A federal judge yesterday found Usenet.com liable for just about every copyright infringement claim on the books: direct infringement, inducement of infringement, contributory infringement, and (just for good measure) vicarious infringement. Not content to be loud and proud about its pro-pirate agenda, Usenet.com also resorted to stonewalling legal questionnaires, sending employees to Europe to avoid depositions, wiping hard drives, and failing to turn over e-mail after being sued in 2007 by the music labels.

The recording industry's high-octane litigation campaign has on many occasions suffered from "poor targeting," but it's hard to see any complexities in this case. When Usenet.com employees privately suggested that the service's tag line should be "piracy, porno, and pictures —Usenet," "Usenet is full of music and movies so get your pirate on!," or "Bless the Usenet and all that it steals!," it's clear they knew why people were paying $4.95 to $18.95 a month for the privilege of accessing the newsgroups. And not only did they know, they allegedly took steps to encourage the infringement.

What Usenet.com knew

Usenet.com is a commercial provider of access to the venerable Usenet newsgroups, the most highly-trafficked of which are "binaries" groups used to share music, movies, pictures, etc. There was a time not so many years ago when most ISPs and college campuses provided full access to newsgroups; as binary groups exploded in popularity and bandwidth, use soared and most cracked down, offering only a limited subset of groups or cutting off access altogether. Those who wanted to turn newsgroups into a widespread file sharing mechanism had to resort to paid providers like Usenet.com.

Tinkering with the data was enough to show that the company could exert and was exerting control over the material on its servers, but Usenet.com never got to mount a vigorous DMCA safe harbor defense for an even simpler reason: the judge refused to allow it.

The service might sound a bit like Google—a service that merely provides access to legal and illegal content alike without discrimination or particular intent to traffic in copyright infringement. But that wasn't the case at Usenet.com, as the judge's order indicates. The Usenet.com marketing department tried to target young people who use file-sharing programs and convince them that Usenet.com was "a safe alternative to peer-to-peer file sharing programs they were getting shut down." The website "also had pages devoted to certain popular recording artists and expressly promoted the availability of 'free music' and MP3 files for download."

Usenet.com went so far as to insert meta tags into its website HTML that included terms like "warez" and "kazaa." When a subscriber called technical support after having trouble downloading copyrighted material, "employees did at times recite Defendants' official policy against assisting with potentially infringing conduct," but still "went on to assist the subscriber in any event." Usenet.com tutorials on how to use the service used infringing music files as examples.

Finally, Usenet.com performed its own customer survey which showed that 42 percent of its responding subscribers said the downloading music was a "primary" reason for signing up.

Dropping mines in your own safe harbor



It still might be argued (and Usenet.com did try to argue) that the entire enterprise operated like any user-generated content site. That is, it was users (and not Usenet.com) there were uploading and downloading the infringing files in question in the lawsuit. This principle, in fact, has been crucial to the growth of the Internet in the US over the last decade and is codified in in the law as a "safe harbor" under the Digital Millennium Copyright Act (DMCA).

As we noted when the case first began, this was likely to be the major defense:

One potential roadblock for the RIAA's latest lawsuit may come courtesy of the Digital Millennium Copyright Act. The DMCA's Safe Harbor provision provides protection for ISPs from copyright infringement lawsuits as long as they take down offending material once they are served with a notice of infringement. The biggest question in the trial is whether Usenet.com qualifies for Safe Harbor protection under the DMCA. "Whether the Safe Harbor applies is the central legal question that is going to be raised," EFF senior staff attorney Fred von Lohmann told Ars.

That failed in this case, however, for two reasons. First, the judge noted that Usenet.com was not actually a "passive conduit" through which user information passed without filtering and without control. Usenet.com "took active measures to create servers dedicated to MP3 files and to increase the retention times of newsgroups containing digital music files," noted the judge in his order. Usenet.com also took plenty of steps to control subscriber access to material, including automated filtering and human review to block pornography and block access to certain users.

That tinkering with the data was enough to show that the company could exert and was exerting control over the material on its servers, but Usenet.com never got to mount a vigorous DMCA safe harbor defense for an even simpler reason: the judge refused to allow it.

Safe harbor defense was disallowed after a repeated pattern of evidence spoliation and stonewalling from Usenet.com. When the recording industry tried to do discovery in the case, it received little material. Only after it tracked down a former employee and took testimony from her did the industry find out about all sorts of missing material. A motion to compel production of this evidence was held in October 2008, and for the first time Usenet.com lawyers admitted that they were "in possession of seven computer hard drives that had belonged to Defendants' employees."

Bad news, though—four of the hard drives had been wiped. Later, the lawyers admitted that all seven hard drives had been wiped. Why had they been wiped, and where had they come from? The story changed several times. First, the drives had been found in storage after being purchased blank from eBay and never used. Second, all hard drives had been pulled directly from active employee workstations back in June 2008. Third, the drives were wiped when they were upgraded to Windows Vista in early 2008.

None of this made much sense to the judge, who pointed out that the drives had been "wiped" by special data-destroying programs, not simply had their files deleted, and that this had apparently happened in June 2008, well after the litigation began.

The strange episode of the hard drives also fit with other oddities. Usenet.com fired most of its employees during the lawsuit, then let them take their corporate computers home "without making certain that the material was preserved." Usenet.com sent some of its employees to Europe at corporate expense during the height of the discovery process, then allegedly "attempted to persuade employees to remain out of the jurisdiction for a longer period, illustrating one more in what appears to be a series of bad faith tactics." Two of the employees, after returning home, "allegedly evaded service," and the Usenet.com boss "provided misleading information concerning these witnesses' contact information and employment status."

There's more—much more—and the judge wasn't pleased with any of it. As a sanction, he barred Usenet.com from asserting an affirmative safe harbor defense at trial. Without being able to mount that defense, Usenet.com had no real case to make, and the judge simply issued a summary judgment to the recording industry. An injunction and damages award will be drawn up in the next few weeks.

Steven Marks, General Counsel for the RIAA, said in a statement this morning, "This decision is another example of courts recognizing the value of copyrighted music and taking action against companies and individuals who are engaging in wide scale infringement. We hope that other bad actors who are engaging in similar activity will take note of this decisive opinion."