United States District Court, W.D. Texas, Austin Division
REPORT AND RECOMMENDATION OF THE UNITED STATES
W. AUSTIN UNITED STATES MAGISTRATE JUDGE.
HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE
the Court are Defendant Grande Communications Networks
LLC's Motion to Dismiss for Failure to State a Claim
(Dkt. No. 28); Plaintiffs' Response (Dkt. No. 33); and
Grande's Reply (Dkt. No. 37), as well as Patriot Media
Consulting, LLC's Motion to Dismiss for Failure to State
a Claim (Dkt. No. 29); Plaintiff's Response (Dkt. No.
34); and Patriot's Reply (Dkt. No. 38). The District
Court referred the motions to the undersigned Magistrate
Judge for a report and recommendation pursuant to 28 U.S.C.
§636(b) and Rule 1(c) of Appendix C of the Local Rules.
the case is before the Court on a motion to dismiss for
failure to state a claim, the facts set forth here, taken
from Plaintiff's Original Complaint (Dkt. No. 1), are
presumed true. Plaintiffs-who the Court will refer to
collectively as “UMG”-are a collection of record
companies that produce and distribute commercial sound
recordings in the United States. Dkt. No. 1 at ¶ 2. They
seek damages and injunctive relief regarding alleged
infringements of various copyrights they claim to own or have
exclusive rights to. They attach a “a non-exhaustive,
illustrative list” of these recordings to the
Complaint. Id. at ¶¶ 6, 34, 37 &
Exhibit A. Grande is an internet service provider that
provides internet access to subscribers in portions of Texas.
Id. at ¶ 3. UMG alleges that Grande has
received, through UMG's agent Rightscorp, millions of
notices of direct copyright infringement allegedly committed
by Grande subscribers. Id. at ¶¶ 4, 47-49.
UMG complains that these Grande subscribers use peer-to-peer
file sharing applications like BitTorrent to share
copyrighted material without authorization. Id. at
¶¶ 4, 38, 39, 43, 45, 48. UMG alleges that Grande
is secondarily liable for these activities because it
continued to provide the subscribers with internet access
after receiving these notices. Id. at ¶ 56;
see also Dkt. No. 28 at § I.B.
is a management consulting firm which provides certain
management services to Grande. Id. at ¶¶
4, 52. In addition to seeking to hold Grande secondarily
liable for infringement, UMG also sues Patriot, contending
that “Patriot's infringing conduct includes, among
other things, formulating and implementing the business
policies, procedures, and practices that provide repeat
infringers with continued internet service through
Grande.” Id. at ¶ 55.
Grande and Patriot move to dismiss UMG's Complaint for
failure to state a claim. The Court addresses each motion
of the Federal Rules of Civil Procedure “requires more
than labels and conclusions, and a formulaic recitation of
the elements of a cause of action will not do . . . Factual
allegations must be enough to raise a right to relief above
the speculative level.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 555 (2007). In deciding a Rule
12(b)(6) motion to dismiss for failure to state a claim,
“[t]he court accepts all well-pleaded facts as true,
viewing them in the light most favorable to the
[nonmovant].” In re Katrina Canal Breaches
Litig., 495 F.3d 191, 205 (5th Cir. 2007) (internal
quotation marks omitted), cert. denied, 552 U.S.
complaint attacked by a Rule 12(b)(6) motion does not need
detailed factual allegations in order to avoid dismissal, the
plaintiff's factual allegations “must be enough to
raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555. A plaintiff's
obligation “requires more than labels and conclusions,
and a formulaic recitation of the elements of a cause of
action will not do.” Id. The Supreme Court has
explained that a court need not accept as true conclusory
allegations or allegations stating a legal conclusion.
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(“mere conclusions[ ] are not entitled to the
assumption of truth”). A complaint must contain
sufficient factual matter “to state a claim to relief
that is plausible on its face.” Id. (quoting
Twombly, 550 U.S. at 570). “A claim has facial
plausibility when the [nonmovant] pleads factual content that
allows the court to draw the reasonable inference that the
[movant] is liable for the misconduct alleged.”
Id. “The plausibility standard is not akin to
a ‘probability requirement, ' but it asks for more
than a sheer possibility that a defendant has acted
GRANDE'S MOTION TO DISMISS
asserts that UMG's claims for secondary copyright
infringement should be dismissed because: (1) the Complaint
fails to plead any instances of direct copyright
infringement, which is a prerequisite to a claim of secondary
infringement; and (2) providing a “staple article of
commerce” such as internet service cannot give rise to
a claim of secondary copyright infringement. Additionally,
Grande more generally asserts that UMG's claims for
contributory and vicarious liability are insufficiently pled
and fail to state a claim.
Secondary Infringement Claims
are two types of liability for copyright infringement: direct
and secondary. Direct copyright infringement requires proof
that the plaintiff “(1) owns a valid copyright and (2)
the defendant copied constituent elements of the
plaintiff's work that are original.” Baisden v.
I'm Ready Prods., Inc., 693 F.3d 491, 499 (5th Cir.
2012). “Copying” includes infringing on any of
the five exclusive rights set forth in 17 U.S.C. § 106:
the right to reproduce, distribute, publicly display,
perform, or create derivative works of the copyrighted work.
Secondary liability applies when a defendant is held
responsible for a third party's acts of infringement,
even though the defendant herself did not engage in the
infringing activity. See Sony Corp. of Am. v. Universal
City Studios, Inc., 464 U.S. 417, 435 (1984). There are
two types of secondary infringement: contributory and
vicarious. Metro-Goldwyn-Mayer Studios, Inc. v.
Grokster, Ltd., 545 U.S. 913, 930 (2005). Contributory
copyright infringement occurs where a defendant
“intentionally induc[ed] or encourag[ed] direct
infringement.” Id. Vicarious infringement
occurs when a defendant “profits directly from the
infringement and has a right and ability to supervise the
direct infringer, even if the defendant initially lacks
knowledge of the infringement.” Id. at 931
Pleading of Direct Infringement
stated above, direct copyright infringement requires a
plaintiff to allege that “(1) [it] owns a valid
copyright and (2) the defendant copied constituent elements
of the plaintiff's work that are original.”
Baisden, 693 F.3d at 499. Grande argues that UMG
cannot plead a claim for secondary copyright infringement
because they have failed to identify instances of actual
direct infringement-the actual copying of copyrighted
materials by Grande subscribers. There cannot be secondary
infringement without direct infringement. Phoenix
Entm't Partners LLC v. Boyte, 247 F.Supp.3d 791, 799
(S.D. Tex. 2017).
Complaint, UMG states:
The notifications Grande received were based upon a software
system Rightscorp developed and employed. The system
identifies specific actual infringements of various
copyrighted works and the users of BitTorrent networks who
infringe these copyrighted works.
Through this process, Grande has been put on notice and
informed of more than one million infringements, and that
thousands of subscriber accounts have engaged in repeated
acts of copyright infringement. Prior to the filing of this
complaint, Grande received notice that 1, 840 of its
customers had each engaged in infringement at least one
hundred times. At least 456 of Grande's customers had
generated 500 notices of infringement. More than 208
customers each generated at least 1, 000 notices of
infringement. And some of Grande's customers generated
more than 2, 000 notices of infringement each. Because
Rightscorp can only observe a small percentage of the overall
activity of Grande subscribers, upon information and belief,
the infringement Rightscorp reported to Grande likely is
merely a small fraction of the infringing activity occurring
over Grande's network.
Compl., ¶ 48-49. The Complaint furthers states:
As detailed herein, users of the Grande service are engaged
in repeat and pervasive infringement of Plaintiffs'
exclusive rights to reproduce, distribute, and publicly
perform their Copyrighted Sound Recordings.
Compl., ¶ 61.
maintains that despite UMG's assertion that Rightscorp
notified Grande of more than a million acts of direct
infringement, the Rightscorp system is incapable of tracking
or recording instances of actual copyright infringement.
Instead, the Rightscorp system is only capable of detecting
when the copyrighted material is “available for
distribution, ” which Grande asserts is insufficient to
establish that direct infringement has taken place because it
does not show the copyrighted material was ever requested or
downloaded-and therefore copied-by a third party.
further argues that UMG has failed to identify a particular
instance of direct infringement of a particular copyrighted
work, and instead has vaguely alleged Rightscorp identified
millions of instances of infringement. Grande asserts that
this amounts to a general assertion “that infringement
happens on the internet, ” and is insufficient to
withstand dismissal in the absence of a concrete allegation
of direct infringement of one of its copyrights by a third
party. In support of these arguments, Grande relies upon