Case 1:19-cv-00874-RBJ-MEH Document 71 Filed 10/21/19 USDC Colorado Page 1 of 16
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF COLORADO
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`Civil Action No. 19-cv-00874-RBJ-MEH
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`WARNER BROS. RECORDS INC.,
`ATLANTIC RECORDING CORPORATION,
`BAD BOY RECORDS LLC,
`ELEKTRA ENTERTAINMENT GROUP INC.,
`FUELED BY RAMEN LLC,
`NONESUCH RECORDS INC.,
`ROADRUNNER RECORDS, INC.,
`WEA INTERNATIONAL INC.,
`WARNER/CHAPPELL MUSIC, INC.,
`WARNER-TAMERLANE PUBLISHING CORP.,
`WB MUSIC CORP.,
`W.B.M. MUSIC CORP.,
`UNICHAPPELL MUSIC INC.,
`RIGHTSONG MUSIC INC.,
`COTILLION MUSIC, INC.,
`INTERSONG U.S.A., INC.,
`SONY MUSIC ENTERTAINMENT,
`ARISTA MUSIC,
`ARISTA RECORDS LLC,
`LAFACE RECORDS LLC,
`PROVIDENT LABEL GROUP, LLC,
`SONY MUSIC ENTERTAINMENT US LATIN,
`VOLCANO ENTERTAINMENT III, LLC,
`ZOMBA RECORDINGS LLC,
`SONY/ATV MUSIC PUBLISHING LLC,
`EMI AL GALLICO MUSIC CORP.,
`EMI ALGEE MUSIC CORP.,
`EMI APRIL MUSIC INC.,
`EMI BLACKWOOD MUSIC INC.,
`COLGEMS-EMI MUSIC INC.,
`EMI CONSORTIUM MUSIC PUBLISHING INC. d/b/a EMI FULL KEEL MUSIC,
`EMI CONSORTIUM SONGS, INC., individually and d/b/a EMI LONGITUDE MUSIC,
`EMI ENTERTAINMENT WORLD INC. d/b/a EMI FORAY MUSIC,
`EMI JEMAXAL MUSIC INC.,
`EMI FEIST CATALOG INC.,
`EMI MILLER CATALOG INC.,
`EMI MILLS MUSIC, INC.,
`EMI UNART CATALOG INC.,
`EMI U CATALOG INC.,
`JOBETE MUSIC CO. INC.,
`STONE AGATE MUSIC,
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`Case 1:19-cv-00874-RBJ-MEH Document 71 Filed 10/21/19 USDC Colorado Page 2 of 16
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`SCREEN GEMS-EMI MUSIC INC.,
`STONE DIAMOND MUSIC CORP.,
`UMG RECORDINGS, INC.,
`CAPITOL RECORDS, LLC,
`UNIVERSAL MUSIC CORP.,
`UNIVERSAL MUSIC – MGB NA LLC,
`UNIVERSAL MUSIC PUBLISHING INC.,
`UNIVERSAL MUSIC PUBLISHING AB,
`UNIVERSAL MUSIC PUBLISHING LIMITED,
`UNIVERSAL MUSIC PUBLISHING MGB LIMITED,
`UNIVERSAL MUSIC – Z TUNES LLC,
`ISLAND MUSIC LIMITED,
`POLYGRAM PUBLISHING, INC., and
`SONGS OF UNIVERSAL, INC.,
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`Plaintiffs,
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`v.
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`CHARTER COMMUNICATIONS, INC.,
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`Defendant.
`______________________________________________________________________________
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`RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE
`______________________________________________________________________________
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`Michael E. Hegarty, United States Magistrate Judge.
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`This action arises out of the alleged secondary infringement by the Defendant of the
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`Plaintiffs’ copyrighted musical compositions and sound recordings. Plaintiffs allege Defendant
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`infringed on their copyrighted works by contributing to its subscribers’ direct infringement
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`(“contributory infringement”) and by profiting from the subscribers’ direct infringement while
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`declining to exercise a right to stop or limit it (“vicarious infringement”). Defendant now moves
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`to dismiss Plaintiffs’ claims for vicarious infringement, and the motion has been referred to this
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`Court for a report and recommendation. For the reasons that follow, this Court respectfully
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`recommends that the Honorable R. Brooke Jackson deny the Defendant’s motion.
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`STATEMENT OF FACTS
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`The following are relevant factual allegations (as opposed to legal conclusions, bare
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`assertions, or merely conclusory allegations) made by Plaintiffs in the operative Complaint, which
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`are taken as true for analysis under Fed. R. Civ. P. 12(b)(6) pursuant to Ashcroft v. Iqbal, 556 U.S.
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`662, 678 (2009).
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`Plaintiffs are record companies and music publishers that produce, manufacture, distribute,
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`sell, and license commercial sound recordings and musical compositions. Through substantial
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`investments of money, time, and creative effort, Plaintiffs—and the recording artists and songwriters
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`they represent—have developed and marketed the music and recordings listed on the attachments
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`to the Complaint, all of which have been registered with the U.S. Copyright Office (“copyrighted
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`works”). Collectively, Plaintiffs own or control the copyrights to millions of musical compositions
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`and sound recordings, which are one of their primary sources of income.
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`Defendant Charter Communications, Inc. is one of the largest internet service providers
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`(“ISP”) in the country, with more than twenty-two million subscribers nationwide. Defendant
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`provides high-speed internet service to its customers in exchange for monthly subscription fees by
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`offering a tiered pricing structure allowing a subscriber to purchase higher download speeds for
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`higher monthly fees.
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`In recent years, Plaintiffs have become aware of persons infringing their copyrighted works
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`through online peer-to-peer file-sharing programs, such as “BitTorrent.” BitTorrent is a file-sharing
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`protocol that allows users to transfer music and other files directly to one another over the internet.
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`What makes BitTorrent unique from other file-sharing programs is that it facilitates much faster
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`downloading by breaking each file into pieces, allowing users to download different pieces of
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`content simultaneously from different peers. At the same time, the system allows users to begin
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`disseminating the copyrighted content before the complete file has even downloaded. This means
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`that, at any given time, each user connected to the internet can be both downloading and uploading
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`different pieces of a file from, and to, multiple other users. Once a user has downloaded all the
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`pieces, the file is automatically reassembled into its complete form and available for playback by
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`the user.
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`The efficiencies gained from this type of file sharing have led to significant online piracy.
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`A January 2011 report estimated that 11.4% of all internet traffic at the time involved the
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`unauthorized distribution of copyrighted works through BitTorrent. In a report from September 24,
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`2013, another company, NetNames, estimated that 99.97 percent of non-pornographic files
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`distributed via BitTorrent systems infringe copyrights. Further, in a well-publicized incident in 2015,
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`millions of individual BitTorrent users downloaded an episode of HBO’s “Game of Thrones” within
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`just twenty-four hours of its airing. Plaintiffs’ own copyrighted works have been distributed
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`millions of times through BitTorrent, depriving Plaintiffs of untold millions of dollars in legitimate
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`music sales.
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`Defendant seeks to draw subscribers to its high-speed internet service—including subscribers
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`who wish to download and distribute music illegally through programs such as BitTorrent—by
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`touting “blazing-fast . . . speeds” that allow users to “download just about anything instantly,”
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`including up to “8 songs in 3 seconds.” Subscribers, in turn, have utilized these speeds to pirate
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`Plaintiffs’ works. For example, between 2012 and 2015, Plaintiffs and their representatives
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`identified hundreds of thousands of specific instances in which Defendant’s subscribers utilized
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`peer-to-peer systems to distribute and copy Plaintiffs’ songs illegally. Tens of thousands of these
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`subscribers were serial infringers, with some pirating hundreds of Plaintiffs’ songs over the course
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`of several months. Defendant ignored the hundreds of thousands of statutory infringement notices
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`the Plaintiffs and others submitted to it under penalty of perjury, each of which detailed specific acts
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`of infringement committed by specific subscribers, identified by their unique Internet Protocol (“IP”)
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`addresses.
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`Defendant’s “Terms of Service/Policies” expressly prohibits users from engaging in
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`copyright infringement and reserves to Defendant the right to terminate users’ accounts for
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`participating in piracy. Notwithstanding this policy, Defendant has failed to address the repeated
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`infringement that occurs over its network because it derives significant income from subscription
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`fees, and Defendant does not want to lose the revenue generated from these infringing subscribers
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`by terminating their accounts, nor risk the possibility that account terminations would make its
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`service less attractive to other existing or prospective users. In addition, Defendant does not want
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`to devote the resources necessary to track repeat infringers and respond to infringement notices.
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`Furthermore, Defendant’s refusal to terminate infringing users’ accounts acts as a further
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`draw to its service, as subscribers come to understand that they can download music and other files
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`illegally over Defendant’s network without fear that Defendant will terminate their internet access.
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`That is, the specific infringing subscribers identified in Plaintiffs’ notices knew Defendant would
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`not terminate their accounts despite Defendant’s receipt of multiple notices identifying them as
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`infringers, and they remained Defendant’s subscribers to continue illegally downloading copyrighted
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`works. Defendant’s conduct encourages its customers to purchase even more bandwidth from the
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`company and to continue using—and paying subscription fees for—Defendant’s services.
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`When Defendant’s subscribers use its network to obtain infringing copies of Plaintiffs’
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`copyrighted works illegally, that activity undercuts the legitimate music market, depriving Plaintiffs
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`and those recording artists and songwriters, whose works Plaintiffs sell and license, of the
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`compensation to which they are entitled. Without such compensation, Plaintiffs and their recording
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`artists and songwriters, have fewer resources available to invest in the further creation and
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`distribution of high-quality music.
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`LEGAL STANDARDS
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`The purpose of a motion to dismiss under Fed. R. Civ. P. 12(b)(6) is to test the sufficiency
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`of the plaintiff’s complaint. Sutton v. Utah State Sch. For the Deaf & Blind, 173 F.3d 1226, 1236
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`(10th Cir. 2008). “To survive a motion to dismiss, a complaint must contain sufficient factual
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`matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” Ashcroft v. Iqbal,
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`556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
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`Plausibility, in the context of a motion to dismiss, means that the plaintiff pled facts which allow
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`“the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”
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`Id. Twombly requires a two-prong analysis. First, a court must identify “the allegations in the
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`complaint that are not entitled to the assumption of truth,” that is, those allegations which are legal
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`conclusions, bare assertions, or merely conclusory. Id. at 679. Second, the Court must consider the
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`factual allegations “to determine if they plausibly suggest an entitlement to relief.” Id. at 681. If
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`the allegations state a plausible claim for relief, such claim survives the motion to dismiss. Id. at
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`680.
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`Plausibility refers “to the scope of the allegations in a complaint: if they are so general that
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`they encompass a wide swath of conduct, much of it innocent, then the plaintiffs have not nudged
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`their claims across the line from conceivable to plausible.” SEC v. Shields, 744 F.3d 633, 640 (10th
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`Cir. 2014) (quoting Khalik v. United Air Lines, 671 F.3d 1188, 1191 (10th Cir. 2012)). “The nature
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`and specificity of the allegations required to state a plausible claim will vary based on context.” Safe
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`Streets All. v. Hickenlooper, 859 F.3d 865, 878 (10th Cir. 2017) (quoting Kan. Penn Gaming, LLC
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`v. Collins, 656 F.3d 1210, 1215 (10th Cir. 2011)). Thus, while the Rule 12(b)(6) standard does not
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`require that a plaintiff establish a prima facie case in a complaint, the elements of each alleged cause
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`of action may help to determine whether the plaintiff has set forth a plausible claim. Khalik, 671
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`F.3d at 1191.
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`However, “[t]hreadbare recitals of the elements of a cause of action, supported by mere
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`conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. The complaint must provide “more
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`than labels and conclusions” or merely “a formulaic recitation of the elements of a cause of action,”
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`so that “courts ‘are not bound to accept as true a legal conclusion couched as a factual allegation.’”
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`Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)). “Determining
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`whether a complaint states a plausible claim for relief will . . . be a context-specific task that requires
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`the reviewing court to draw on its judicial experience and common sense.” Iqbal, 556 U.S. at 679.
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`“[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of
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`misconduct,” the complaint has made an allegation, “but it has not shown that the pleader is entitled
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`to relief.” Id. (quotation marks and citation omitted).
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`ANALYSIS
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`The present motion seeks an order dismissing Plaintiffs’ “Count II” for vicarious copyright
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`infringement. The Tenth Circuit has determined that a defendant can be secondarily liable for
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`another’s copyright infringement under principles of vicarious and contributory liability. Diversey
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`v. Schmidly, 738 F.3d 1196, 1204 (10th Cir. 2013) (citing Fonovisa, Inc. v. Cherry Auction, Inc., 76
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`F.3d 259, 261–65 (9th Cir. 1996)). Vicarious liability attaches when the defendant “has the right
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`and ability to supervise the infringing activity” and “has a direct financial interest in such activities.”
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`Id. (quoting Gershwin Publ'g Corp. v. Columbia Artists Mgmt., Inc., 443 F.2d 1159, 1162 (2d Cir.
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`1971)); see also Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913, 930 (2005)
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`(“One . . . infringes vicariously by profiting from direct infringement while declining to exercise a
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`right to stop or limit it”).
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`A defendant may be vicariously liable even when he or she is not aware of the infringing
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`activity. Diversey, 738 F.3d at 1204 (citing Fonovisa, 76 F.3d at 262); see also Grokster, Ltd., 545
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`U.S. at 930 n.9 (“vicarious liability theory ... allows imposition of liability ... even if the defendant
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`initially lacks knowledge of the infringement.”). But, there must be a showing that someone directly
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`infringed a copyright for vicarious liability to attach. La Resolana Architects, PA v. Reno, Inc., 555
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`F.3d 1171, 1181 (10th Cir. 2009) (“[B]oth contributory and vicarious infringements require someone
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`to have directly infringed the copyright.”) (citing Grokster, Ltd., 545 U.S. at 930-31).
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`Here, Defendant contends that Plaintiffs fail to allege (1) a causal connection between the
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`alleged infringement and its profits and, thus, fail to show a direct financial interest in any infringing
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`activities; and (2) that Defendant maintained the right and ability to control infringement by its
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`subscribers. The Court will address each challenge as presented.
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`I.
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`Direct Financial Interest in Alleged Infringing Activities
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`Citing cases from the Ninth Circuit, Defendant argues that Plaintiffs’ allegations fail to
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`demonstrate Defendant derived direct financial benefits from any infringement. Specifically,
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`Defendant asserts that the alleged subscription fees Defendant charges the infringing users constitute
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`only an “indirect benefit” because “the infringing activity must be more than an ‘added benefit’ to
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`a subscription; it must be the attracting factor, the ‘draw’ for subscribers.” Mot. 9 (citing Perfect
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`10, Inc. v. Giganews, Inc., 847 F.3d 657, 674 (9th Cir.), cert. denied, 138 S. Ct. 504 (2017)).
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`Defendant contends that the only benefit it “receives is a flat fee for the provision of internet
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`services, which is insufficient to state a claim.” Id. at 11 (citing Ellison v. Robertson, 357 F.3d
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`1072, 1079 (9th Cir. 2004)). According to Defendant, “[a]t most, Plaintiffs assert that subscribers
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`are able to utilize their internet connection for illegal activity as an added benefit to the subscribers,
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`not the draw.” Id.
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`Plaintiffs counter that Defendant “misstates the financial benefit standard.” Resp. 11.
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`Plaintiffs contend that the standard is “permissive and imposes liability even for ‘remote’ and
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`‘unquantifiable’ benefits.” Id. Plaintiffs also argue that Defendant misinterprets Ellison in that flat
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`periodic fees “can and do ‘constitute direct financial benefits’ when ‘the value of a defendant’s
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`service lies in providing access to infringing material.’” Id. at 11-12 (citing Ellison, 357 F.3d at 1079
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`(emphasis in original)). Plaintiffs conclude their allegations “that Charter drew infringers to its
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`service by touting specific features of its service that are attractive to copyright infringers and by
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`adopting a policy of non-enforcement, and that these features ‘motivated’ a subset of users to sign
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`up for, or remain with, the company,” together with allegations “that Charter has a financial
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`incentive not to terminate the accounts of infringing users—an allegation buttressed by the fact that
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`Charter has declined to terminate users’ accounts despite receiving repeated notices of specific
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`users’ infringement” are sufficient to plausibly state the “direct financial interest” element of a
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`vicarious liability claim. Id. at 14.
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`The Court finds Plaintiffs’ allegations, taken as true at this early stage of the litigation,
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`plausibly state that Defendant has a direct financial interest in the alleged infringing activity.
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`Defendant is correct that the Tenth Circuit has cited opinions from the Ninth Circuit when
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`addressing vicarious infringement claims. See Diversey, 738 F.3d at 1204 (citing Fonovisa, Inc.,
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`76 F.3d at 261–65) and La Resolana Architects, PA., 555 F.3d at 1181 (citing Ellison, 357 F.3d at
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`1076). However, no case in the Tenth Circuit has cited Perfect 10, Inc. v. Giganews, Inc., supra,
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`on which Defendant primarily relies. Nevertheless, the court in Perfect 10 confirmed that a
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`“[f]inancial benefit exists where the availability of infringing material acts as a draw for customers”
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`and “[t]he size of the ‘draw’ relative to a defendant’s overall business is immaterial.” Perfect 10,
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`Inc., 847 F.3d at 673. The court concluded that“[t]he essential aspect of the ‘direct financial benefit’
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`inquiry is whether there is a causal relationship between the infringing activity and any financial
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`benefit a defendant reaps, regardless of how substantial the benefit is in proportion to a defendant’s
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`overall profits.” Id.
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`The Perfect 10 court also noted its analysis in Ellison–which has been cited by the Tenth
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`Circuit–emphasizing the difference between a defendant’s receipt of financial benefits from
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`infringement of the plaintiff’s copyrighted works and a defendant’s receipt of benefits from
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`infringement in general. In Ellison, the Ninth Circuit concluded “[t]he record lacks evidence that
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`AOL attracted or retained subscriptions because of the infringement or lost subscriptions because
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`of AOL’s eventual obstruction of the infringement” – in other words, AOL’s action upon its receipt
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`of plaintiff’s complaint of blocking access to the infringing material led the court to find the plaintiff
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`failed to demonstrate the defendant received a direct financial benefit from the infringement alleged
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`in that case. Ellison, 357 F.3d at 1079. Likewise, in Perfect 10, the court concluded “Perfect 10 was
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`required to provide evidence that customers were drawn to Giganews’s services because of the
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`infringing Perfect 10 material at issue” and “there was no evidence indicating that anyone subscribed
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`to Giganews because of infringing Perfect 10 material.” Perfect 10, Inc., 847 F.3d at 674.
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`While the Tenth Circuit has cited Ellison and Fonovisa in setting forth the elements for
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`secondary copyright infringement, the court has not yet engaged in an analysis of the direct financial
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`benefit prong of such claim. However, citing the Supreme Court’s opinion in Grokster and the
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`Ninth Circuit’s opinions in Ellison and Fonovisa, the District of Kansas determined that “[t]he
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`financial benefit may be established [ ] ‘by showing that users are attracted to a defendant’s product
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`because it enables infringement and that [ ] use of the product for infringement financially benefits
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`the defendant.’ It exists ‘where the availability of infringing material acts as a draw for customers.’”
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`Tomelleri v. Zazzle, Inc., No. 13-CV-02576-EFM-TJJ, 2015 WL 8375083, at *15 (D. Kan. Dec. 9,
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`2015).1 The Tomelleri court addressed a motion for summary judgment and found the plaintiff
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`failed to provide evidence that the alleged infringement was a “draw” to zazzle.com users. Id.
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`This Court finds Tomelleri consistent with Perfect 10, Ellison and Fonovisa, and concludes
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`that Plaintiffs have plausibly alleged the infringement of their musical compositions and sound
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`recordings is a “draw” to Defendant’s subscribers. Taking the allegations as true, Plaintiffs allege
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`that Defendant’s subscribers are “motivated” by company advertisements promoting Defendant’s
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`“high speed” service that “enables subscribers to ... ‘download 8 songs in 3 seconds’”; Defendant’s
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`subscribers have used such service to “pirate” Plaintiffs’ works, as evidenced by Plaintiffs’
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`identification between 2012 and 2015 of “hundreds of thousands” of instances in which Defendant’s
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`subscribers used its service to distribute Plaintiffs’ songs illegally; despite notification of its
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`1The Tomelleri court cites to Arista Records LLC v. Lime Grp. LLC, 715 F. Supp. 2d 481
`(S.D. N.Y. 2010), which was withdrawn and superceded by Arista Records LLC v. Lime Grp.
`LLC, 784 F. Supp.2d 398 (S.D. N.Y. 2011); however, the analysis cited in Tomelleri is the same
`in both opinions.
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`subscribers’ infringement, Defendant did nothing to stop it; once Defendant’s subscribers realized
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`that Defendant did not intend to stop or control the infringement, they “purchased more bandwidth”
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`and continued using Defendant’s service to infringe Plaintiffs’ copyrights; and, the greater the
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`bandwidth used for pirating content, “the more money [Defendant] made.” These allegations are
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`sufficient to demonstrate a causal relationship between the infringing activity alleged in this case
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`and any financial benefit the Defendant reaps in this case. See Perfect 10, Inc., 847 F.3d at 673.
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`Defendant contends that the opinion in UMG Recordings, Inc. v. Grande Communications
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`Networks, LLC, No. A-17-CA-365-LY, 2018 WL 1096871, at *10 (W.D. Tex. Feb. 28, 2018), report
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`and recommendation adopted by 2018 WL 1905124 (Mar. 28, 2018), demonstrates Plaintiffs’
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`allegations are insufficient to state a plausible direct financial benefit. This Court disagrees. In
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`Grande, the court found the allegation that the availability of plaintiff’s music acted as a “powerful
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`draw for users of [defendant’s] service” was not sufficient and noted, “[t]here are no allegations that
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`[defendant’s] actions in failing to adequately police their infringing subscribers is a draw to
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`subscribers to purchase its services, so that they can then use those services to infringe on
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`[plaintiff’s] (and others’) copyrights.” Id. Here, the Plaintiffs do, in fact, allege that Defendant’s
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`failure to stop or take other action in response to notices of infringement is a draw to current and
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`prospective subscribers to purchase and use Defendant’s internet service to “pirate” Plaintiffs’
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`copyrighted works. The Court finds the UMG Recordings opinion consistent with its conclusion
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`that Plaintiffs’ allegations, taken as true, are sufficient.
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`Accordingly, the Court respectfully recommends that Judge Jackson deny Defendant’s
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`motion to dismiss Plaintiffs’ vicarious liability claim based on a failure to state the direct financial
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`benefit element of the claim.
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`II.
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`Right and Ability to Supervise Alleged Infringing Activities
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`Defendant also seeks dismissal of Plaintiffs’ vicarious infringement claim asserting Plaintiffs
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`fail to plausibly allege Defendant “exercises any practical ability to control the online activity of the
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`allegedly infringing subscribers here.” Mot. 14.
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`Again, the Supreme Court has determined that a claim for vicarious infringement “allows
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`imposition of liability when the defendant profits directly from the infringement and has a right and
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`ability to supervise the direct infringer, even if the defendant initially lacks knowledge of the
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`infringement.” Grokster, Ltd., 545 U.S. at 930 n.9; see also Diversey, 738 F.3d at 1204 (the “right
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`and ability to supervise” may be found even when a defendant is not aware of the infringing
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`activity). The parties cite Perfect 10, Inc. v. Amazon.com, Inc., 508 F.3d 1146, 1173 (9th Cir. 2007)
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`for the proposition that “a defendant exercises control over a direct infringer when he has both a
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`legal right to stop or limit the directly infringing conduct, as well as the practical ability to do so.”
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`The court in UMG Recordings, Inc. v. Grande Communications Networks, LLC, which is
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`cited by both parties in this case, also cites Amazon.com for the same proposition. See 2018 WL
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`1096871, at *10. Like the Plaintiffs here, UMG Recordings and the other plaintiffs in that case “are
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`a collection of record companies that produce and distribute commercial sound recordings in the
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`United States” and like Defendant here, Grande Communications is “an internet service provider
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`that provides internet access to subscribers in portions of Texas.” Id. at *1. The court addressed
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`Grande Communications’ motion to dismiss the plaintiffs’ vicarious infringement claims and, as set
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`forth above, found that plaintiffs failed to allege plausible facts supporting the direct financial
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`benefit element of the claims. Id. at *10 (allegations “that the existence of music and the BitTorrent
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`protocol is the draw” were insufficient).
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`However, before coming to that conclusion, the UMG Recordings court addressed the same
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`arguments Defendant proffers here (see Reply 4-5) for dismissal based on the “right and ability to
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`supervise” element:
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`Grande asserts that because it cannot block access to the peer-to-peer software used
`to infringe the copyrights here, it cannot stop or limit the infringing conduct taking
`place by its subscribers. Additionally, Grande argues that, even if it terminates
`subscribers, such action will only indirectly affect the infringing conduct, as Internet
`access is ubiquitous, and the subscribers can simply obtain the service from another
`ISP. The Court disagrees. Grande can stop or limit the infringing conduct by
`terminating its subscribers' internet access. BMG [Rights Mgmt. (US) LLC v. Cox
`Commc’ns, Inc.], 149 F. Supp. 3d [634,] 674 [(E.D. Va. 2015), reversed on other
`grounds, 881 F.3d 293 (4th Cir. 2018)]. This is clearly sufficient to state a claim on
`the first element of vicarious liability.
`
`Id. at *10. In fact, in BMG Rights Management, the court found that defendant, another internet
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`service provider, had “the contractual right to condition the availability of its internet access to users
`
`who do not use that service to violate copyrights. If users listen when Cox exercises that power,
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`infringement stops. If users do not and Cox terminates them, that also stops or at least limits
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`infringement.” BMG Rights Mgmt. (US) LLC, 149 F. Supp. 3d at 674.2 The court also determined
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`the defendant had
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`the practical ability to stop or limit infringement. There cannot be any serious dispute
`that internet service is an essential component of the infringing activity alleged by
`BMG. File-sharing programs are completely dependent on the internet to facilitate
`the download and upload of files. It is therefore a reasonable inference that the result
`of an internet service provider exercising its ability to suspend or terminate account
`holders stops or limits infringement.
`
`Id. This Court finds UMG Recordings and BMG Rights Management instructive as applied to this
`
`2The Fourth Circuit reversed the jury verdict in this case based on a faulty jury instruction
`regarding contributory infringement. BMG Rights Mgmt. (US) LLC, 881 F.3d at 307. With
`respect to the vicarious infringement claim, the court did not opine on the trial court’s decision
`on summary judgment (cited here) nor the jury’s finding of no liability. See id.
`
`14
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`Case 1:19-cv-00874-RBJ-MEH Document 71 Filed 10/21/19 USDC Colorado Page 15 of 16
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`case and concludes that Plaintiffs plausibly allege the Defendant “has both a legal right to stop or
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`limit the directly infringing conduct, as well as the practical ability to do so.” Plaintiffs allege that
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`Defendant’s own “Terms of Service/Policies” expressly prohibits users from engaging in copyright
`
`infringement and reserves to Defendant the right to terminate users’ accounts for participating in
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`piracy. Plaintiffs provided Defendant with “hundreds of thousands” of notices of infringement; yet,
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`despite the notices identifying the infringing users and the Defendant’s policy, Defendant failed to
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`stop or limit the infringement by suspending or terminating these users’ accounts. See Amazon.com,
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`Inc., 508 F.3d at 1173.3
`
`Accordingly, this Court respectfully recommends that Judge Jackson deny the Defendant’s
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`motion to dismiss Plaintiffs’ vicarious infringement claim based on a failure to state the “right and
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`ability to supervise” element of the claim.
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`CONCLUSION
`
`In sum, the Court finds that, taking Plaintiffs’ allegations as true, Plaintiffs plausibly allege
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`the Defendant profited from direct infringement while declining to exercise a right to stop or limit
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`the infringing activity. See Grokster, Ltd., 545 U.S. at 930. Thus, this Court respectfully
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`RECOMMENDS that Judge Jackson deny Defendant’s Motion to Dismiss Plaintiff’s Claim for
`
`3The Court notes an opinion from this District also citing Amazon.com and Grokster, and
`finding the plaintiff failed to state a plausible vicarious infringement claim. Viesti Assocs., Inc.
`v. Pearson Educ., Inc., No. 12-cv-02240-PAB, 2013 WL 4052024, at *8 (D. Colo. Aug. 12,
`2013). The Viesti court, unlike here, found the plaintiff asserted only conclusory allegations and
`failed to identify any third party over which the defendant might have the ability to control. Id.
`(“The factual averments present no evidence to support a plausible inference that Pearson had
`the right or ability to prevent infringing conduct of unidentified third parties.”).
`
`15
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`Case 1:19-cv-00874-RBJ-MEH Document 71 Filed 10/21/19 USDC Colorado Page 16 of 16
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`Vicarious Liability [filed May 28, 2019; ECF 38].4
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`Respectfully submitted this 21st day of October, 2019, at Denver, Colorado.
`
`BY THE COURT:
`
`Michael E. Hegarty
`United States Magistrate Judge
`
`4Be advised that all parties shall have fourteen (14) days after service hereof to serve and
`file any written objections in order to obtain reconsideration by the District Judge to whom this
`case is assigned. Fed. R. Civ. P. 72. The party filing objections must specifically identify those
`findings or recommendations to which the objections are being made. The District Court need
`not consider frivolous, conclusive or general objections. A party’s failure to file such written
`objections to proposed findings and recommendations contained in this report may bar the party
`from a de novo determination by the District Judge of the proposed findings and
`recommendations. United States v. Raddatz, 447 U.S. 667, 676-83 (1980); 28 U.S.C. §
`636(b)(1). Additionally, the failure to file written objections to the proposed findings and
`recommendations within fourteen (14) days after being served with a copy may bar the
`aggrieved party from appealing the factual and legal findings of the Magistrate Judge that are
`accepted or adopted by the District Court. Duffield v. Jackson, 545 F.3d 1234, 1237 (10th Cir.
`2008) (quoting Moore v. United States, 950 F.2d 656, 659 (10th Cir. 1991)).
`
`16
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`