properly characterized as a gift, both under common law and under the Postal Reorganization
Act.^2931
Augusto brought a counterclaim against UMG under Section 512(f), alleging that UMG
knowingly misrepresented to eBay that Augusto’s auction infringed UMG’s copyrights. The
court rejected this claim because the evidence demonstrated that UMG had a subjective good
faith belief that Augusto was infringing its copyrights. UMG was aware that Augusto had
entered into a consent judgment in a previous case, in which he had admitted that selling
promotional CDs violated the owner’s copyright. Augusto also believed that the license
language on the CDs enabled it to enforce its copyrights against an unauthorized seller of those
CDs. Accordingly, the court granted UMG summary judgment on Augusto’s Section 512(f)
claim.^2932
(viii) Capitol Records v. MP3tunesIn Capital Records, Inc. v. MP3tunes, LLC,^2933 a number of record labels brought
claims for copyright infringement against MP3tunes.com for offering online storage lockers
where users could store illegally downloaded music and against sideload.com, a search engine
that allowed users to search for free music downloads. The plaintiffs sent MP3tunes a DMCA
take-down notice with a representative list of over 350 songs that were copied, performed,
stored, distributed, and made available for download on or by MP3tunes, but also demanded that
MP3tunes take action with respect to all of the plaintiffs’ copyrighted recordings, even if not
included on the representative list. MP3tunes removed the songs identified on the representative
list from its websites, but took no action concerning the broader demand to take down other
copyrighted recordings.^2934
MP3tunes brought a counterclaim under Section 512(f) based on the allegation that five
or more recordings on the take-down notice were authorized by one of the plaintiff record labels
(EMI) for free downloading. The court ruled that MP3tunes was collaterally estopped from
bringing the counterclaim based on an earlier ruling in a separate state litigation between the
parties. MP3tunes then sought to amend its counterclaim to enumerate additional allegations,
including that plaintiff EMI paid third parties to distribute free MP3s over the Internet; at least
six of the plaintiffs’ record label websites distributed songs for free; and EMI engaged in active
marketing of its music directly and through hundreds or thousands of online music partners. The
court denied MP3tunes the ability to amend its counterclaim on three grounds. First, the court
noted, citing the Diebold case above, that a material misrepresentation for purposes of Section
512(f) is one that affected the infringer or service provider’s response to a DMCA letter.
Because MP3tunes removed only the songs on the representative list and did not respond to the
demand that it remove all links to any of the plaintiffs’ copyrighted recordings, the court
(^2931) Id. at 1060-61. The Ninth Circuit affirmed this ruling with respect to the first sale doctrine. See UMG
Recordings, Inc. v. Augusto, 628 F.3d 1175 (9th Cir. 2011).
(^2932) 559 F. Supp. 2d at 1065. The Ninth Circuit did not reach the issue under Section 512(f).
(^2933) 611 F. Supp. 2d 342 (S.D.N.Y. 2009).
(^2934) Id. at 344.