May 16, 2006 | By Fred von Lohmann

Record Labels Sue XM Radio

As has been widely reported, the four major record labels have filed a copyright infringement suit against XM Radio, based on the recording capabilities included in certain recently-introduced XM receivers, such as the Pioneer Inno and Samsung Helix.

The complaint [200k PDF] makes it clear that the RIAA companies are gunning not just for XM, but for all innovators. Here's a summary of the claims, many of which reach well beyond the borders of established copyright jurisprudence:

  • Count 1: Direct Infringement (Distribution) by "making available and automatically disseminating" sound recordings to subscribers who record them.
  • Count 2: Direct Infringement (Unauthorized DPD delivery) by distributing digital phonorecord deliveries to the public.
  • Count 3: Direct Infringement (Reproduction) by broadcasting to subscribers whose recorders automatically create buffer copies.
  • Count 4: Direct Infringement (Reproduction) by creating ephemeral "transmitter-side" copies beyond the scope of the compulsory license provided by 17 U.S.C. 112(e), both because the ephemeral copies are used for purposes beyond solely enabling public performance and because they are not destroyed every 6 months.
  • Count 5: Inducement by actively marketing and advertising the "librarying" function of Inno receivers and failing to "take readily available steps to prevent infringement."
  • Count 6: Contributory Infringement by providing and activating XM receivers knowing they will be used to create infringing permanent libraries of sound recordings.
  • Count 7: Vicarious Infringement by failing to prevent infringement despite having both legal and practical mechanisms whereby user infringement could be detected and prevented.
  • Count 8: State Law Copyright Infringement (for Pre-1972 Works).
  • Count 9: State Unfair Competition (for Pre-1972 Works).

Journalists covering the parade of copyright lawsuits arising out of new technologies (Napster, Aimster, ReplayTV, MGM v. Grokster, Elektra v. Barker, Perfect 10 v. Google, etc.) often make the mistake of examining only the facts surrounding the individual disputes, rather than recognizing that they represent a coordinated strategic effort by the entertainment industry to change the copyright law jurisprudence that applies to everyone. Court rulings, after all, continue to cast a legal shadow long after the technologies involved have disappeared (just consider the Supreme Court's 1984 Betamax ruling).

Here are a few of the larger issues touched on by this lawsuit:

  • An attack on home taping: In the RIAA's view, home taping is illegal, at least when done with today's digital tools: "The XM+MP3 subscribers are creating unauthorized reproductions of Plaintiffs' copyrighted sound recordings,... and therefore are guilty of direct copyright infringement...." So much for fair use. So much for the AHRA. Sorry Pioneer, Samsung, and all the other innovators out there, but apparently home taping is only legal so long as the RIAA dictates the feature-set of the recorders.
  • Forgetting the AHRA: As XM has made clear in its public statements [PDF], its new receivers have been designed to follow the rules set out in the AHRA, which was passed in 1992 in order to settle the a lawsuit brought by the music industry against Sony's then-new DAT recorders. The law expressly legalized digital audio recorders, and gave music fans the right to engage in home taping (for more on the AHRA as applied to digital radio recorders, see EFF's comments to the FCC on the "audio flag" for HD Radio). According to the RIAA's then-president, Jay Berman, the AHRA "will eliminate the legal uncertainty about home audio taping that has clouded the marketplace," and "will allow consumer electronics manufacturers to introduce new audio technology into the market without fear of infringement lawsuits." In the lawsuit against XM, however, the RIAA companies never mention the AHRA. It's as though it never happened. As though XM hadn't already paid millions in royalties to the RIAA as required by the AHRA (UPDATE: XM has not been specific about how much of the millions have gone to the transmission licenses, and how much for the AHRA device levies, both of which are required). As though music fans don't already enjoy the legal right to make digital recordings off the radio.
  • Transmission + Recording = Distribution: As we've discussed previously, the RIAA has been trying to expand the scope of the "distribution" right on the backs of individual P2P file-sharing defendants in cases like Elektra v. Barker. The goal? To force broadcasters (and others who thought all they were doing was publicly performing music) to pay a second time for distribution licenses. If the RIAA wins on this score, then radio stations and webcasters are all in hot water, too.
  • Inducement isn't just for pirates anymore: In the wake of the Supreme Court's ruling in MGM v. Grokster, EFF warned that the newly minted "inducement" weapon would not be reserved for "bad actors," but would also be leveled against legitimate innovators building the next generation of fair use technologies. Sure enough, the complaint accuses XM of inducement based on the following statements in promotional materials: "Hear It, Click It, Save It!," "[XM] delivers new music to you everyday and lets you choose tracks to create your own custom playlists," "record with the touch of a button," and "store up to 50 hours of XM." Not exactly a pirates "ahoy," is it?
  • Holding design against innovators. The RIAA claims that XM should be held liable for both inducement and vicarious liability because it could have designed its technology differently, an argument familiar from the MGM v. Grokster battle. Of course, in that case even the Department of Justice (see fn.3) rejected the RIAA "you could have designed it differently" argument as baseless. If the RIAA succeeds this time, innovators could face liability whenever a court decides they didn't do "enough" to prevent infringement. The value of "enough," of course, will not be revealed to you until after you spend millions in legal fees and risk losing your company to ruinous statutory damages.
  • Statutory damages as innovation's enemy: As I've pointed out before, a big part of the chilling effect on innovation created by copyright law stems from the thermonuclear effect that statutory damages has in cases involving recording devices. For example, the RIAA is seeking $150,000 in damages for each song recorded by any XM subscriber. The complaint further alleges that XM automatically infringes every song on every channel to which an Inno user is tuned (because the Inno records a live radio buffer, much like TiVo's 30 minute cache, and the RIAA argues that the buffer is an infringing copy). XM broadcasts 160,000 different songs each month. Assuming 20% of the songs each month are different from the last, that works out to roughly 500,000 different songs each year. Assuming Inno users are tuned in to at least half of those songs, that would mean statutory damages of $37.5 billion! This number obviously bears no relationship to the harm suffered by the recording industry (whose entire gross US revenues are less than $13 billion).

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