United States v. Charter Communications, Inc.

393 F.3d 771, 73 U.S.P.Q. 2d (BNA) 1339, 2005 U.S. App. LEXIS 31, 2005 WL 15416

• Court: Court of Appeals for the Eighth Circuit
• Decided: January 4, 2005
• Docket: 03-3802
• Status: Published

Opinions

BYE, Circuit Judge.

This case concerns whether the Digital Millennium Copyright Act (DMCA), specifically 17 U.S.C. § 512(h), permits copyright owners and their representatives to obtain and serve subpoenas on internet service providers (ISPs) to obtain personal information about an ISP’s subscribers who are alleged to be transmitting copyrighted works via the internet using so-called “peer to peer” or “P2P” file sharing computer programs. The dispute arose when the Recording Industry Association of America (RIAA) requested the clerk of the district court to issue subpoenas under § 512(h) to Charter Communications, Inc. (Charter),¹ in its capacity as an ISP, requiring Charter to turn over the identities of persons believed to be engaging in unlawful copyright infringement. The district court issued the subpoenas and denied Charter’s motion to quash. We reverse.

I

Starting in the 1980s, internet users began “posting” copyrighted works on electronic bulletin boards (BBSs). A BBS allows a user to post files for others to download to their computers. Other internet users would then copy and download the posted works from the BBS. Beginning-in the early 1990s, copyright owners began suing individuals who unlawfully disseminated copyrighted music, photographs, and software. Such litigation targeted BBSs operated from home computers. Advances in technology, however, including the use of MP3 format (a compressed digital format) facilitated the piracy, and by 1998 approximately three million sound recordings were believed to be downloaded from the internet daily.

In 1999, such activity reached new heights with the emergence of so-called peer-to-peer (P2P) systems. Like BBS sites, P2P systems allow users to disseminate files stored on their computers to other internet users. Napster was the first and most notorious P2P system, and the courts ultimately shut it down via an injunction. See A & M Records, Inc. v. Napster, Inc., 284 F.3d 1091, 1099 (9th Cir.2002); A & M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1027 (9th Cir. 2001). Other P2P systems have emerged since then, including KaZaA, Grokster, Morpheus, and iMesh. It is this new generation of P2P systems being implicated in the present case.

Unlike earlier centralized P2P file-sharing programs which rely upon a single facility for identifying files, the new generation of P2P file sharing programs allow an internet user to access the files located on other computers through the internet. By utilizing the new technology, an internet user can search directly the MP3 file libraries of other users, with no web site being involved because the transferred files are not stored on the computers of the ISP providing the peer-to-peer users with internet access. See Recording Ind. Ass’n of Am. v. Verizon Internet Servs., Inc., 351 F.3d 1229, 1232 (D.C.Cir.2003), petition for cert. filed, 2004 WL 1175134 (U.S. May 24, 2004) (No. 03-1579). Significant to this case is that Charter’s role in disseminating the allegedly copyright protected material is confined to acting as a conduit in the transfer of files through its network.

Approximately 90% of the content on P2P systems is copyrighted movies, software, images, and music disseminated without authorization. It is estimated more than 2.6 billion allegedly infringing music files are downloaded monthly. This Circuit has never determined whether music downloaded from P2P systems violates the copyright owner’s rights or is a fan-use. The RIAA, to our knowledge, has never prevailed in any infringement actions brought against individual downloaded.

The DMCA has been the principal legislative response to such activities; it was enacted, however, in 1998, prior to the emergence of P2P systems. The DMCA is designed to advance “two important priorities: promoting the continued growth and development of electronic eommerce[ ] and protecting intellectual property rights.” H. Rep. No. 105 — 551(11) at 23 (1998). Title II of the DMCA was the product of lengthy negotiations between copyright owners and internet service providers. It was designed to strike a balance between the interests of ISPs in avoiding liability for infringing.use of their services and the interest of copyright owners in protecting their intellectual property and minimizing online piracy. See discussion below. The scope of the DMCA is a primary issue in this appeal.

The RIAA is a trade association representing record companies which create, manufacture and distribute most of the sound recordings produced and sold in the United’ States. In June 2003, the RIAA announced a nationwide effort to identify and sue individuals committing copyright infringement using P2P systems. In this case, by using' tracking programs, the RIAA ascertained the' internet protocol (IP) addresses and user names (e.g., paulina400@KaZaA) of ninety-three Charter subscribers suspected of trading copyrighted music files. The RIAA logged onto P2P networks and observed certain users offering the copyrighted songs for downloading. It confirmed the infringement by downloading files offered by individuals and verifying such .as being unauthorized copies of copyrighted sound recordings. The RIAA alleges such subscribers collectively made more than 100,000 copyrighted songs available for illegal copying and downloading. Significantly, with an IP address, the RIAA can identify the ISP providing internet access to an alleged infringing party. Only the ISP, however, in this case Charter Communications, Inc. (Charter), can link a particular IP address with an individual’s name and physical address.

In this case, purportedly pursuant to § 512(h) of the DMCA, the RIAA obtained subpoenas from the clerk of the district court requiring Charter to produce the names, physical addresses, telephone numbers, and email addresses of approximately 200 of Charter’s subscribers. On October 3, 2003, Charter filed a motion to quash the subpoenas on several grounds. During a November 17, 2003, hearing, the district court denied Charter’s motion to quash, and ordered Charter to disclose by November 21 the names, addresses, and email addresses of 150 subscribers who had received notice of the subpoenas, and to produce the same information by December 1 for another fifty to seventy subscribers who had not yet received notice. See In Re: Charter Communications, No. 4:03MC273CEJ at 1 (Nov. 17, 2003) (Minute Order directing Charter to comply with the terms of the subpoenas with the exception of providing the telephone numbers of the subscribers).

On November 20, 2003, Charter filed a notice of appeal and a motion to stay the district court’s order. The district court declined to act on the motion to stay its order before the' compliance deadline. Consequently, on the deadline, November 21, 2003, Charter filed with this court an emergency motion to stay order of enforcement of the subpoenas pending appeal, which was denied then.² As a result, Charter turned over the subpoenaed names and addresses of its subscribers to the RIAA. This appeal followed.³

On appeal, Charter contends the district court erred in enforcing the subpoenas because (1) Section 512(h) applies only to ISPs engaged in storing copyrighted material and not to ISPs, such as Charter, engaged solely as a conduit for the transmission of information by others; (2) a judicial subpoena is a court order that must be supported by a case or controversy at the time of its issuance and no case or controversy existed here; (3) the enforcement of a § 512(h) subpoena violates the privacy protections for cable subscribers in the Communications Act of 1934 set forth in 47 U.S.C. § 551(c)(1); and (4) Section 512(h) violates the First Amendment rights of internet users.

II

This court reviews de novo the district court’s rulings on questions of statutory interpretation. Haug v. Bank of Am., N.A., 317 F.3d 832, 835 (8th Cir.2003).

We begin our analysis with the language of the statute itself. United States Sec. & Exch. Comm’n v. Zahareas, 272 F.3d 1102, 1106 (8th Cir.2001). Section 512(h) permits a copyright owner to “request the clerk of any United States district court to issue a subpoena to [an ISP] for identification of an alleged infringer.” Significantly, one of the items to be included in any subpoena request is “a copy of a notification described in subsection [512](c)(3)(A).” 17 U.S.C. § 512(h)(2)(A). This notification is a mandatory part of the subpoena request and a condition precedent to the issuance of a subpoena because the statute further provides, as the “[b]asis for granting subpoena,” that “the notification filed satisf[y] the provisions of subsection (c)(3)(A).” 17 U.S.C. § 512(h)(4). Thus, Charter argues § 512(h) only authorizes copyright owners to obtain and serve a subpoena on an ISP if the ISP is notified in accordance with the provisions of § 512(c)(3)(A). We turn, then, to the notification provision.

The notification provision of § 512(c)(3)(A) is found within one of the four safe harbors created by the statute to protect ISPs from liability for copyright infringement under certain conditions. Each safe harbor applies to a particular ISP function.⁴ The first safe harbor, under § 512(a), limits the liability of ISPs when they do nothing more than transmit, route, or provide connections for copyrighted material — that is, when the ISP is a mere conduit for the transmission. The second safe harbor, under § 512(b), protects ISPs for “system caching,” that is, instances when they provide intermediate and temporary storage of material on a system or network under certain conditions. The third safe harbor, under § 512(c), limits the liability of an ISP for infringing material “residing on [the ISP’s] system or network at the direction of its users.” The fourth safe harbor, under § 512(d), protects an ISP when it merely links users to online locations containing infringing material.

As stated above, the notification provision is found within § 512(c), or the storage-at-the-direction-of-users safe harbor.⁵ The notification provision is also referenced, however, in two other safe harbors — subsections (b) and (d) — the “system caching” and “linking” safe harbors. Each of these three subsections protect an ISP from liability if the ISP “responds expeditiously to remove, or disable access to, the material that is claimed to be infringing upon notification of claimed infringement as described in [§ 512](c)(3).” 17 U.S.C. §§ 512(b)(2)(E), 512(c)(1)(C), and 512(d)(3) (emphasis added). In other words, a specific purpose of the notification provision is to allow an ISP, after notification, the opportunity to remove or disable access to infringing material and thereby protect itself from liability for copyright infringement. Therefore, as one might expect, each safe harbor which covers an ISP function allowing the ISP to remove or disable access to infringing material (i.e., the storage, caching, and linking functions) refers to the notification provision and contains a remove-or-disable-access provision.

As Charter notes, the safe harbor provision implicated here is § 512(a), which limits the liability of an ISP when it merely acts as a conduit for infringing material without storing, caching, or providing links to copyrighted material. Section 512(a) does not reference the notification provision of § 512(c)(3)(A), nor does it contain the remove-or-disable-access provision found in the three safe harbors created for the storage, caching, and linking functions of an ISP. The absence of the remove-or-disable-access provision (and the concomitant notification provision) makes sense where an ISP merely acts as a conduit for infringing material — rather than directly storing, caching, or linking to infringing material — because the ISP has no ability to remove the infringing material from its system or disable access to the infringing material.

Based on this analysis of the statute, Charter argues § 512(h) does not allow a copyright owner to request a subpoena for an ISP which merely acts as a conduit for data transferred between two internet users. Charter avers the text and structure of the DMCA require the ISP to be able both to locate and remove the allegedly infringing material before a subpoena can be issued against it. . Thus, where Charter acted solely as a conduit for the transmission of material by others (its subscribers using P2P file-sharing software to exchange files stored on their personal computers), Charter contends the subpoena was not properly issued. We agree.

The United States Court of Appeals for the District of Columbia Circuit recently considered this identical issue in holding § 512(h) only permits a copyright owner to obtain and serve a subpoena- on an ISP for identifying information about an alleged infringer if the ISP is provided statutory notification under 17 U.S.C. § 512(c)(3)(A), which in turn, requires the ISP to be able to both locate and remove the allegedly infringing material. Verizon, 351 F.3d at 1233-36.

The court held where an ISP performs only the “conduit” functions addresséd in § 512(a), § 512(h) does not authorize the subpoenas because the ISP “can not remove or disable [a requirement of § 512(c)(3)(A)(iii) ] one user’s access to infringing material resident on another user’s computer.” Id. at 1235. The court further concluded the concept of removing or disabling access to particular material could not be equated with the distinct remedy of termination of a subscriber’s account. Id. As to the RIAA’s failure to comply with the requirement of identifying material to be removed or disabled, the court also rejected the RIAA’s argument it had “substantially” met the notification requirements of § 512(c)(3)(A), despite its failure to identify material to be removed or disabled. Id. at 1236. Additionally, the court emphatically rejected the RIAA’s reliance on a broad definition of “service provider” in § 512(k)(l)(B), concluding however broadly that internet service provider may be defined in that section, a subpoena may issue to an ISP only under the prescribed conditions regarding notification set forth in §. 512(c)(3)(A). Id.

The court also analyzed the structure of § 512 as a whole, and in particular the fact that § 512(h) cross references § 512(c)(3), and subsection (c) pertains to the safe harbor for “Information residing on systems or networks at direction of users.” The court concluded “the references to § 512(c)(3)” in subsections (b) through (d) “lead inexorably to the conclusion that § 512(h) is structurally linked to the storage functions of an ISP and not to its transmission functions, such as those listed in § 512(a).” Id. at 1237.

The court further concluded it is the province of Congress, not the courts, to decide whether to rewrite the DMCA “in order to make it fit a new and unforeseen internet architecture” and “accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology.” Id. at 1238 (internal quotations and citations omitted).

We agree with and adopt the reasoning of the United States Court of Appeals for the District of Columbia Circuit in Verizon as it pertains to this statutory issue. Thus, because the parties do not dispute that Charter’s function was limited to acting as a conduit for the allegedly copyright protected material, we agree § 512(h) does not authorize the subpoenas issued here. As a court we are bound to interpret the terms of the statute and not to contort the statute so as to cover the situation presented by this case.

For purposes of this appeal, we do not address the constitutional arguments presented by Charter, but do note this court has some concern with the subpoena mechanism of § 512(h). We comment without deciding that this provision may unconstitutionally invade the power of the judiciary by creating a statutory framework pursuant to which Congress, via statute, compels a clerk of a court to issue a subpoena, thereby invoking the court’s power. Further, we believe Charter has at least a colorable argument that a judicial subpoena is a court order that must be supported by a case or controversy at the time of its issuance. We emphasize, however, for purposes of this appeal we do not reach these issues and have decided this case on the more narrow statutory grounds.

Accordingly, it is hereby ordered the November 17, 2003, order of the United States District Court for the Eastern District of Missouri enforcing various subpoenas for personal information about Charter’s subscribers is hereby vacated. This matter is hereby remanded so the district court may: (1) Order the RIAA to return to Charter any and all information obtained from the subpoenas; (2) Order the RIAA to maintain no record of information derived from the subpoenas; (3) Order the RIAA to make no further use of the subscriber data obtained via the subpoenas; and (d) Grant such other relief not inconsistent with this order the district court deems appropriate in these circumstances.

1 . Charter is a cable company that serves markets throughout the United States. In addition to offering traditional cable television service, it offers broadband internet access.

2 . We note that until the filing of this opinion, there have been no obstacles to prevent the RIAA from making use of the information obtained pursuant to the subpoenas at issue in this case.

3 . This case has wide-reaching ramifications, because as a practical matter, copyright owners cannot deter unlawful peer-to-peer file transfers unless they can learn the identities of persons engaged in that activity. However, organizations such as the RIAA can also employ alternative avenues to seek this information, such as “John Doe” lawsuits. In such lawsuits, many of which are now pending in district courts across the country, organizations such as the RIAA can file a John Doe suit, along with a motion for third-party discovery of the identity of the otherwise anonymous “John Doe” defendant.

4 . A fifth safe harbor, under § 512(e), applies when the ISP is a nonprofit educational institution.

5 . 17 U.S.C. § 512(c)(3)(A), the notification provision, (to which 17 U.S.C § 512(h)(2)(A) cross-references) provides:

Elements of notification.'—

(A) To be effective under this subsection, a notification of claimed infringement must be a written communication ... that includes substantially the following:

(i) A physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.

(ii) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site.

(iii) Identification of die material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material.

(iv) Information reasonably sufficient to permit die service provider to contact the complaining party, such as an address, telephone number, and, if available, an electronic mail address at which the complaining party may be contacted.

(v) A statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.

(vi) A statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.

17 U.S.C. § 512(c)(3)(A) (emphasis added).