EMIMP3tunesThe U.S. Court of Appeals for the Second Circuit has helped to push the rewind button on a decision involving fifteen major record companies and a now-defunct online music company in an ongoing battle about the Digital Millennium Copyright Act and copyright infringement.

The appellate court’s ruling in a separate case has led a U.S. District Court in New York to grant a motion to reconsider its 2011 ruling in Capitol Records Inc. v. MP3tunes LLC, granting in part and denying in part motions for the plaintiff’s EMI Inc. and the defendant Michael Robertson.

MP3tunes is the now-gone locker-storage service for music files that Robertson owned. It provided online music storage and facilitated free music downloads by linking to websites with free music files. In 2007, MP3tunes received from EMI Music Group a take-down a notice identifying 350 infringing songs and unauthorized websites. The notice also demanded that the firm remove all EMI’s copyrighted works, including those not specifically identified.

The storage firm partially responded by removing unauthorized websites from its link index but it did not remove the infringing songs from users’ lockers. Two months later, EMI sued MP3tunes and Robertson for copyright infringement.  The lower court held that MP3tunes qualified for “safe harbor” protection under the DMCA but still could be liable for contributory infringement due to its failure to remove infringing songs after receiving take-down notices. Robertson also was held liable for songs he personally copied from unauthorized websites.

Both parties, however, filed motions to reconsider that decision, a move arising in the recent Second Circuit decision in Viacom International Inc. v. YouTube Inc., in which summary judgment was granted to Google, YouTube’s parent firm; the court there held that the DMCA “safe harbor” provisions shielded Google from Viacom’s copyright infringement claims.  Viacom had sued Google asserting that YouTube had infringed by allowing users to upload thousands of videos owned by Viacom without permission.

The district court in EMI-MP3 looked to the appellate holding in Pescatore v. Pan Am World Airways, where the judge said he was directed: “Where there is an arguable ‘intervening change of controlling law,’ the court should consider if that change justifies a departure from ‘law of the case’ and revision of a previous decision.”  In Capitol Records v. MP3, because the district court’s 2011 Order relied on Viacom and parts of it were reversed by the Second Circuit, the parties urged the district court to reconsider. Defendant Robertson also sought another look at his direct liability for copyright infringement, the court’s personal jurisdiction over him and he moved for summary judgment on his vicarious liability for MP3tunes’ alleged  infringements.

The district court agreed with plaintiffs that Viacom directed lower courts to engage in explicit fact-finding on the issue of willful blindness before determining a party may be protected in DMCA safe harbors. The court ruled that a jury may find MP3tunes had a duty to make further inquiries into “specific and identifiable” instances of possible infringement. That would vacate part of its October, 2011, summary judgment for defendants on contributory infringement liability for songs not subject to DMCA-compliant take-down notices and the finding that factual issues preclude summary judgment.

The court then turned to “red flag” knowledge of infringement, where service providers can lose DMCA shields if they have actual or apparent knowledge of infringing content. Looking again to Viacom, the Court ruled for  plaintiffs and vacating its summary judgment, noting: “Since something less than a formal take-down notice may now establish red flag knowledge and EMI offers communications acknowledging likely infringement, the issue of Defendants’ red flag knowledge cannot be resolved on summary judgment.”

Lastly, EMI contended that Viacom confirmed that inducement of copyright infringement is a separate cause of action, distinct from contributory infringement and citing MGM Studios. v. Grokster. Defendants prevailed on this issue; the court denied EMI’s request to revive its inducement claim, saying it would be futile because evidence before the court was insufficient to meet the “high degree of proof’ required for an inducement claim.”  The court denied Robertson’s motions for reconsideration on infringement of EMI’s cover art, personal jurisdiction and summary judgment as to his vicarious liability.