Grande’s 5th Circuit Appeal Seeks Remand of Infringement Judgment for New Trial

Oral argument would help the 5th Circuit “in resolving the complex issues arising from a three-week trial in which a jury found Grande Communications Networks secondarily liable for infringing 1,403 copyrighted songs and awarded $46.7 million in statutory damages, on grounds that Grande provided internet service to the direct infringers,” said Grande’s opening brief Wednesday (docket 23-50162). Grande’s appeal seeks to reverse the district court’s May 11 denial of its renewed motion for judgment as a matter of law or remand the case for a new trial to get the jury award vacated (see 2306120002).

Grande’s appeal presents “important questions of first impression” in the 5th Circuit “about whether, and in what circumstances, an internet service provider may be held secondarily liable for the conduct of users of its service,” said Grande’s brief. The answers to those questions must account for the U.S. Supreme Court’s May 18 decision in Twitter v. Taamneh (see 2305180049), saying online service providers “cannot be held secondarily liable merely for failing to stop known wrongdoers from using their services,” it said.

SCOTUS has approved two bases for contributory copyright infringement liability, said Grande. One is through the distribution of a commodity “used solely for infringement,” the other is by inducing others to commit infringement, it said. Here, Grande didn’t shut off internet access to accused copyright infringers, it said. But the district court erred in ruling Grande could be secondarily liable because it didn’t take “basic measures” to stop infringement, it said.

Courts have consistently said online content providers can’t be contributorily liable for infringing use of their services “unless they directly and substantially assist the infringing conduct,” said Grande. The evidence at trial showed Grande “merely provided content-neutral internet access to its subscribers, some of whom were accused infringers,” it said.

Precedent in the 5th Circuit prohibits a finding of direct copyright infringement “without a side-by-side comparison of the copyrighted work and the alleged copy,” said Grande. At trial, the record labels didn’t introduce into evidence the copyrighted songs allegedly infringed by Grande’s subscribers, so the jury “had no opportunity to compare any copyrighted work to any alleged copy,” it said.

The district court, in effect, decided that failing to terminate internet service to accused infringers equals contributory liability, “and then it told the jury what verdict to reach,” said Grande. “The district court was wrong,” it said: “Instead of submitting the case to the jury, the district court should have granted judgment as a matter of law for Grande.”

Because there’s insufficient evidence “to sustain the verdict of contributory liability, under either a correct jury instruction or the instruction as given, the 5th Circuit “should vacate the district court’s judgment,” and enter judgment that the labels “take nothing,” said Grande. In the alternative, the 5th Circuit should remand the case for a new trial, it said.

In the alternative to that, “the judgment should be modified -- or vacated and remanded with instructions for the district court to modify it -- to correct the district court’s error in the calculation of statutory damages,” said Grande. It argues the district court wrongly decided each of the 1,403 songs in suit was eligible for a separate award of statutory damages, “even though many of the songs were registered together as compilations,” it said. “Alone, this error requires a dramatic reduction in damages,” it said.