UMG v. Grande — Copyright | Outside IP Counsel

The Fifth Circuit held that a broadband provider can be contributorily liable for ignoring 1.3 million piracy notices, then vacated the $46.7 million award over how albums are counted.

For years, internet service providers treated copyright takedown notices as someone else’s problem: forward them, file them, and keep the connection live. In UMG Recordings, Inc. v. Grande Communications Networks, LLC, No. 23-50162 (5th Cir. Oct. 9, 2024), 117 F.4th 314, the Fifth Circuit told a major broadband provider that doing nothing has a price. The court affirmed that Grande could be held contributorily liable for its subscribers’ music piracy after ignoring more than 1.3 million infringement notices—then vacated the jury’s $46.7 million statutory-damages award over how many “works” had actually been infringed. For anyone who runs a network or licenses a catalog, the decision is a map of where conduit liability now begins and ends.

At a glance

Case: UMG Recordings, Inc., et al. v. Grande Communications Networks, LLC, No. 23-50162 (5th Cir. Oct. 9, 2024), 117 F.4th 314.
Court: U.S. Court of Appeals for the Fifth Circuit; opinion by Judge Stephen A. Higginson, joined by Judges Higginbotham and Stewart, on appeal from the Western District of Texas.
Posture: Appeal from a jury verdict and roughly $46.7 million statutory-damages judgment for the plaintiff record labels.
Holding: A jury could find Grande contributorily liable because it knew of specific, repeated infringement and materially contributed by continuing to provide service without taking basic preventive steps; but the statutory-damages award was vacated because the songs on an album count as one work under Section 504(c), and damages were remanded for a new trial.
Significance: Confirms that “material contribution” remains a viable theory of secondary copyright liability against ISPs and clarifies how statutory damages are counted for albums.

The plaintiffs are a coalition of major record labels. Grande is a Texas internet service provider whose subscribers used peer-to-peer networks like BitTorrent to share music. A vendor called Rightscorp monitored those networks and sent Grande more than 1.3 million notices identifying specific subscribers tied to specific infringing files. Grande forwarded essentially none of them and, critically, terminated essentially no one for infringement between 2011 and 2016—even after abandoning the repeat-infringer policy it had nominally used earlier. The labels sued for contributory infringement, a jury found Grande liable for 1,403 sound recordings and found the conduct willful, and it awarded $33,333 per recording, totaling $46,766,200.

Why the safe harbor was already gone

The Digital Millennium Copyright Act’s Section 512 safe harbor can immunize a “mere conduit” ISP from monetary liability, but only if the provider satisfies the statute’s threshold conditions—including that it “has adopted and reasonably implemented” a policy for terminating repeat infringers under Section 512(i). Before trial, the district court held that Grande could not claim the safe harbor because it had no meaningful repeat-infringer policy in place during the relevant period; it had effectively stopped terminating anyone for infringement. Grande did not appeal that ruling. The lesson sits in the procedural background of the whole case: a forwarding-and-filing routine is not a “reasonably implemented” termination policy, and once the safe harbor falls away, ordinary secondary-liability rules govern. The Fifth Circuit therefore decided the appeal on common-law contributory infringement, not on Section 512.

Material contribution survives as a theory

Grande’s central legal argument was that an ISP can be secondarily liable only for inducement—actively encouraging infringement—and not for the looser “material contribution” theory. The Fifth Circuit rejected that. Drawing on the common-law roots of secondary liability and the Supreme Court’s secondary-liability cases, the court held that material contribution remains a valid, independent basis for contributory copyright liability. An ISP that knows of specific, ongoing infringement by identified subscribers and continues to furnish the very service used to infringe—without taking any of the steps available to it—can be found to have materially contributed to that infringement. The court was careful to ground liability in knowledge of specific infringing activity, not in the general awareness that some customers somewhere misuse the internet. The 1.3 million notices, tied to identifiable accounts, supplied that specificity.

Knowledge, inaction, and the limits of “just a conduit”

The opinion’s most quotable move is its treatment of inaction as contribution. Grande argued it was a passive pipe that simply transmitted bits. The court answered that providing continued access to known repeat infringers, while declining to use the tools the provider concededly had, is not passivity—it is a choice that materially furthers the infringement. Importantly, the court did not announce a rule that ISPs must terminate accounts on receipt of notices. It held only that a reasonable jury could find material contribution on these facts, where the provider did essentially nothing for years despite overwhelming, specific notice. The decision thus leaves room for providers to argue, in future cases, that they took reasonable intermediate measures short of termination. What it forecloses is the position that an ISP can ignore specific, repeated, identified infringement indefinitely and still hide behind its status as a conduit.

The damages reversal: an album is one work

The plaintiffs’ victory came with an expensive asterisk. Section 504(c) of the Copyright Act allows statutory damages “for all infringements involved in the action, with respect to any one work,” and provides that “all the parts of a compilation or derivative work constitute one work.” The jury, however, had awarded damages for each of the 1,403 individual sound recordings. The Fifth Circuit held that was error: where recordings were issued as parts of an album, the album is the relevant “work” for statutory-damages purposes, and the plaintiffs cannot multiply the award by treating each track separately. The court declined to follow the “independent economic value” approach some other circuits use to let individual tracks count separately. It vacated the entire award and remanded for a new trial on damages computed on a per-work (album) basis—dramatically shrinking the likely recovery even though liability stands.

Open questions

How much must an ISP do? The court held that doing nothing can be material contribution, but it did not define the floor. Whether throttling, warnings, or graduated responses short of termination suffice remains unsettled.
How specific must notices be? The 1.3 million Rightscorp notices were unusually voluminous and account-specific. Courts have not fixed how granular or reliable notices must be to establish the requisite knowledge.
How will the album rule play out? On remand and elsewhere, parties will fight over which recordings were “issued as part of” an album versus released as standalone works with independent value.

Implications

For internet service providers: A real, working repeat-infringer policy is now a business necessity, not a formality. Forwarding notices without ever acting on specific, repeated infringement invites both loss of the safe harbor and contributory liability.
For rightsholders: Material contribution is alive in the Fifth Circuit. Building a record of specific, account-level notices and provider inaction is the path to liability—but expect the damages to be counted by album, not by track.
For litigators: Plead and prove specific knowledge tied to identifiable subscribers; generalized awareness will not do. And calibrate damages models to Section 504(c)‘s one-work rule from the outset.
For the broader docket: The split with circuits that allow per-track statutory damages, plus the live question of what conduct an ISP must take, makes this an area ripe for further appellate—and possibly Supreme Court—attention.

Frequently asked questions

Did Grande lose its DMCA safe harbor in this appeal? Grande had already lost the safe-harbor defense at the district court, which ruled it could not invoke Section 512 because it had no working repeat-infringer policy during the relevant years. Grande did not challenge that ruling on appeal, so the Fifth Circuit decided liability and damages without the safe harbor in play.

Does an ISP have to terminate a customer’s account to avoid liability? The court did not impose a flat termination rule. It held that knowingly continuing to provide service to subscribers identified as repeat infringers, without taking any available steps to stop the infringement, can be enough material contribution to support contributory liability. What steps suffice will turn on the facts.

Why did the court throw out the $46.7 million damages award? The jury awarded statutory damages per individual song. The Fifth Circuit held that under Section 504(c) the songs released as parts of an album count as one work, so the award had to be vacated and damages retried on a per-album basis.