This week a huge coalition of recording labels headed by the RIAA, IFPI, and BPI, sued YouTube ripping service YouTube-MP3. Today we take a closer look at the lawsuit which was filed against a German company, owned and operated by a German citizen, which could seek damages running into the hundreds of millions of dollars.

A couple of weeks ago, the IFPI announced that the problem of stream-ripping has become so serious that in volume terms it has overtaken downloading from ‘pirate’ sites. For what is essentially a YouTube-powered phenomenon, that was quite a claim.

When the labels publish this kind of information, they usually have an end game in mind. So, thinking ahead, we contacted Philip Matesanz, the usually responsive operator of YouTube-MP3, the world’s largest ripping site. We asked if the labels had been in contact with him. We received no response and the alarm bells began ringing.

This week, all became clear. UMG Recordings, Capitol Records, Warner Bros, Sony Music, Arista Records, Atlantic Records and several others, sued Matesanz and his company PMD Technologie, claiming that his ripping of tracks from YouTube infringed their rights. Today we take a closer look at their lawsuit.

Jurisdiction

Those familiar with YouTube-MP3 will recall that the site is based in Germany and therefore operates under local law. However, the labels have chosen to sue Matesanz and his company in the United States under US law.

They state that their claims arise under federal copyright law and that is appropriate since YouTube-MP3 is “dedicated exclusively to capturing, converting, and copying audio content that is maintained on a U.S.-based website, YouTube.com.”

The labels say that after ripping the content from YouTube, YouTube-MP3 then distributes that content to users in the United States, noting that the site has more users from the US than any other country.

It is worth noting that unlike the Kim Dotcom/Megaupload case, there appears to be no criminal action against YouTube-MP3, only civil litigation.

The allegations against YouTube-MP3

The labels claim that YouTube-MP3 was designed and exists for one reason – to profit from the unauthorized reproduction of their copyrighted music. In carrying this out, the labels say that YouTube-MP3 breaches copyright law in a number of ways.

Direct Copyright Infringement: The labels allege that after ripping content from YouTube, YouTube-MP3 stores the resulting MP3s on its servers in order to service subsequent users more efficiently. This, they say, amounts to the site carrying an illegal library of their content and distributing it in the United States.

Contributory Copyright Infringement: With the allegations of direct infringement in mind, the labels say that YouTube-MP3 has “actual and constructive knowledge” that its users are also committing infringement when they rip content and have it delivered to their machines. Therefore, YouTube-MP3 is liable for user infringements too and at $150,000 per shot, that could get insanely expensive.

Vicarious Copyright Infringement: “Defendants have the right and ability to supervise and control the infringing activities that occur through the use of YTMP3, and at all relevant times have derived a direct financial benefit from the infringement of Plaintiffs’ copyrights. Defendants are therefore vicariously liable for the infringement of Plaintiffs’ copyrighted sound recordings,” the lawsuit reads.

Inducement of Copyright Infringement: Simply put, the labels claim that by providing the ripping and downloading service, YouTube-MP3 encouraged, promoted and assisted the direct infringements of its users. As a result, the site is liable for their actions.

Circumvention of Technological Measures: The labels say that YouTube has technical measures in place to prevent users from downloading music from the site. These are bypassed by YouTube-MP3 in breach of copyright law.

“YTMP3 service circumvents technological measures that YouTube has implemented to effectively control access to and prevent copying of works protected under the Copyright Act, in violation of 17 U.S.C. § 1201(a). More specifically, Defendants’ service descrambles a scrambled work, decrypts an encrypted work, or otherwise avoids, bypasses, removes, deactivates, or impairs a technological measure without the authority of Plaintiffs or YouTube.”

While not as much as the $150,000 in statutory damages available for each instance of willful infringement, circumvention can get expensive too. In this respect, the labels are looking for $2,500 for each act of circumvention and with a reported 60 million visitors each month, there are countless millions of those.

Conclusion

There can be little doubt that given the importance the labels are now placing on stream-ripping, this case against YouTube-MP3 will be vigorously pursued to its conclusion. Whether it will progress to a full trial will remain to be seen but one has to think that barring an extraordinarily spirited Kim Dotcom-style defense, this one is unlikely to end well for YouTube-MP3.