Court Ruled Grooveshark Employees Responsible of Copyright Infringement

The ad-funded Grooveshark service allows its subscribers to upload music tracks and stream them for free. However, the company has been pursued by the entertainment industry for years under the claims that Grooveshark impinges on copyright only licensing some of the music offered to the listeners.

The online service claims that the “safe harbor” provisions of the Digital Millennium Copyright Act insulate it from the potentially infringing actions of its 30 million subscribers who upload around 15 million files. Grooveshark responds to the takedown requests submitted by the copyright owners much in the same way as YouTube or other user-generated content services.

However, the US judge recently ruled that despite provisions of the DMCA, the online services, as well as its parent company Escape Media Group, was responsible for copyright violation by its employees who were directed to upload almost 6,000 music tracks without permission. The list of the illegal music included Eminem, Green Day, Jay-Z and Madonna’s songs.

The judge rules that each time the service streamed one of the plaintiffs’ songs, Grooveshark directly infringed upon their exclusive performance rights. Both Grooveshark’s CEO and chief technology officer were implicated. According to the court decision, the online service has infringed the rights of 9 record companies. The judge pointed to an internal memo the CEO sent in 2007 to employees where he asked them to “share as much music as possible” from outside the office, trying to help Grooveshark get off the ground.

The court decision was that the Grooveshark chief executive overtly instructed his employees to upload as many files as possible as a condition of their employment, thus engaging in purposeful conduct with intent to foster copyright infringement via the ad-funded service. The judge therefore gave the parties 3 weeks to reach an agreement and stop further copyright violation.

In response, the attorneys representing Grooveshark and its parent company claimed that they respectfully disagree with the court’s decision, and are currently assessing their next steps, considering the possibility of an appeal.

In the meantime, the industry observers point out that this ruling opens the door to a multimillion-dollar damages suit from the record labels. Of course, the entertainment industry is keen to see Grooveshark shut down, claiming that the service is a “linear descendant” of such predecessors as Grokster, LimeWire and Napster – as you remember, all of them have been shutdown over copyright violation.

By the way, this was not the only legal case Grooveshark is being involved into. The company also faces two other copyright lawsuits from the entertainment industry, one of which is a 2010 case concerning music recorded before 1972 – the matter is that this case is covered under New York state law where the DMCA safe-harbor provisions don’t apply