of the statute are unambiguous, the ‘judicial inquiry is complete.‘” Id. (quoting Conn. Nat‘l Bank v. Germain, 503 U.S. 249, 254 (1992)). The plain language of the
In concluding otherwise, the district court “found that the majority of case law holds that when individual sound recordings are available as individual works, a plaintiff can recover one statutory damages award per recording.” The district court‘s assessment of existing circuit case law was accurate: As Plaintiffs contend, the majority of the seven circuits to have considered this question apply a “functional” test that looks to “where the market assigns value,” deciding whether the parts of a compilation are individually eligible for statutory damages by determining whether the parts have “independent economic value.” Sullivan v. Flora, Inc., 936 F.3d 562, 572 (7th Cir. 2019). In addition to the Seventh Circuit, the D.C., First, Ninth, and Eleventh17 Circuits also take this approach. See, e.g., Walt Disney Co. v. Powell, 897 F.2d 565, 570 (D.C. Cir. 1990); Gamma Audio & Video, Inc. v. Ean-Chea, 11 F.3d 1106, 1117-18 (1st Cir. 1993); VHT, 69 F.4th at 990; MCA Television Ltd. v. Feltner, 89 F.3d 766, 769 (11th Cir. 1996).
Contrary to Plaintiffs’ assertion, the Second Circuit has not adopted this functional test, although it has awarded statutory damages for individual songs on albums. In EMI Christian Music Group, Inc. v. MP3tunes, LLC, the Second Circuit acknowledged that “[m]aterials that are sold as part of a compilation, such as songs on an album, ordinarily are not deemed separate works for the purpose of determining statutory damages.” 844 F.3d 79, 101
The Fourth Circuit‘s approach also has uncertainty. Its answer to the question presented in Xoom, Inc. v. Imageline, Inc. followed the Second Circuit‘s approach in Bryant but suggested that different facts might require a different construction of
Plaintiffs urge this court to adopt the majority approach and affirm the district court‘s ruling that because each song “has its own independent economic value in the marketplace at the time it is infringed, it constitutes a separate work for the purpose of determining eligibility for statutory damages.” But their position—which, admittedly, is a position shared by five other circuit courts—cannot be squared with the statutory text.
Nothing in the statute permits Plaintiffs to recover damages for each individual song because the song was “exploited . . . individually,” or began to live its “own copyright life.” Gamma Audio & Video, 11 F.3d at 1116 (citation omitted). Instead, because—as Plaintiffs concede—each album constitutes a compilation, the statutory text constrains Plaintiffs’ eligible award to statutory damages for each album, rather than each song in suit.
Record evidence supports this conclusion. The works’ certificates of registration—which are “prima facie evidence . . . of the facts stated” therein,
The amicus supporting plaintiffs, the Copyright Alliance, separately contends that “[w]hile Section 504(c)(1) of the Act provides that all parts of a compilation constitute one work, it does not say that individual works in a compilation cannot also exist as separate, independent works.” See VHT, 69 F.4th at 990. But with all due respect, that is not what the statute says. True, parts of a compilation can constitute separate works for other purposes,18 but “[f]or the purposes of [
The Copyright Alliance also marshals policy arguments against this interpretation of the statutory text. The Copyright Alliance complains that the result of Grande‘s reading is harsh and will “threaten the livelihood of some copyright owners.” Paraphrasing the Ninth Circuit, the Copyright Alliance argues that if a copyright holder could receive only one statutory damage award for infringements of multiple works that have independent value, then the attempt to save the copyright owner expenses and foster efficiency via registration of a compilation, collective work, or group registration19 would be “at best an empty gesture and at worst a cruel joke.” VHT, 69 F.4th at 992. But “to award statutory damages on a per-song basis would make a total mockery of Congress‘[s] express mandate that all parts of a compilation must be treated as a single ‘work’ for purposes of computing statutory damages.” Bryant, 603 F.3d at 142 (internal quotation marks and citation omitted). And between policy arguments and the statutory text—no matter how sympathetic the plight of the copyright owners—the text must prevail. See Desert Palace, 539 U.S. at 98. So, the strong policy arguments made by Plaintiffs and their amicus are best directed at Congress.
In sum, the record evidence indicates that many of the works in suit are compilations (albums) comprising individual works (songs). The statute unambiguously instructs that a compilation is eligible for only one statutory damage award, whether or not its constituent works are separately
* * *
All that remains is the appropriate remedy. For the first time on appeal, Grande asks this court to “reverse the district court‘s denial of JMOL and modify the statutory damages award to $22,066,446 based on 662 copyrighted works.” In its renewed motion for JMOL or a new trial, Grande requested only that the district court “order a new trial on the issue of statutory damages.” Nowhere in its briefing at summary judgment or post-judgment did Grande assert that only 662 copyrighted works in evidence were eligible for statutory damages. In Grande‘s own words below, “[n]o factfinder has considered these issues and determined from the record evidence which of the 1,403 sound recordings at issue are entitled to and eligible for a separate award of statutory damages under sections 504(c) and 412.” Accordingly, we vacate the statutory-damages award and remand for a new trial on damages with the proper jury instruction. See Sullivan, 936 F.3d at 572 (vacating where “[t]he district court did not ask (or put to the jury) the questions . . . necessary for resolving the statutory damages question“).
V.
For the foregoing reasons, we AFFIRM the jury‘s verdict finding Grande liable for contributory copyright infringement; VACATE the jury‘s damages award and REMAND for a new trial on damages; and DISMISS Plaintiffs’ conditional cross-appeal as moot.