AUSTIN, Texas — In a significant legal showdown, a Texas federal jury ruled against the internet service provider Grande Communications in late 2022, ordering it to pay $47 million in damages for what was found to be willful contributory copyright infringement. This marked a considerable victory for major music companies including Warner Bros. and Sony Music, who argued that Grande failed to adequately address piracy among its users.
The music companies had accused Grande Communications, which is under the ownership of Astound, of not taking necessary actions to disconnect repeat copyright offenders using its service, thereby indirectly supporting piracy. The jury concurred, deciding that the ISP’s inaction amounted to contributory copyright infringement.
Following the unfavorable ruling, Grande Communications pursued an appeal, questioning the viability of holding ISPs accountable for the actions of their subscribers on the basis of allegations made by third-parties. In their September appeal filing, Grande posited that the decision raised crucial first-time questions about the circumstances under which an ISP could be considered secondarily liable for its users’ actions.
Grande highlighted a recent Supreme Court decision in favor of Twitter, which found that the social media platform was not liable for terrorist messages posted on its service. Grande argued this precedent supported their stance that mere provision of service does not equate to liability.
Nonetheless, the music companies maintained a firm stance, countering that the original jury’s decision was justified and should remain in effect to properly combat online piracy. They argued this was achievable if ISPs like Grande developed and followed through on reasonable policies to manage repeat infringers systematically.
During the proceedings, the importance of ISPs’ knowledge of copyright infringements through the receipt of piracy notices became a central point. Evidence was brought that Grande did indeed have notices that could link its service to the piracy cases, yet failed to act decisively to curb the activity.
Despite Grande’s assertions that terminating internet services was heavy-handed and could affect innocent customers, the Fifth Circuit Court of Appeals upheld the initial verdict, concurring that the ISP had materially contributed to the infringements by continuing to provide services to known offenders.
However, there was a silver lining for Grande regarding the damages awarded. The Court found the methodology used to calculate the damages — originally summing individual songs rather than treating albums as single compilations — flawed. The earlier decision to impose a $47 million penalty was vacated and remanded for a new trial to properly assess the damages, taking into account that statutory damages should apply per compilation (album) and not per individual track within it.
This nuanced interpretation underscores the complexity of copyright laws when applied to digital content and the internet. The verdict and subsequent appeals suggest a challenging balance between protecting copyright holders and ensuring fair treatment of service providers and consumers in the digital age.
The copyright infringement finding stands firm, shaping future legal landscapes regarding ISP responsibilities and copyright enforcement on digital platforms. Meanwhile, Grande is expected to focus its efforts on the upcoming trial to argue for a reduced damages sum, reflecting the court’s guidance on assessing compilations rather than individual copyrighted songs.