Grooveshark in the dock: the music streaming service versus the record labels

It appears Grooveshark's days are just about numbered. The music sharing service has been dealt what could easily amount to a death blow by a US District Court judge, which found that Grooveshark's own employees personally (and willfully) violated and profited from copyright infringement. It's been a long saga; Grooveshark has faced lawsuit after lawsuit in recent years. It's managed to overcome some by striking deals with publishers, but vengeful music labels haven't given up on sinking the company.

Most recently, Grooveshark had tried to seek protection under the "safe harbor" provision of the Digital Millennium Copyright Act. It took on a Google-like approach when responding to takedown notices by taking down unauthorized files mentioned in those complaints. But US District Judge Thomas Griesa essentially wiped out that possibility in his opinion filed on Monday, and Grooveshark's own employees are to blame. Collectively, they uploaded some 5,977 tracks to the service — without the necessary licensing rights to do so — under the orders of CTO and co-founder Joshua Greenberg. Way back in 2007, Greenberg demanded that his workers help the cause by sharing their own MP3s, obtained from who knows where, on the service.

The streaming music service Grooveshark has been a legal punching bag for almost the entire music industry, but the company has announced an agreement that will address at least one subset of its legal concerns. Grooveshark has signed a settlement and licensing deal with Sony / ATV Music Publishing that will put the legal battle between the two companies to rest, and will also see Sony / ATV's catalog added to Grooveshark's offerings. In a statement, Grooveshark CEO Sam Tarantino said that "We are excited to add Sony / ATV Music's impressive array of songwriters to our catalog further advancing our mission to empower creators with the best audio platform in the world."

Despite the lofty rhetoric, it's the second such deal that Grooveshark has had to strike in recent days. Earlier this month it signed a deal with EMI Music Publishing, staving off breach of contract and copyright violation claims. Grooveshark has drawn the ire of the music industry by — amongst other things — allowing users to upload their own music to share with others, even if it's copyrighted material. Grooveshark does pull files when served with DMCA takedown notices, but the battles have put the company in an increasingly fragile state. With players like Apple and Google getting into the streaming game with licensing agreements already in hand, it's unclear if there's room for a service like Grooveshark in an increasingly crowded marketplace.

Grooveshark, the oft-sued streaming music service, appears to be putting some of its legal troubles behind it. The company is expected to announce, perhaps as early as this week, that it has signed a licensing agreement with EMI Music Publishing after first settling their legal differences. In September, EMI accused Grooveshark of breach of contract and copyright violations.

This is the latest development in Grooveshark's ongoing legal saga with the top record companies. Seemingly every year, we see Grooveshark license music, then stop paying, and then get sued again. The company enables users to post songs that other listeners can access. Often the songs are pirated and the music companies have to ask Grooveshark managers to take them down. The labels resent that.

An important legal protection that defends websites like YouTube from being held liable for user-generated copyright infringement has been called into question by a New York state appellate court. Since the Digital Millennium Copyright Act (DMCA) passed in 1998, companies have been protected under a provision known as "safe harbor" that makes them unaccountable for such content until they becomes aware of it. But now, courts disagree on whether that safe harbor applies to audio recordings created before 1972.

In a case between Universal Music Group and the music streaming service Grooveshark, the court ruled that the DMCA-granted protections do not cover sound recordings that were made before 1972, which as the court points out, includes classics such as The Temptations' 1964 hit "My Girl." However, a court at the federal level determined that safe harbor did apply in such cases, and a separate 2007 federal ruling suggests that the federal court's interpretation of safe harbor probably preempts the state court's decision here, as Forbes points out. Grooveshark believes that these protections are necessary. The company argued that if songs prior to 1972 weren't covered by the DMCA, the safe harbor provision would cease to be effective: companies would become responsible for policing every upload by a user — perhaps a sisyphean task.

After finding itself under fire during a licensing suit back in January, Grooveshark is in trouble with EMI yet again. According to CNET, EMI has filed suit against the music streaming service for its failure to provide sales records and make monthly licensing payments, as outlined by a September 2009 agreement. EMI had actually terminated its contract with Grooveshark in March of this year, but the company continued to distribute the label's music through the service.

Grooveshark previously won a dispute against Universal Music using the DMCA's safe harbor provision — which protects hosting sites from liability for user-uploaded content that violates copyrights — although EMI is confident that it will not be applicable in this case. Grooveshark, it claims, "specifically agreed in the settlement agreement and distribution agreement that it would not permit or allow the exploitation of any EMI recordings unless there was an EMI content agreement in place." The last year has been exceptionally tough for Grooveshark, having also had its app removed from the Google Play store, twice.

A judge has handed controversial music streaming service Grooveshark a major win in a dispute with record label Universal Music, rejecting an argument which would make Grooveshark responsible for determining the copyright status of all pre-1972 recordings. Arguing in a New York court, Universal had attempted to claim that safe harbor provisions in the Digital Millennium Copyright Act (DMCA) do not apply to recordings made before 1972, as the recordings were not covered by federal copyright law at the time of their creation.

It's a flimsy argument — as Techdirt points out, it "failed spectacularly" when EMI attempted to use it against MP3tunes last year. In addition to having its DMCA claims rejected, Universal was slapped down by the judge over attempts to have certain counterclaims by Grooveshark dismissed. The company won a few minor dismissals of similar claims, but the balance of yesterday's ruling is decidedly in Grooveshark's favor.

EMI has terminated its contract with Grooveshark, leaving the music streaming service with an uncertain future without support from any major label and pending lawsuits from all four of them, including EMI. The news of the termination comes by way of CNET, and in a statement Grooveshark confirmed the separation:

EMI, naturally, takes a different view about the money it has been paid to date, alleging in a court case that Grooveshark missed a $100,000 payment and therefore sued to recover the money. With the end of the contract, the streaming music service will need to remove EMI's original recordings from its databases, but since Grooveshark also utilizes user-contributed music, some of EMI's music will likely remain available on the service — it can only be taken down one-by-one via DMCA notices.

More bad news for Grooveshark today: a court in Denmark has ruled that both the streaming music service and its users are infringing the copyright of record labels, resulting in an injunction forcing mobile ISP 3 Denmark to block the site. The lawsuit mirrors the allegations of copyright infringement the service is facing in the US, with Universal, EMI, Sony, and Warner alleging that Grooveshark hosts illegal copies of music and is unresponsive to takedown notices. The scale of the Danish case is broader: the RettighedsAlliancen group which won the injunction represents 30 rights holders in all.

RettighedsAlliancen hopes that the injunction will lead to other ISPs blocking Grooveshark as well. The group sees this alternative method of closing off the site as its only option, calling Grooveshark "completely uncooperative" and saying that its "business model is based on trickery and fraud." For its part, 3 argued that since not all content offered by Grooveshark is offered without permission, the injunction could set a dangerous precedent for filtering legitimate sites.

EMI has just become the latest of four major labels to sue streaming music service Grooveshark. The label had previously sued for copyright infringement, but ended up settling with Grooveshark in 2009 and licensing its music to the service. Now, however, it's saying that Grooveshark has "made not a single royalty payment to EMI, nor provided a single accounting statement." Grooveshark has allegedly estimated its debts at $150,000, but EMI says the actual amount is much higher.

In the last few months, Sony, Warner, and Universal Music have all filed suit against Grooveshark for copyright infringement, and the addition of EMI's suit means Grooveshark may have lost its only major supporter in the industry. Although this is a contract dispute rather than an infringement case, it could still be a major blow, and certainly doesn't inspire confidence that any other label will choose to license with Grooveshark.