Michigan court finds that a free stream is not a ‘rent, lend or sale’

August 2016

Internet, recorded music


The Michigan Court of Appeals has confirmed that music service Pandora didn’t violate a 20 year old Michigan privacy law by allegedly disclosing information about users of its free service to Facebook. in a unanimous decision the court said that the state’s Video Privacy Protection Act doesn’t apply when companies stream music to users for free. That law prohibits companies that rent, lend or sell music (as well as books and videos) from disclosing customers’ identities without their consent, upholding U.S. District Court Judge Saundra Brown in Oakland, California who had dismissed the lawsuit, ruling that Michigan’s law doesn’t apply when companies stream tracks. She said the law only applies to companies that lend, rent or sell material.
Michigan resident Peter Deacon had begun the action against Pandora, a potential class-action, saying that Pandora wrongly disclosed his music-listening history to all of his Facebook contacts that also used Pandora. In 2010 Pandora partnered with Facebook for the first version of its “instant personalization” programme which automatically shared Facebook users data with outside companies. People could opt out, but at launch the feature operated by default. Having lost at first instance, Deacon appealed to the 9th Circuit Court of Appeals, who referred the matter to the Michigan Court of Appeals to rule on whether Deacon could proceed against Pandora under the state’s privacy law. The Michigan Court said that Deacon couldn’t show that he either “rented” or “borrowed” the music streams he accessed through Pandora, with Judge Stephen Markman opining for the court “For a listener to constitute a person who ‘rents’ a sound recording, he or she must, at a minimum, provide a payment in exchange for that recording”. Even if Deacon had paid Pandora for a premium membership, he still wouldn’t necessarily be considered a “renter.”
The Court also said that Deacon didn’t “borrow” the streams, because he never “returned” them to the service. “Put simply, the music-streaming program offered by defendant only involved the delivery of a sound recording to the listener; there was no corresponding ‘return’ of a recording or its equivalent from the listener to defendant.”

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