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Recording industry wins one against Usenet supplier

Afternoon of Wednesday, July 1, 2009 • One of the P2P proprietors' most successful self-defense arguments, when confronted in court by copyright holders, is what the legal profession now calls safe harbor. It's the idea that a P2P service only provides users with the technology to share files, and its up to the users to determine which files are shared -- at any one time, the service can't know what's shared, because it doesn't have a centralized index.

But that argument has now failed when transferred to another, older, more conventional style of file sharing: via Usenet. In a ruling yesterday that may set some legal precedent (at least prior to any appeal), a New York district court judge has granted summary judgment in favor of Recording Industry Association of America members against the owners of Usenet.com, a subscription service giving users access to files shared over the Internet's historical NNTP protocol (Usenet). Judge Harold Baer ruled that Usenet.com kept a service, knew what was on it, knew that its users knew what was on it, and knew that the purpose of that service was evidently to trade in unauthorized and copyrighted material.

Citing a phrase from the second Supreme Court ruling against P2P trader Grokster, Baer referred to Usenet.com's "staggering scale of infringement makes it more likely that [Defendants] condoned illegal use." The evidence of this was an independent study commissioned by the court that determined that some 94% of files available on Usenet.com were probably illicit.

The guilt-by-association factor didn't help the defendants' case much either. "Moreover, also similarly to Grokster, the undisputed facts in this case indicate that Defendants openly and affirmatively sought to attract former users of other notorious file-sharing services such as Napster and Kazaa," Judge Baer wrote.

One of the standards being tested here was whether Usenet.com simply contributed to the ongoing acts of copyright infringement made feasible through the Usenet system, or whether Usenet.com specifically used Usenet as a vehicle for profiting from illicit file-trading -- what the law calls vicarious infringement. The judge granted the RIAA the grand slam on this issue, writing, "Because the undisputed facts illustrate that Defendants garnered a direct financial benefit from copyright infringement and failed to exercise their right and ability to control or limit infringement on their servers, Plaintiffs' motion for summary judgment on their claim for vicarious copyright infringement is granted."

In keeping with its very public stance, the RIAA issued a statement late yesterday stating it hopes this ruling will set an example for all the others: "This decision is another example of courts recognizing the value of copyrighted music and taking action against companies and individuals who are engaging in wide scale infringement," stated Executive Vice President Stephen Marks. "We hope that other bad actors who are engaging in similar activity will take note of this decisive opinion."

The recorded-music industry won a victory in federal court against Usenet.com Inc., a company that allows users to exchange files such as articles and songs on different newsgroups.

The ruling, from the Southern District of New York, gives the industry more ammunition to go after companies that facilitate unauthorized distribution of songs, even as it ratchets down its suits on individuals. Judge Harold Baer Jr. found Usenet.com liable for several types of copyright infringement and referred the case to a magistrate to determine a remedy, which could include fines and an order to cease infringing activity.

The suit was originally filed in October 2007.

"We're disappointed in the outcome," said Charles Baker of Fulbright & Jaworski LLP, who represented Usenet.com in the case. He added he is pleased that precedents weren't set that could adversely affect future Usenet defendants.

Usenet.com isn't Usenet. It's a Usenet access provider that markets itself pretty transparently as a warez service.