Court Recognizes DMCA Safe Harbor in Universal v Grooveshark Lawsuit

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Two years ago, Universal Music filed a lawsuit claiming that streaming music service Grooveshark carried unauthorized copies of the label's pre-1972 music catalog on its servers. Universal's angle was that because of the age of the music and the dating of legislation, DMCA safe harbors are not available to Grooveshark. Yesterday a judge disagreed, and this wasn't Grooveshark's only success. The company will now be allowed to push ahead with counterclaims said to be worth tens of millions of dollars.

Streaming music service Grooveshark has always compared its service to that offered by YouTube. Users come along, upload content to their servers, and the same is made available to the public.

Again, just like YouTube, Grooveshark says that if any rightsholder has a problem with any content being made available, upon correct notification and in line with relevant law it will remove access to said content. This is how the DMCA works – as long as the correct procedures are followed it exists to stop service providers being held responsible for the infringements of others.

However, in January 2010, Universal Music Group filed a lawsuit in a New York court in which it claimed that Grooveshark had copies of its music in its archives. But there was an interesting twist – Universal said that since the music came from the company’s pre-1972 back catalog and was therefore covered by New York state law and not the federal Copyright Act, Grooveshark would not be able to rely on the safe harbor provisions of the DMCA.

After a summary of the DMCA’s requirements including the responsibilities of both copyright holders and service providers and what the latter must do to receive safe harbor protection, yesterday the Court reached its decision.

“There is no textual, or other reason, to think that Congress intended to limit that distribution of responsibilities to only post-1972 recordings,” Judge Barbara R. Kapnick wrote, effectively neutralizing the first element of Universal’s unconventional attack on Grooveshark.

In a response to the 2010 lawsuit, Grooveshark parent company Escape Media had also filed several other counterclaims, not only on the issue of the DMCA, but also concerning competition.

Escape stated that it is a competitor to Universal and that the music company had engaged in an unlawful anti-competitive campaign “to exploit its sizeable market power by coercing third party business entities into refusing to deal with Escape” and Escape had suffered significant damages as a result.

Escape said that Universal coerced two of its advertising partners – Hewlett Packard and INgrooves – into breaching their contracts and terminating their relationships with Escape. The deal with HP is reported as being worth $325,000. Escape also claim that Universal had their Grooveshark app pulled from the Apple App Store.

Universal tried to have these and other counterclaims dismissed. They succeeded on one point concerning antitrust, with the Judge noting that those laws were enacted for the “protection of competition, not competitors” and that injury to a competitor [Grooveshark] is not “injury to competition as a whole.”

The end result though, with the lion’s share of the counterclaims against Universal allowed to stand, is great news for Grooveshark.

A source close to the company told TorrentFreak they are “thrilled” at the prospect of counterclaims worth “tens of millions of dollars, if not more” going through.

Who knows, maybe they might prove to be a good point of negotiation in the other case the companies are still fighting?


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