Arista Records, LLC v. Launch Media, Inc., 2009 WL 2568733 (2d. Cir. 2009)

The Second Circuit (Calabresi, Droney, Wesley writing) released a delightfully brief decision on Friday that addressed the definition of an “interactive service” for purposes of 17 U.S.C. 114(d)(3)(C).

Launch Media, Inc. provided an internet radio site that allowed users to create stations from their preferences, such as a genre, artist or song. BMG brought suit alleging that it was entitled to an individual licensing fee, and not just the compulsory license rate set by the Copyright Royalty Board, because the web service was an “interactive service.”

Section 114(j)(7) defines an “interactive service” as a service “that enables a member of the public to receive a transmission of a program specially created for the recipient, or on request, a transmission of a particular sound recording …, which is selected by or on behalf of the recipient.” BMG argued a bright line rule, that “under the DMCA there is no tipping point for the level of influence a user must assert before the program becomes an interactive service-all that matters is that the alleged copyright infringer is “transmi [tting] … a program specially created for” the user.” The Court disagreed:

Justice Oliver Wendell Holmes once wrote that “[a] word is not a crystal, transparent and unchanged, it is the skin of a living thought and may vary greatly in color and content according to the circumstances and the time in which it is used.” Towne v. Eisner, 245 U.S. 418, 425 (1918) (internal citation omitted). Holmes’s observation seems pertinent here. The meaning of the phrase in question must significantly depend on the context in which Congress chose to employ it.

The Second Circuit’s decision was ostensibly based on the theory underlying the structure of 114(j)(7). The Court found that the web service as designed would not provide a market substitute for the purchase of digital downloads.

Based on a review of how LAUNCHcast functions, it is clear that LAUNCHcast does not provide a specially created program within the meaning of § 114(j)(7) because the webcasting service does not provide sufficient control to users such that playlists are so predictable that users will choose to listen to the webcast in lieu of purchasing music, thereby-in the aggregate-diminishing record sales.

First, the rules governing what songs are pooled in the hashtable ensure that the user has almost no ability to choose, let alone predict, which specific songs will be pooled in anticipation for selection to the playlist. . . Second, the selection of songs from the hashtable to be included in the playlist is governed by rules preventing the user’s explicitly rated songs from being anywhere near a majority of the songs on the playlist. . .Finally, after navigating these criteria to pool a hashtable and generate a playlist, LAUNCHcast randomly orders the playlist. This randomization is limited by restrictions on the consecutive play of artists or albums, which further restricts the user’s ability to choose the artists or albums they wish to hear.