UMG sues MySpace in a no-lose proposition, draws Grokster judge

After its negotiations with MySpace broke down, there was no downside to Universal Music Group suing MySpace for copyright infringement. The suit will be a significant factor in any future negotiations, and can be dismissed down the road without terribly dire consequences if UMG so chooses. Should the suit go forward, it is slated to do so in front of Stephen V. Wilson, the trial judge in MGM v. Grokster.

Last Friday, Universal Music Group filed copyright infringement claims against MySpace, claiming that MySpace and News Corp. are "liable for the direct infringement of [UMG's] copyrights, and for aiding, facilitating, and inducing the infringement of [UMG's] copyrights by countless MySpace users."

Steve O'Hear provides terrific context in the form of a timeline, to which I would add one key footnote:  when filed last week, UMG's complaint was assigned to Judge Stephen V. Wilson:  the trial judge in the MGM v. Grokster litigation.  In September, Judge Wilson applied the Supreme Court's decision in that case to grant summary judgment against defendant StreamCast on theories quite similar to those now being asserted by UMG against MySpace.  (More on Judge Wilson's recent decision from Ars Technica and Cathy Kirkman.)  I think it's safe to say UMG and its lawyers could not be more thrilled with their draw of a judge.

It's a sad reflection on our judicial system and the state of U.S. copyright law — which many of you feel should be rewritten — that there was no strategic downside to UMG filing this action.  In the wake of MGM v. Grokster, it is extraordinarily unlikely these claims would ever be considered purely tactical and frivolous, so as to subject the plaintiffs and their lawyers to Rule 11 sanctions.  Nevertheless, there is no denying the tactical value of the claims to UMG vis à vis MySpace/News Corp.  And virtually all of the potential outcomes are rosy for UMG.  Consider:

  • the lawsuit lets UMG strong-arm the deal it wants = it wins;
  • UMG wins the lawsuit = it wins; or
  • in the unlikely event UMG decides the tide has turned against it in court and it may wind up creating bad (for UMG) precedent concerning the impact of the DMCA safe harbor, or that the marketing/promotional impact of MySpace is too great to try to squelch, it negotiates a dismissal with partial payment of the defendants' attorneys' fees = it wins.
Under any of the foregoing scenarios, this case is little more than a game of high stakes poker.  The way it stands to get really interesting is if UMG ultimately has the hubris and confidence to go to mat on the inevitable DMCA defense.