Grooveshark Loses its Groove in Copyright Lawsuit

Grooveshark, an online service provider (OSP) of streamed music that claims to have 35 million users and a library of 20 million songs, somehow managed to maintain its groove amidst constant attacks by the recording industry for alleged copyright infringement over the past few years. However, a ruling by the U.S. District Court for the Southern District of New York may trigger the end of Grooveshark’s good fortunes.

On September 29, 2014, Judge Thomas P. Griesa granted summary judgment against Grooveshark in a copyright infringement suit filed in 2011 by nine music labels, including Universal Music Group (UMG), Warner Bros. and Sony Music Entertainment. UMG Recording v. Escape Media Group, 11 Civ. 8407, 2014 U.S. Dist. LEXIS 137491 (S.D.N.Y. Sept. 29, 2014). The plaintiffs joined forces after a prior infringement suit by UMG unveiled that Grooveshark’s employees had uploaded thousands of infringing files to the company’s Central Music Library. Grooveshark’s parent company, Escape Media Group, as well as founders Joshua Greenberg and Samuel Tarantino, were named as defendants.

The ruling carved a large hole into Grooveshark’s long-standing defense. Grooveshark has consistently claimed that the safe harbor provision of the Digital Millennium Copyright Act (DCMA)—a federal law that limits the infringement liability of OSPs under certain circumstances—shields it from liability. However, Judge Griesa essentially revoked Grooveshark’s “Get-Out-Of-Jail-Free” pass by focusing on the pressure that the parent company’s officers placed on its employees to acquiesce and participate in the music-sharing enterprise.

Among the evidence considered was a company-wide message from Greenberg, Grooveshark’s Chief Technology Officer. Greenberg encouraged officers and employees to download and share as much music as possible to quickly grow Grooveshark’s network. He also stated: “there is no reason why ANYONE in the company should not be able to do this, and I expect everyone to have this done by Monday… IF I DON’T HAVE AN EMAIL FROM YOU IN MY INBOX BY MONDAY, YOU’RE ON MY OFFICIAL SHIT LIST.” (Emphasis in original). Tarantino sent similar emails to officers and employees. Greenberg also offered to allow employees access to his home computer to expedite the upload process.

Judge Griesa also considered evidence indicating that Grooveshark executives were aware that its business model relied on using infringing music. Grooveshark’s DCMA system generated automatic infringement notifications to users who uploaded files that were subject to the DCMA takedown requests initiated by the copyright owners. According to the evidence, Grooveshark sent thousands of those notifications to almost all of its officers and employees for files they uploaded to Grooveshark’s servers. Escape Media’s chairman admitted that Tarantino and Greenberg “bet the company on the fact that [it] is easier to ask forgiveness than it is to ask permission”.

While it may have been easier for Grooveshark to ask for forgiveness, the question of whether they will be able to afford to pay the price of the plaintiffs’ unwillingness to forgive remains unanswered. As the case moves into the damages phase, Grooveshark may face a multimillion-dollar ruling that could relegate it to the OSP graveyard among predecessors such as Napster and Grokster.

In the meantime, Grooveshark is assessing its next steps and attorney John J. Rosenburg has stated that the company “respectfully disagrees with the court’s decision” and may consider appealing it.

Sources: The New York Times; Wall Street Journal; Digital Music News