MP3Tunes Founder|Faces Revived Claims

MANHATTAN (CN) — Already slapped with a jury's $12.2 million tab over his defunct site MP3tunes, founder Michael Robertson must now face fresh claims by music companies that sued him, the Second Circuit ruled.

When it first launched in 2005, MP3tunes offered users a virtual locker to store their private music collections.

The company came under withering attack from record companies, with EMI spearheading a lawsuit along with 14 other music publishers for copyright violations two years later.

MP3tunes folded in 2012, but its legal headaches continued to multiply.

In 2014, a federal jury reached a roughly $48 million verdict for the record companies, including $7.5 million in punitive damages against Robertson.

U.S. District Judge William Pauley III later reduced the award.

On Tuesday, the Second Circuit unanimously upheld that ruling, but it overturned Pauley's pre-trial orders that had cleared Robertson of certain liabilities.

Writing for the three-judge panel, U.S. Circuit Judge Raymond Lohier found that Pauley inappropriately granted MP3tunes safe-harbor protection under the Digital Millennium Copyright Act by applying too narrow a definition of a "repeat infringer."

"To show that it reasonably implemented such a policy, MP3tunes proffered evidence at the summary judgment stage that it terminated 153 users who shared locker passwords," the 50-page ruling states. "In response, though, the plaintiffs demonstrated that MP3tunes did not even try to connect known infringing activity of which it became aware through takedown notices to users who repeatedly created links to that infringing content in the sideload.com index of who copied files from those links."

Pauley believed that MP3tunes had no responsibility to do this because the DMCA's safe-harbor provision specifies that internet service providers, or ISPs, do not have to monitor their users for violations.

However, the Second Circuit found that "repeat infringement" did not mean "willful infringement," but referred to those who "repeatedly or flagrantly abuse their access to the internet through disrespect of the intellectual property rights of others."

"A jury could reasonably infer from that evidence that MP3tunes actually knew of specific repeat infringers and failed to take action," the opinion states.

The Second Circuit also revived infringement claims involving pre-2007 MP3s and Beatles songs.

Attorney Andrew Bart, representing the record companies for Jenner & Block, celebrated the ruling in a statement.

"We are gratified the court reinstated the jury's verdict finding the defendants were willfully blind to the rampant infringement on their website," he said. "Significantly, the court agreed with our position that an ISP forfeits its DMCA safe harbor protections when it is willfully blind to repeat infringement, including by failing to track users who upload or copy infringing files identified on takedown notices."

Robertson's attorney Ira Sacks of the Manhattan-based firm Akerman LLP declined to comment, but he revealed that his client is considering further appeal en banc or before the U.S. Supreme Court.

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