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Alliance of Artists & Recording Companies, Inc. v. General Motors LLC

United States District Court, District of Columbia

February 19, 2016

ALLIANCE OF ARTISTS AND RECORDING COMPANIES, INC., Plaintiff,
v.
GENERAL MOTORS COMPANY, et al., Defendants.

MEMORANDUM OPINION

KETANJI BROWN JACKSON United States District Judge.

The Audio Home Recording Act of 1992 (“AHRA”), 17 U.S.C. §§ 1001 et seq., requires manufacturers, importers, and distributers of “digital audio recording devices” (“DARDs”) to incorporate certain copying control technology into their devices and pay a set royalty amount for each device. The AHRA is part of federal copyright law, and a non-profit organization called the Alliance of Artists and Recording Companies (“AARC”) assists the U.S. Copyright Office in enforcing the AHRA’s provisions by, among other things, collecting AHRA royalties and distributing them to featured recording artists and sound recording copyright owners. (See Compl. (“GM Compl.”), ECF No. 1, ¶ 8); see also Justin M. Jacobson, What Is the AARC?, 56 J. Copyright Soc’y U.S.A. 213, 215 (2008). In the instant action, the AARC contends that automobile suppliers DENSO International America, Clarion Corporation of America, and Mitsubishi Electric Automotive America have developed certain audio technology that car manufacturers General Motors Company, Inc., Ford Motor Company, and FCA U.S. (collectively, “Defendants”) have been installing in certain car models since 2008.[1]The AARC believes these audio devices qualify as DARDs for AHRA purposes; its five-count complaint seeks an injunction, a declaratory judgment, and monetary damages, claiming that Defendants should be paying royalties and implementing copying control technology when vehicles equipped with these devices are made and marketed, and that Defendants have violated the AHRA because they have done no such thing to date. (See GM Compl. ¶¶ 52-70; FCA Compl. ¶¶ 53-70.)[2]

Before this Court at present are a motion to dismiss that Ford and Clarion have filed jointly under Federal Rule of Civil Procedure 12(b)(6), and a motion for judgment on the pleadings that General Motors has submitted pursuant to Rule 12(c). (See ECF Nos. 30, 48.) Both dispositive motions make essentially the same argument: that none of the devices at issue, as described in the complaint, satisfies the AHRA’s multi-faceted DARD definition, and thus the statute’s mandated royalty payments and technology limits do not apply. This Court largely agrees with these defendants’ interpretation of the statute for the reasons explained below, but it also concludes that the allegations that the AARC makes regarding the devices at issue are sufficient to survive the Rule 12 motions. Accordingly, and as set forth in the separate order that accompanies this Memorandum Opinion, these motions will be DENIED.

I. BACKGROUND

A. The Audio Home Recording Act Of 1992

In the 1980s, the music industry faced a growing problem in the form of emerging digital technology that allowed users to create multi-generation copies of sound recordings without losing sound quality. This was a new issue for the industry because, with older analog technology, each successive copy of the same sound recording sounded worse; consequently, consumers always had an incentive to purchase the original recording from its manufacturer. See Recording Indus. Ass’n of Am. v. Diamond Multimedia Sys., Inc., 180 F.3d 1072, 1073 (9th Cir. 1999). By contrast, Digital Audio Tape (“DAT”) machines and other new digital recording technology could produce a copy of an original audio recording, then copy that copy of the original, then copy the copy of the copy of the original, and so forth and so on, and the copies sounded just as good as the original recording, leading the music industry to fear that it could lose significant revenue. See H.R. Rep. No. 102-873, pt. 1, at 18 (1992).[3]At the same time, the high-tech manufacturers and users of DAT machines and other digital audio recording technology were becoming increasingly concerned that the production and use of devices that could produce such high-quality copies of protected material would expose them to liability for copyright infringement on a massive scale. See Jacobson, supra, at 213. These various concerns led to protracted negotiations in Congress, which ultimately culminated in the Audio Home Recording Act of 1992 (“AHRA”), 17 U.S.C. § 1001 et seq.

It is well-established that the AHRA was a “grand compromise” between the stakeholders insofar as the statute was designed to address both the serial copying problem that concerned the music industry and the high-tech industry’s fear of widespread copyright infringement liability. Lee A. Hollaar, Legal Protection of Digital Information 150 (2002); see also The Audio Home Recording Act of 1991: Hearing on S. 1623 Before the S. Subcomm. on Patents, Copyrights & Trademarks of the S. Comm. on the Judiciary, 102d Cong. 1 (1991) [hereinafter 1991 Senate Hearing] (statement of Sen. Dennis DeConcini) (“[This bill] represents a historical compromise among opposing segments of the entertainment and electronic industries. As in all such compromises, all parties had to give a little to gain a little.”). Significantly for present purposes, one by-product of the extensive negotiations is the particular and carefully defined scope of the statute: rather than “prohibit[ing] digital serial copying of copyright protected audio recordings” altogether, “the Act [instead] places restrictions only upon a specific type of recording device[, ]” Diamond, 180 F.3d at 1075, and it provides immunity from copyright infringement lawsuits if the manufacturers of those particular devices comply with the statutory restrictions.

To this end, the AHRA contains a lengthy “Definitions” section that prescribes the statute’s reach by laying out the intended meaning of a “digital audio recording device” (a.k.a. DARD), which is the only type of recording device to which the statutory requirements pertain. See 17 U.S.C. § 1001. Then, on the restrictions side of the AHRA balance, the statute imposes two limitations on electronics manufacturers and distributers with respect to the production of DARDs. First, it requires that DARDs be manufactured to “conform to the Serial Copy Management System [or] a system that has the same functional characteristics[, ]” 17 U.S.C. § 1002(a)(1)-(2); that is, DARDs must contain technology that “allows the making of unlimited copies from an original digital recording but prevents any copies being made from those copies.” Hollaar, supra, at 151.[4] Second, every manufacturer or importer of a DARD is required to pay a royalty fee for the manufacture, importation or distribution of each device. See 17 U.S.C. §§ 1003, 1004. The statute also makes clear, on the copyright-protection side of the statutory compromise, that DARD manufacturers who produce and distribute the devices in accordance with these two requirements cannot be sued for copyright infringement based on their manufacture, importation, or distribution of such devices, nor can consumers be sued for noncommercial use of DARDs. See 17 U.S.C. § 1008. However, copyright owners (typically, musicians, producers, and other members of the music industry) are entitled to sue DARD manufacturers and distributors for violations of the AHRA’s requirements. See Id. §§ 1009(a), 1009(d)(1)(A)-(B).

Thus, the AHRA is best characterized as a carefully crafted “legislative solution[], ” S. Rep. No. 102-294, at 31, that seeks to “ensure the right of consumers to make . . . digital audio recordings of copyrighted music for their private, noncommercial use[, ]” and at the same time “provide[] modest compensation to the various elements of the music industry for the digital home recordings of copyrighted music[, ]” all while effectively “prohibit[ing] the digital serial copying of copyrighted music[, ]” id. at 30.

B. The AHRA’s DARD Definition

The instant case involves the remarkably complex question of which audio recording devices qualify as DARDs under the AHRA. As noted, Congress has furnished an answer in the statute itself, but discerning its intended meaning requires navigation of an intricate set of interlocking (and “non-intuitive”) definitions. Hollaar, supra, at 151. The undisputed bird’s-eye view is that any machine for private use that has a recording function that is capable of, and has the primary purpose of, making a “digital audio copied recording” by reproducing a “digital music recording” qualifies as a DARD under the AHRA. See 17 U.S.C. § 1001. But the statute also parses the terms “digital audio copied recording” and “digital music recording”; therefore, with respect to application of the AHRA’s DARD definition, the devil is in the details.

To start, the statute expressly defines a “digital audio recording device” as

any machine or device of a type commonly distributed to individuals for use by individuals, whether or not included with or as part of some other machine or device, the digital recording function of which is designed or marketed for the primary purpose of, and that is capable of, making a digital audio copied recording for private use. . . .

17 U.S.C. § 1001(3) (emphasis added).[5] Put another way, this provision plainly establishes that a DARD is a machine intended for private, individual use that has a digital recording function that is (1) capable of making a digital audio copied recording (or DACR), and (2) designed or marketed for the primary purpose of making a DACR.

The statute also defines a DACR (i.e., the DARD’s output): a DACR is “a reproduction in a digital recording format of a digital musical recording, whether that reproduction is made directly from another digital musical recording or indirectly from a transmission.” Id. § 1001(1) (emphasis added). In other words, a DACR is a “reproduction” of a “digital musical recording” (“DMR”) in a digital recording format.

And, finally, the statute makes clear that the DARD’s input-i.e., the “digital musical recording” (“DMR”) that the DARD reproduces to make a DACR-must be

a material object-
(i) in which are fixed, in a digital recording format, only sounds, and material, statements, or instructions incidental to those fixed sounds, if any, and
(ii) from which the sounds and material can be perceived, reproduced, or otherwise communicated, either directly or with the aid of a machine or device.

Id. § 1001(5)(A). Notably, the statute also (somewhat helpfully) specifies what a DMR is not. It ...


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