Substantial Damages Award Expected Against Usenet.com for Copyright Infringement

On June 30, 2009, the District Court for the Southern District of New York (Court) found Usenet.com liable for infringing the copyrights of 14 plaintiff record companies as a result of file sharing. For a monthly fee, Usenet.com allows subscribers to access its peer-to-peer file sharing service. Usenet.com agreed that illicit downloading of copyrighted music recordings was widespread on its service. Two key results included the Court's findings that the defendant was liable for copyright infringement, and a finding of litigation misconduct and spoliation of evidence. In response to claims of contributory infringement, the defendant asserted it had not made a material contribution to the copyright infringements, since the Usenet service was equally capable of being used for non-infringing uses. This same defence had been successfully used in the US Supreme Court case of Sony Corp of America v Universal Studios, Inc (Sony case) as it related to the sale of Betamax video players. The Court found Usenet.com liable, and distinguished the facts from the Sony case, on the basis that Usenet.com maintained an ongoing relationship with its infringing end-users, while Sony had terminated the relationship at the point of purchase of the device. The plaintiffs also succeeded on a motion for default judgment after evidence was received of the defendant's spoliation of evidence and litigation misconduct. The plaintiffs showed that the defendant deliberately erased hard drives, disabled several hundred music-related newsgroups on its service, and deleted e-mail mailboxes, all in order to destroy incriminating records showing Usenet.com employees assisting subscribers to download copyrighted material. Damages will be assessed in a subsequent hearing, and could potentially reach several hundreds of millions of dollars. For a copy of the reasons for judgment in Arista Records LLC v Usenet.com Inc (Court file 07 Civ 8822HB), follow this link. Summary by: Darren Hall