On August 22, 2011, Judge William H. Pauley III of the Southern District of New York ruled that cloud-based music storage services are entitled to substantial protection under the Digital Millennium Copyright Act (“DMCA”). (Cloud computing offers computation, storage and other services that do not require end-user knowledge of how the system works, much like the use of electricity in one’s home does not require that a homeowner understand the electrical grid that supplies the electricity.)

Defendant MP3tunes created a system that allowed its users to search and download free MP3s from third-party sites. Its service allowed users to store downloaded music in private accounts and stream it on any device. At the same time, MP3tunes.com enforced policies prohibiting the use of its services by persons who had repeatedly downloaded music unlawfully and uploaded it to their accounts.

Notwithstanding that policy, the EMI Group brought suit because users of MP3tunes.com’s services were, predictably, downloading its music, which was not being offered for free. EMI sent “takedown notices” to MP3tunes.com under OCILLA (the “Online Copyright Infringement Liability Limitation Act”) and alleged that MP3tunes.com was liable for infringing the 472 songs that it failed to remove after receiving the notices. Under OCILLA, that was a given. Notably, though, EMI also sought to impose liability based on the unlawful downloading of files as to which it had never sent takedown notices. EMI alleged that 3,189 sound recordings, 562 musical compositions, and 328 images of album cover art had been infringed and that MP3tunes.com was liable because it was well aware that its services were being used for unlawful purposes.

Rejecting that argument, the court held that MP3tunes.com had no duty to search for instances of copyright infringement: “While a reasonable person might conclude after some investigation that the websites used by MP3tunes executives were not authorized to distribute EMI’s copyrighted works, the DMCA does not place the burden of investigation on the internet service provider.” The court further observed that “[i]f enabling a party to download infringing material was sufficient to create liability, then even search engines like Google or Yahoo! would be without DMCA protection.” Accordingly, MP3tunes.com was liable only for the pirated works it failed to remove after receiving takedown letters. See Capitol Records, Inc. v. MP3tunes, LLC, No. 07 Civ. 9931 (WHP), 2011 WL 366735, 2011 LEXIS 93351 (S.D.N.Y. Aug. 22, 2011).