Capitol Records, LLC v. Escape Media Grp., Inc., 2014 U.S. Dist. LEXIS 183098 (S.D.N.Y. May 28, 2014), adopted, 2015 U.S. Dist. LEXIS 38007 (S.D.N.Y. Mar. 25, 2015):

In 1999, a teenage college dropout finished writing software for an internet service called Napster that would allow people to swap music stored on their computers. Six months after the service was released, 18 record companies filed a lawsuit to shut it down. Since then, content-sharing websites have proliferated. Listening to music obtained free from others over the internet has become increasingly common; so too have lawsuits that pit corporate copyright owners against emergent online service providers in disputes over the use of copyrighted musical works. This is such a lawsuit.

Before the Court is the plaintiff EMI's motion for [*2]  summary judgment on its copyright infringement claims against Escape Media Group, which operates the free music-streaming website Grooveshark.com. Like many recent copyright lawsuits against online service providers, this case turns not on whether Grooveshark exploits EMI's copyrighted works without authorization, but on whether Escape can secure immunity from monetary liability for any infringing activity under the Digital Millennium Copyright Act.

After considering the papers submitted in support of and in opposition to EMI's summary judgment motion, as well as the arguments advanced by the parties at the April 29, 2014 hearing, the Court recommends that EMI's motion for summary judgment be GRANTED IN PART and DENIED IN PART. Specifically, the Court recommends finding that Escape, as a matter of law, is not entitled to an affirmative defense under the Digital Millennium Copyright Act, and that summary judgment should be granted in favor of EMI on its claims for direct infringement of the right of performance under federal law, secondary infringement under federal law for both contributory and vicarious infringement, and direct and secondary infringement under New York common law for [*3]  copyrighted works not covered by the Copyright Act. The Court recommends that EMI's motion be denied with respect to its claim for direct infringement of its right of reproduction.

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In its opposition, Escape objects to the following portions of the declaration of Ellis Horowitz, EMI's expert witness: (1) statements that rely on analyses of Escape's data conducted using Copysense, software created by the company Audible Magic, on the ground that Audible Magic is functioning as an expert witness but was not disclosed properly as such....

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1. EMI's Allegedly Undisclosed Expert Testimony

In support of its summary judgment motion, EMI submits the declaration of its expert witness, Ellis Horowitz, which contains findings based on data analyses Horowitz conducted using Audible Magic software. Escape contends that Audible Magic is functioning as an expert witness whom EMI failed to disclose as required by Rule 26(a)(2). The Court thus must determine initially whether Audible Magic is an expert witness for the purposes of Rule 26(a) disclosures, and, if it is, must then determine if EMI's failure to disclose Audible Magic was either "substantially justified" or "harmless" and thus whether the related testimony should be precluded under [*17]  Rule 37(c)(1).

In his declaration, Horowitz provides "a description of certain data and statistics concerning the Grooveshark system" and opines on "whether certain MP3 files [in Grooveshark's database] embodied sound recordings whose copyrights are owned by EMI."⁵ (Horowitz Decl. ¶¶ 6, 77.) Horowitz states that he identified the recordings embodied in the MP3s and identified the copyright owner of those recordings by using Copysense, content-recognition software developed by Audible Magic. Horowitz explains that Audible Magic's software "is based on recognizing the unique content of an underlying audio work" and creating a "psychoacoustic fingerprint," which is then matched against a "Global Rights Registry Database" to identify the copyright owner. (Id. ¶ 78 (internal quotation marks omitted).) The Global Rights Registry Database is "a large database of sound recording content submitted directly by content owners, including EMI." (Id.; see also AudibleMagic.com, Content ID Databases, www.audiblemagic.com/content-databases/ (last visited May 22, 2014) ("Audible Magic's Music Database is one of the most complete content identification registries in the world, containing recognition signatures for [*18]  tens of millions of titles that are continually submitted by music studios and content owners world-wide.").)⁶ In short, the Horowitz evidence submitted by EMI relies in part on Audible Magic's technology to demonstrate the fact that, and to what extent, EMI content is housed on Escape servers and streamed to Grooveshark users.

5   MP3s are digital music files "created through a process colloquially called 'ripping.' Ripping software allows a computer owner to copy an audio compact disk . . . directly onto a computer's hard drive by compressing the audio information on the CD into the MP3 format. The MP3's compressed format allows for rapid transmission of digital audio files from one computer to another . . . ." A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1011 (9th Cir. 2001).

6   Horowitz cites to the Audible Magic website in paragraph 78 of his declaration. To the extent the website's content is not in the record, the Court takes judicial notice of the information on the website under Federal Rule of Evidence 201 for the purpose of ascertaining the service Audible Magic offers. Cf. Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082, 1084, n.2 (C.D. Cal. 2001) (taking judicial notice of ebay.com as evidence of the "the nature of eBay's business"); Boarding Sch. Review, LLC v. Delta Career Educ. Corp., 11 Civ. 8921 (DAB), 2013 WL 6670584, at *1 n.1 (S.D.N.Y. Mar. 29, 2013) ("The Court generally [*19]  has the discretion to take judicial notice of internet material.").

Audible Magic's software and services involving audio and visual content have been cited and described similarly in several recent cases. See, e.g., UMG Recordings, Inc. v. Shelter Capital Partners LLC, 718 F.3d 1006, 1012 (9th Cir. 2013) ("Audible Magic's technology takes audio 'fingerprints' from video files and compares them to a database of copyrighted content provided by copyright holders. If a user attempts to upload a video that matches a fingerprint from Audible Magic's database of forbidden material, the video never becomes available for viewing."); Arista Records LLC v. Lime Wire LLC, 06 Civ. 05936 (KMW), 2010 WL 10031251, at *6 (S.D.N.Y. Aug. 9, 2010) (defining "Fingerprinting Technology," which is "available from commercial vendors such as Audible Magic," as "the most effective available means of content-recognition filtering based on recognizing the unique content of an underlying audio-visual work and detecting and preventing copying of that content"); Arista Records LLC v. Myxer Inc., 08 Civ 03935 (GAF)(JCX), 2011 WL 11660773, at *5 (C.D. Cal. Apr. 1, 2011) ("By running a sound file through Audible Magic's Copysense software . . ., Myxer can obtain highlevel descriptive information, 'metadata,' about the particular sound recording. This information includes whether the sound recording is [*20]  owned by a particular record company, and whether the copyright owner seeks to have it blocked from Myxer's Website.") (internal citations omitted); Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd., 518 F. Supp. 2d 1197, 1205-06 (C.D. Cal. 2007) (". . . Audible Magic has a database of approximately 6 million acoustical fingerprints of musical sound recordings. . . . Companies such as Audible Magic claim to have a database of file hashes that are known to contain copyrighted content."). Audible Magic's technology is often used by online content providers to filter out infringing content in an attempt to comply with the Copyright Act and the DMCA. See,e.g., id.; Myxer, 2011 WL 11660773, at *5; UMG Recordings, Inc. v. Veoh Networks Inc., 665 F. Supp. 2d 1099, 1103 (C.D. Cal. 2009).

Given the nature of Audible Magic's services and its software Copysense, Audible Magic plainly is not an expert witness here. Contrary to Escape's characterizations, EMI did not "hire" Audible Magic and Audible Magic did not provide "testimony." (Opp'n at 11.) Audible Magic simply created Copysense, the software used by Horowitz to filter Grooveshark's database and obtain the results necessary to formulate his expert opinion. See Fed. R. Evid. 702. There is no authority to support a rule that a party must include the manufacturer of a tool used by its expert in its initial disclosures, nor could there be without, for instance, executives [*21]  of calculator companies being subjected to constant depositions. Cf. Henry v. Champlain Enters., Inc., 288 F. Supp. 2d 202, 220-21 (N.D.N.Y. 2003) (analyzing the reliability of an expert's "methodologies," including "the use of a software program" and the use of specific valuation instruments, but not inquiring into whether the manufacturers of the software or instruments are third-party experts).

Further, even if Escape's characterization of Audible Magic's services in this litigation were accurate, such services would likely "fall[] within the permissible scope of research and data collection done by third-party assistants to experts." Bd. of Trustees of AFTRA Ret. Fund v. JPMorgan Chase Bank, N.A., 09 Civ. 686 (SAS), 2011 WL 6288415, at *10-11 (S.D.N.Y. Dec. 15, 2011); see also Cedar Petrochem., Inc. v. Dongbu Hannong Chem. Co., Ltd., 769 F. Supp. 2d 269, 285 (S.D.N.Y. 2011) (finding expert testimony admissible where "the experts have based their conclusions on reliable results from tests conducted by independent consultants"). Going even further and accepting Escape's assertion that Audible Magic is a "third-party expert," it is still not clear why Escape's objection should be sustained. EMI is not submitting Audible Magic's testimony, but rather Horowitz's expert opinions, which, arguendo, would be found to rely on hearsay evidence from Audible Magic. This would be likely permissible under the Federal [*22]  Rules of Evidence. See United States v. Mejia, 545 F.3d 179, 197 (2d Cir. 2008) ("Under Rule 703 [of the Federal Rules of Evidence], experts can testify to opinions based on inadmissible evidence, including hearsay, if experts in the field reasonably rely on such evidence in forming their opinions.") (internal quotation marks omitted); Century Pac., Inc., 528 F. Supp. 2d at 215.

Finally, Escape fails to show that it suffered any meaningful prejudice from EMI's failure to disclose Audible Magic, regardless of whether such a duty exists. Escape argues that "EMI's failure to disclose Audible Magic's analysis has manifestly prejudiced Escape, as it has prevented Escape from obtaining documents and deposing Audible Magic on a number of topics affecting the reliability of its analysis." (Opp'n at 11.) Yet, Escape does not claim that a single MP3 file is incorrectly identified as an EMI work. Escape submits no evidence regarding its own music library and data to try to dispute the facts related to Horowitz's Audible Magic analyses. Escape's hypothetical and unsubstantiated prejudice is far from adequate to justify preclusion under Rule 37(c)(1), particularly where Escape possesses substantial information that would allow it to determine whether the Audible Magic analyses were reliable, without the need for [*23]  additional depositions and document requests.