New Jersey Law Journal July 16, 2007

Recent court decisions may force the Recording Industry Association of America to reevaluate its litigation tactics.

Internet Law

Download Enforcers May Be Singing New Tune

Recent decisions may force change of course in Internet music infringement litigation

By Jonathan Bick

Bick is of counsel to WolfBlock Brach Eichler of Roseland and is an adjunct professor of Internet law at Pace Law School and Rutgers Law School. He is also the author of 101 Things You Need To Know About Internet Law [Random House 2000].

            Recent court decisions may force the Recording Industry Association of America (RIAA) to reevaluate its litigation tactics. In the past, RIAA members were able to file actions against the owners of Internet addresses if their sites were used by others to file share.

            The scope and tactics of the RIAA members appeared to have some of the characteristics of a nuisance suit. A nuisance suit, in this instance, is a legal action accompanied by a settlement offer that is far less than the cost of defending the suit.

            In Capital Records v. Forster, Case No. Civ. 04-1569W (W.D. Okla. Feb. 6, 2007), a music down-loading copyright infringement case, the court limited liability for Internet address ownership and awarded attorney’s fees to the prevailing defendant. As a result of the ruling, RIAA members will likely change their litigation tactics, which currently target individuals for file sharing based on the use of an individual's Internet Protocol (IP) address alone.

            Major record companies, which comprise the bulk of the RIAA, have sued more than 18,000 individuals since fall of 2003 for copyright infringement of music down-loaded from the Internet. Prior to the Forster case, most RIAA defendants treated RIAA cases as a nuisance, choosing to settle rather than spend large sums defending the actions. However, the prospect of attorney’s fees for falsely accused the RIAA suit defendants created a viable alternative to accepting settlement offers from the RIAA.

            In Forster, the RIAA sued Debbie Foster in November of 2004, accusing her of unlawfully downloading registered copyrighted content from the Internet. However, it was discovered that Forster’s adult daughter was downloading the copyright protected material without her mother’s knowledge.

            Capital Records named Forster's daughter as a defendant in the action. A default judgment was entered when she didn’t answer the complaint. However, Capital Records refused to drop Forster as a defendant, claiming that the use of her IP address to file share was enough for her to be held liable. Forster filed a counterclaim against the Capital Records for a declaratory judgment of noninfringement.

            The Oklahoma district court ruled Foster could not be found secondarily or contributorily liable based solely on the fact that her IP address was being used for the infringing activity. For someone to be liable for the copyright infringement of a third party, the person to must both know of the infringement and to a large extent participate in the infringement. The court also ruled that Foster, as the prevailing party, was entitled to reasonable attorney’s fees.

            If other courts follow the Oklahoma federal court's reasoning, The RIAA members will have a difficult time targeting individuals for file sharing violations based on the IP address alone. For the RIAA members to prevail, evidence of knowledge and participation will become much more vital.

            The RIAA has appealed, claiming that even if there is no knowledge of the activity, account owners should be held secondarily or contributorily liable if their IP addresses are being used for infringement. RIAA argued Foster should have known about the activity because her contract with her ISP required her to keep her account clear of copyright infringement.

            The RIAA also claimed that the discovery process was cut short, and additional evidence of Foster’s knowledge might have turned up eventually. In fact, the RIAA stated, “the computer may well have been in a common area such that defendant heard music coming from the computer when admitted infringer Foster's daughter was using it.”

            The result in this case is a major concern for the RIAA members and other plaintiffs alleging copyright infringement through file sharing. The possibility of successful defendants being awarded attorney’s fees means an increase in the liability associated with litigation. This case may also encourage resistance to RIAA settlement offers, particularly those whom the RIAA has forced into expensive litigation for the purpose of clearing their names. Those who see themselves as innocent victims of meritless lawsuits will also be encouraged to continue to litigate.

            As illustrated by the Forster case, courts can punish as well as dismiss. Courts have inherent powers to control bad-faith conduct, and the U.S. Supreme Court has, on this basis, upheld sanctions. Courts may also assess penalties for frivolous or dilatory proceedings, particularly if a bad act is repeated many times.

            The best-known sanction is Rule 11 of the Federal Rules of Civil Procedure. This rule provides that an attorney may only file claim if to the best of his knowledge, information and belief formed after reasonable inquiry, the suit is well grounded in fact and is warranted by existing law or a good faith argument for the extension, modification or reversal of existing law, and that a suit is not interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.

            Rule 11 may be applied to nuisance suits. The possibility of such application may encourage RIAA members to change copyright infringement litigation tactics.