Weekend Law: Music Piracy, Drug Boats, Asylum & Texas Maps

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1:14And when losses do happen, The Hartford can pair that risk control work with insurance coverage grounded in underwriting, risk engineering, and claims experience developed over time. Learn more at thehartford.com slash risk mitigation. This coffee shop? Running smooth thanks to Genius. From Global Payments, instant transactions, effortless inventory, and synchronized operations. Big League reliability for any business. That's Genius. This is Bloomberg Law with June Grosso from Bloomberg Radio. The music industry faced off against internet providers at the Supreme Court this week. Over a$1 billion jury verdict against Cox Communications for not shutting down the accounts of customers who'd pirated more than 10 ,000 copyrighted songs by artists like Beyonce and Justin Timberlake.

2:13The lawyers painted very different, bleak pictures of the consequences of a decision against their clients. Joshua Rosencrantz represents the internet provider Cox and Paul Clement represents the record companies. There is no surefire way for an ISP to avoid liability. And the only way it can is to cut off the internet, not just for the accused infringer, but for anyone else who happens to use the same connection. That could be entire towns, universities or hospitals. If Cox is right on the law, then Cox could take tens of thousands of copyright notices and throw them in the trash, and they could have its employees say, F the DMCA.

3:00The issue is whether Internet providers should be held responsible for contributing to copyright infringement when they know their customers are pirating music but don't terminate their Internet access. Several justices appeared skeptical that Cox had done enough to stop piracy and questioned whether a favorable ruling would allow Internet service providers to ignore clear copyright infringement by their users. Here are Justices Sonia Sotomayor and Amy Coney Barrett. You did nothing. And in fact, counselor, your client's sort of laissez-faire attitude towards the respondents is probably what got the jury upset.

3:46What incentive would you have to do anything if you won? If you win and mere knowledge isn't enough, why would you bother to send out any notices in the future? But Justice Samuel Alito expressed concerns about the effect on large institutions like universities or hospitals if an Internet service provider is forced to cut off infringers. What is an ISP supposed to do with a university account that has, let's say, 70 ,000 users? What is the university supposed to do? My guest is intellectual property litigator Terrence Ross, a partner at Katnuchin Rosenman. Terry, will you explain the issue here and the process of policing music piracy?

4:31The issue in the case involves a process by which recording companies track online sharing of musical compositions that they own the copyright in. The process allows them to identify the IP address and the ISP that is providing the service to that IP address. And so the music companies, recording companies regularly, on a daily basis, in fact, send notices of infringement to the ISPs that are providing the Internet service to these infringers. And there are days in which they're sending out 10 ,000 notices to each individual ISP service. And the recording companies finally became fed up that the ISPs were not doing something.

5:22They wanted the ISPs to cut off service to these identified infringers. And the ISPs dragged their heels on doing anything, taking any real concrete action to stop it. And so the recording companies finally sued Cox Cable Company, which is one of the largest ISPs in the nation, alleging that they had engaged in contributory copyright infringement. In its papers, Cox had argued that grandma will be thrown off the Internet because Junior visited and illegally downloaded songs. Did some of the justices seem to pick up on that concern? There was only one justice who seemed to give some credence that and that was Justice Alito.

6:08He was the only justice who really seemed to buy into the position by Cox that it was hesitant to kick people off because of then you can fill in the blank as to what the reason is. They're a grandmother, they're a university, they're a hospital. In fact, the hypothetically posed at oral argument in the Supreme Court was what happens when all you can do is identify that the IP address belongs to the university? Are you going to shut down the entire university? One of those odd hypotheticals that takes the case to the extreme. The facts are actually contra to that. And indeed, none of the other justices seem to buy into that argument.

6:47The reality is that over the period of time issue, Cox had received 163 ,000 notices of infringement and had kicked off of its service only 32 customers. The policy of compliance used by Cox was described in some detail, and it was somewhat laissez-faire, to use the word that one of the justices used to describe it. They had originally started off as saying, well, if we get three notices about a particular user, we're going to tell them we're cutting off their service. That rose gradually over time from being a three-strikes-you're-out policy to being a 13-strikes-and-you're-out policy. And the 13 strikes reset every six months.

7:34So if you didn't get to 13 within a six-month period, you went back to zero. Or if you got kicked off after six months off, you got put back on. They also capped the number of notices that they were accepting from recording companies at 300 a day. And then probably the worst fact of all, which got brought up at the Supreme Court, if you emailed to the people in charge of enforcing copyright policy, in which he said, F the DMCA. Now, the DMCA refers to the Digital Millennium Copyright Act, which is one of the key statutes at issue here, and which requires ISPs to set up a policing mechanism against copyright infringement if they want to claim the safe harbor that is embedded in the Digital Millennium Copyright Act.

8:31In response to that, one of the minions for the head of compliance wrote back saying, well, we're helping law-breaking customers. And there were dozens of emails like this amongst the compliance group at Cox that just manifested a complete disdain for copyright laws, which obviously impacted the jury because the jury below had awarded a billion dollars in damages against Cox. And in the Supreme Court argument, it was clear that outside of Justice Alito, none of the eight other justices were buying what Cox was trying to claim was their reason for not cutting off people that you'd kick grandmas off of the Internet.

9:09The other eight justices just didn't buy it. And it was a loser argument for Cox. So then can you tell where most of the justices do stand? That's always a tough question in this case. I think it's tougher than most. I think outside of Justice Alito, the other eight were just incredibly skeptical of Cox's excuses for allowing this widespread infringement to go on. In the record below, there's apparently one period of time at which 21 % of all traffic on the Cox Internet connection, 21 % involved copyright infringement. And the lawsuit below didn't go after every single mom and pop business or every single college student.

9:50It was targeted only at distributors, not people who were downloading the occasional song, but people who were copying music digitally and distributing it on a mass scale. So there was this enormous skepticism expressed by the justices, except for Justice Alito, that Cox really wasn't fulfilling its obligation and needed to do something differently. Now, on the other hand, there also seemed to be some concern about the size of the jury verdict and whether or not the actions of Cox were sufficient to constitute willful contributory infringement, which is what set them up for much larger scale damages than if this had been found to be just ordinary copyright infringement.

10:42So what's the standard that the justices would use here? Cox contends that under a 2005 Supreme Court ruling, it can't be held liable for contributory infringement unless it affirmatively fostered piracy or clearly intended to promote it. The music companies say it's enough that Cox's new subscribers were using its service to download songs illegally. The case on appeal of the Supreme Court presented two pretty crisp issues for decision. The first issue, which I think is where the real fight is going to be, is whether or not contributory copyright infringement requires some sort of affirmative action by the defendant.

11:27The second question presented for review was whether or not willfulness required some sort of knowledge of customer infringement. Now, the problem with that second question, the willfulness standard, is that Cox had failed to object in the trial court to the instruction that the judge gave to the jury about how to find willfulness. So after the case has finished, all the evidence is submitted, and the attorneys have made their closing argument, and just before the jury goes into the jury room to make a decision, the judge reads to them a series of instructions as to what the law is. And one of those instructions will go something like, Sony Music Corporation here has alleged that the contributor copyright infringement was willful on the part of Cox.

12:14In order for you to find willfulness, you must consider the following factors. And typically, if a party doesn't believe the judge has stated the law correctly to the jury, they get up and they object. And indeed, they don't even have to do it at the time of trial. These jury instructions are sent out to the lawyers while in advance, and you file an objection with a court saying, we object to this, and give the court a chance to refine it, improve it, so that there's no objection. Here, the Cox folks, for whatever reason, failed to object to the willfulness instruction. And that means they waived any objection to willfulness and had really no excuse.

12:51So I just don't see question number two as being resolved in any way in favor of Cox. And indeed, I suspect the court won't reach it so that we will get no further instruction from the Supreme Court on what constitutes willfulness. I think the court is focused really on the position that Cox is arguing that contributory infringement requires some sort of affirmative act. And that, as they phrased it, they can't be a contributory infringer by providing internet service to one of their customers. So then do you think that they'll send it back to the lower court with an instruction? I just don't know what they're going to do here.

13:36I have to be frank. This is one of the more opaque oral arguments I've listened Other commentators have argued that the court might be looking for some sort of middle ground. Indeed, I think it was Justice Sotomayor commented at one point during the argument that the court was being forced to choose between two extreme positions. And in particular, Justice Sotomayor, who was very skeptical of Cox's position, but also didn't quite like the extreme argument being made by Sony Music Corp and the recording company, seemed really perplexed as to what to do, genuinely perplexed. The problem the Supreme Court faces here is that the standard for contributory copyright infringement has been pretty well settled in this court for more than a century.

14:27As early as 1912, there was a case that involved mimeograph machines, if you remember those. They were a pre-Xerox machine way of doing sort of a mass production, mass production being a couple hundred. And there was a case in which a publisher sued a mimeograph company for knowingly selling mimeograph materials to a company that it knew was engaged in infringing copyright at work by using the mimeograph machine. And the standard was set out there and has been repeated over and over since that time, 1912. And the standard is pretty simple. If you provide something that you know is going to be used by a person to commit copyright infringement, you've engaged in contributory infringement.

15:17And the past cases haven't spoken in terms of needing an affirmative act. Although one could argue this did not come up at the Supreme Court hearing that providing the Internet service is an affirmative act. the Cox Company argued in the Supreme Court that that's not an affirmative act, but that's sort of a stretch. In order to try to get around that line of cases, the Cox Company argued that contributory infringement is really akin to aiding and abetting liability in the context of torts and criminal law. And that's a real stretch that I think is just dead wrong. It would give the court a way to get out of this dilemma, but it would mean the court would have to overturn half a dozen cases going back to 1912 for over a century and say, now they're not good law anymore.

16:04I don't see the court doing that here. Do you think we'll see the justices coming up with some sort of middle ground? So it's a shame that Justice Ginsburg is no longer on the court. We've had many conversations about her knowledge of copyright law and her ability to cobble together coalition for positions under the Copyright Act that were actually quite pragmatic and useful. And I just don't see anybody either with that depth of knowledge of copyright law or the ability to do that sort of log rolling on this court. And so I think it's going to be a real struggle for this court to come up with some sort of middle ground, particularly in light of the fact that the law here is just so set for such a long period of time and the sort of odd cases that Cox cited the Supreme Court, including this recent gun distribution case the Supreme Court decided recently where the gun companies were being sued for deaths in Mexico.

16:57And the argument was they were aiding and vetting this criminal activity. And the gun company said, well, we sold the guns to dealers in Texas, not knowing what they were going to do with them. And if anybody's contributed to them, but it's not us. We had no knowledge of it. And that case just doesn't fit here, either legally or factually. And yet Cox sort of bet a lot on that. I mean, it was almost as if there's a, oh, hey, we cite to some case in which the Second Circuit, which everybody believes in on the Supreme Court, that'll get us over the hump. It's just such a stretch that it, in fact, backfires.

17:34One starts to think, well, what's wrong with their case that that's the best they've got? Yeah, gun distribution and pirated music don't seem to equate. Thanks so much, Terry, as always. That's Terrence Ross of Katnuchin Rosenman. The thing about AI for business, it may not automatically fit the way your business works. At IBM, we've seen this firsthand. But by embedding AI across HR, IT, and procurement processes, we've reduced costs by millions, slash repetitive tasks, and freed thousands of hours for strategic work. Now we're helping companies get smarter by putting AI where it actually pays off, deep in the work that moves the business.

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20:07And Douglas Urias Uralana, his wife and child, joined that pool of applicants after fleeing El Salvador in 2021. They claim they were repeatedly threatened by a cartel hitman in a years-long violent vendetta against their extended family. But an immigration judge rejected their bid for asylum, as did the Board of Immigration Appeals, and a federal appeals court deferred to the board's decision. And it appeared during oral arguments this week that the family would not fare much better at the Supreme Court. Several justices from across the ideological spectrum appeared to agree that the board's decision on whether an immigrant faces persecution serious enough to qualify for asylum is a factual inquiry, not a legal one.

20:59And so the Court of Appeals should defer to the Immigration Board's decision. Here are Liberal Justice Elena Kagan and Conservative Justice Samuel Alito. And that's the legal rule. A threat can be persecution, but only if it's menacing enough to cause actual harm. Now, what's going to happen in this case is we're going to have to look at all this evidence, all these facts, and decide whether these threats were indeed that level of menacing. And that sounds like really weighing evidence to me. That sounds really factual. That must add up to more than ordinary harassment, mistreatment, or suffering.

21:40You may have a set of historical facts that are undisputed, but determining whether they add up, whether the totality of those facts satisfies that standard, sure looks to me like primarily a factual question. Joining me is immigration law expert Leon Fresco, a partner at Holland & Knight. Leon, tell us a little about the asylum process. What a person asks for asylum, they have to prove at the end of the day that they have what's called a well-founded fear of future persecution on the basis of their race, religion, political origin, social group. There's a presumption that if you have experienced what's called past persecution, there is a presumption that you will then have a well-founded fear of future persecution.

22:33So what does that mean? That means that people go into immigration court and they explain what happened in their country that caused them to leave. And there's cross-examination and the judge can ask questions. At the end of all of this, there's two determinations. One, did the person experience past persecution? And number two, was it on the basis of one of the protected grounds? so in this supreme court case what happened was there literally was no dispute about the credibility of the facts raised by the foreign national in this case douglas umberto urias oreana who said that he fled el salvador after repeated threats and violence from a hitman linked to a drug lord and he said that the drug lord shot his half brothers and tracked and threatened his family And so there was no dispute about the facts.

23:27There was not a factual issue that was being raised on appeal. Instead, the court said, I'm going to take all of the facts that you've presented today as true. And I'm going to say that they still do not rise to the high level of this word persecution, such that we can say that you experienced past persecution, such that you would get the presumption of future persecution. So now, Mr. Urias-Oriana then says, well, how is that possible? I would like to get review of that. And so when it gets to the First Circuit Court of Appeals, the First Circuit says we're going to defer to the Board of Immigration Appeals, which is the administrative court that decides this issue at the end of the day.

24:14We're going to defer to them and say that even though the facts are not in dispute, we still have to give some deference to their decision in terms of, let's say there's a scale and you're weighing it. how many pebbles go on one scale, how many pebbles go on the other scale, that even that determination gets some deference that the federal courts can't just reweigh the evidence on their end and decide whether the facts that were undisputed in a particular case constituted persecution such that the person should win their asylum case. And the circuit courts of appeals have been split on whether federal courts can review the immigration board's decision from scratch or have to defer to the board.

25:04The Supreme Court then has to decide, okay, what happens in a case like this where there's not a dispute about the actual facts, but there's a dispute about whether the facts, when you weigh them, there's quote-unquote significant enough pebbles on the scale. does the foreign national win or do they lose can we re-weigh that on our own or do we have to give some deference under some standard of deferential review and so the foreign nationals obviously claiming there should be de novo review the court should look at this and say okay were the threats here that were undisputed sufficient to say that that was past persecution and the government says no, no, no, the standard is actually much different and that this is a mixed question of law and fact.

25:55And so you have to treat that with some type of deferential review. And so you had justices like Justice Gortz saying a reasonable fact finder standard as opposed to de novo review and others wanted to weigh it even more deferentially potentially than even that and say that basically if there's substantial evidence to support the determination of the lower administrative court, that's enough. So that would be even a broader deferential standard. And it appears as if really there's not a lot of excitement in the Supreme Court for having a complete de novo review of this process. So the issue is really going to be how much deference is given in these types of cases moving forward.

26:43So Leon, just to clarify, everyone accepts that the facts of the asylum claim are determined by the court below, the immigration court. So the only question is how the federal appellate court is going to weigh those facts? Correct. So what the lower court said in this case was, yes, all these very bad and serious things happen to you. But when we put all those pebbles on the scale, they're not sufficiently weighty enough to actually constitute persecution for the purposes of winning your case. And then the question is, okay, when this gets to the federal court, can they literally reweigh all of that exact evidence and say, no, no, no, those stones do weigh enough to tip the scales in favor of the foreign national?

27:31Or are they stuck with, hey, if this is in any way defensible, we have to keep this decision the way it is. And it seemed like the Supreme Court did want to give more deference than rather reweighing all of the facts in the case, even if they're undisputed to decide if they meet the legal standard of past persecution. If the appeals court can't re-weigh what the lower court decided, it's not much of a review, is it? Correct. I mean, it would only be a review if essentially what happened was somebody goes into immigration court and they say, the government came in and shot me one time in the left arm because I'm a dissident, and then they left.

28:18And then two weeks later, they shot me in the right arm. And then three weeks later, they shot me in the left leg. And they said, do you want this to keep going or are you going to stop being a dissident? And then the immigration judge says, well, that doesn't seem like sufficient persecution. You only got shot three times. Maybe in a case like that, then the court would say, well, there's no way a reasonable fact finder could come to that determination that that wasn't persecution. because then you'd have the sort of reasonable fact finder deference or some other standard like that. It's not never will we review it.

28:54So they're not saying never, but as opposed to a case like this where they're saying, OK, threats, how serious are the threats? Were the threats very serious? They might say, look, this is the kind of case that falls in the gray zone. And when you're in the gray zone, the government wins. I'm curious, what do you think about the threats in this case? do you think they were serious enough for an asylum claim? I think it's really in the gray zone. I think this is the problem when they talk about sort of bad facts make bad law, is this is the exact type of case where one judge would definitely grant asylum 100 out of 100 times, and another judge would never grant asylum 0 out of 100 times, because people just approach these cases with different levels of sympathy and different levels of concern and different standards in their mind of what constitutes persecution.

29:47It really does become problematic in terms of the subjectiveness of the process. But what the Supreme Court is trying to figure out is where does the subjectiveness stop? Does it stop at the Court of Appeals or does it stop at the administrative level? And it seems like they're going to stop it at the administrative level for the most part and not bring in sort of a new antiseptic court of appeals who's just reading a transcript without any other context than deciding is this sufficient persecution. It didn't really seem like any of the Supreme Court justices wanted to do that de novo. I agree.