Following Remand, District Court Again Says YouTube Protected by DMCA's Safe Harbors

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By Tamlin H. Bason  

 

An internet service provider only forfeits protection under the Digital Millennium Copyright Act if it “influence[s] or participate[s]” in infringement activities perpetrated by its users, the U.S. District Court for the Southern District of New York said April 18 (Viacom International Inc. v. YouTube Inc., S.D.N.Y., No. 1:07-cv-02103; 07-cv-3582, 4/18/13).

The district court determined that YouTube Inc.'s general awareness of infringing clips on its servers did not impose upon the company an affirmative duty to search for and remove infringing material. Thus, the district court for a second time granted YouTube summary judgment in a billion dollar copyright infringement suit brought by Viacom Inc.

An earlier award of summary judgment was overturned by the U.S. Court of Appeals for the Second Circuit. On remand, the district court was instructed to determine either if YouTube was aware of, and failed to remove, any specific infringing clips-in-suit, or if the company intentionally avoided confirming instances of specific infringement. The record shows no instance of YouTube having knowledge and failing to act on any specific instances of infringement, the district court concluded, and thus it said YouTube was protected by Section 512(c) of the DMCA..

Viacom Seeks $1 Billion in Damages

Viacom Inc. is the world's fourth largest media conglomerate, and its assets include extensive holdings in the motion picture, television, and online industries. Viacom's production companies and TV channels include Paramount Pictures Corp., Comedy Central, BET, Spike TV, TV Land, Nickelodeon, MTV, and VH1. YouTube Inc., a subsidiary of Google Inc., operates YouTube, the most popular user-generated video-sharing website.

Viacom alleged that many of the videos hosted on the YouTube website infringed its copyrights. In February 2007, Viacom sent in bulk more than 100,000 notices to YouTube, pursuant to the Online Copyright Infringement Liability Limitation Act, which is part of the Digital Millennium Copyright Act of 1998, 17 U.S.C. §512(c). YouTube took down the videos identified in the notices, but Viacom argued that the presence of so many infringing videos meant that YouTube had failed to act on its own when it had knowledge of massive infringement on its website.

In March 2007, Viacom sued YouTube, alleging copyright infringement. Viacom International Inc. v. YouTube Inc., No. 07-2103 (S.D.N.Y., complaint filed March 13, 2007). The complaint sought damages of $1 billion. YouTube argued that it was shielded from liability as a result of its compliance with the safe harbor provisions of Section 512.

During the discovery process, Viacom asked YouTube to disclose data on YouTube's users and the logs of what videos they had viewed. According to Viacom, the data was necessary in order to show that the infringing videos constituted a significant attraction for YouTube users. In July 2008, YouTube agreed in a stipulation to turn over data regarding viewership of videos, but without identifying data such as user names and internet protocol addresses.

In a parallel case--which the court consolidated with the instant action--the Football Association Premier League Ltd., which operates England's top professional soccer league, and several other copyright holders also sued YouTube, alleging that their copyright interests in broadcasts of sporting events were being infringed on the video-sharing website.Football Association Premier League Ltd. v. YouTube Inc., No. 07-cv-3582 (S.D.N.Y., complaint filed May 4, 2007).

In this case, YouTube moved for summary judgment, asserting that it was shielded from liability in both cases for direct and indirect infringement by the Section 512(c) safe harbor. The safe harbor protects an online service provider from liability for infringement committed by users if it complies with standards that require it to take down infringing videos when it has notice of their presence on their servers.

The copyright owners also moved for partial summary judgment that the safe harbor did not apply because YouTube had actual knowledge of infringement even without notice sent by copyright owners and had failed to act.

In a June 23, 2010, ruling, Judge Louis L. Stanton awarded summary judgment in YouTube's favor. 718 F. Supp. 2d 514, 95 U.S.P.Q.2d 1766 (S.D.N.Y. 2010). In doing so, the district court rejected the copyright owners' argument that YouTube was not protected by the safe harbor because it possessed “[m]ere knowledge of prevalence of such activity in general,” as a result of the general knowledge that users post and watch infringing videos on the YouTube service.

Stanton's opinion relied both on the legislative history of Section 512 and on other cases that had interpreted the DMCA as putting the onus to monitor for copyright infringement squarely on the shoulders of the content owners. The burden to monitor does not shift to the service provider when it becomes aware that its network is being used to host infringing content, Stanton said.

“Mere knowledge of prevalence of such activity in general is not enough,” he said.

Viacom appealed the decision.

Appeals Court Affirms 'Red Flag' Standard

Section 512(c)(1)(A)(ii) of the DMCA states that an ISP's duty to remove infringing content is triggered when the service provider becomes aware of “facts or circumstances from which infringing activity is apparent.” This, the “red flag” provision of the DMCA, is distinct from Section 512(c)(1)(A)(i)'s requirement that an ISP remove material upon receiving “actual knowledge that the material or an activity using the material on the system or network is infringing.”

The Second Circuit agreed that “red flag” knowledge of infringement under Section 512(c) is determined by a subjective reasonableness standard and thus it affirmed the district court's interpretation that general awareness of infringement cannot trigger an internet service provider's duty to remove content. 676 F.3d 19, 102 U.S.P.Q.2d 1283 (2d Cir. 2012).

In so holding, the appeals court rejected Viacom's contention that the district court's interpretation rendered Section 512(c)(1)(A)(ii) superfluous by holding that the red flag standard is only met when the plaintiff can demonstrate that the service provider knew of specific instances of infringement. Knowledge of specific instances of infringement satisfies Section 512(c)(1)(A)(i), and thus, according to Viacom, the red flag standard is rendered meaningless if the same level of knowledge is needed for both Section 512(c)(1)(A)(ii) and Section 512(c)(1)(A)(iii). The appeals court disagreed.

“This argument misconstrues the relationship between 'actual' knowledge and 'red flag' knowledge,” Judge José A. Cabranes said. The term “actual knowledge,” according to the court “is frequently used to denote subjective belief,” whereas the “facts and circumstances” language that is found in Section 512(c)(1)(A)(ii) is used “in discussing an objective reasonableness standard.”

Accordingly, the Second Circuit said, “The difference between actual and red flag knowledge is thus not between specific and generalized knowledge, but instead between a subjective and an objective standard.” It continued:  

In other words, the actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement “objectively” obvious to a reasonable person. The red flag provision, because it incorporates an objective standard, is not swallowed up by the actual knowledge provision under our construction of the § 512(c) safe harbor. Both provisions do independent work, and both apply only to specific instances of infringement.  

 

 

 

The appeals court said that its interpretation was in accord with other court opinions on what constitutes red flag knowledge under the DMCA. Most notably, the court said that its decision comported with the--now withdrawn--U.S. Court of Appeals for the Ninth Circuit's decision in UMG Recordings Inc. v. Shelter Capital Partners L.L.C., 667 F.3d 1022, 101 U.S.P.Q.2d 1001 (9th Cir. 2011) .

Shelter Capital, which concerned Veoh, a video-hosting service that was similar to YouTube's, held that “Veoh's general knowledge that it hosted copyrightable material and that its services could be used for infringement is insufficient to constitute a red flag.”

In addition to Shelter Capital, the Second Circuit said that its interpretation of red flag knowledge was also supported by Capitol Records Inc. v. MP3tunes L.L.C., 101 U.S.P.Q.2d 1093 (S.D.N.Y. 2011), and Shelter Capital'spredecessor, UMG Recordings Inc. v. Veoh Networks Inc., 665 F. Supp. 2d 1099, 93 U.S.P.Q.2d 1010 (C.D. Cal. 2009).

The Second Circuit said, “While we decline to adopt the reasoning of those decisions in toto, we note that no court has embraced the contrary proposition--urged by the plaintiffs--that the red flag provision 'requires less specificity' than the actual knowledge provision.”


   

[T]he governing principle must remain clear: knowledge of the prevalence of infringing activity, and welcoming it, does not itself forfeit the safe harbor. To forfeit that, the provider must influence or participate in the infringement.  

 

 

 

--Judge Louis L. Stanton, S.D.N.Y.

2d Cir. Remands for 'Willful Blindness' Determination

However, although it affirmed the red flag standard, the appeals court remanded for a determination as to whether internal email messages among YouTube's co-founders, in which they discussed specific infringing clips, satisfied the red flag standard.

Moreover, the appeals said that “in appropriate instances” willful blindness can demonstrate knowledge of infringement. Accordingly, on remand the district court was instructed to determine whether YouTube intentionally avoided confirming instances of infringement.

The Second Circuit also criticized the lower court for its statutory construction of Section 512(c)(1)(B). That provision states that a service provider cannot be eligible for safe harbor protections if it “receive[s] a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity.”

The district court, relying on Shelter Capital's interpretation of the statute, held that “the 'right and ability to control' the activity requires knowledge of it, which must be item-specific.”

Cabranes said that this interpretation, in effect, rendered Section 512(c)(1)(A) superfluous.

“Any service provider that has item-specific knowledge of infringing activity and thereby obtains financial benefit would already be excluded from the safe harbor under § 512(c)(1)(A) for having specific knowledge of infringing material and failing to effect expeditious removal,” the appeals court said. “No additional service provider would be excluded by §512(c)(1)(B) that was not already excluded by §512(c)(1)(A).”

On remand, the district court was instructed “to consider in the first instance whether the plaintiffs have adduced sufficient evidence to allow a reasonable jury to conclude that YouTube had the right and ability to control the infringing activity and received a financial benefit directly attributable to that activity.”

Intervening Third Veoh Opinion Erases Circuit Split

The Second Circuit's recognition of the willful blindness doctrine, and its right and ability to control analysis, created an apparent circuit split with the Ninth Circuit's decision in Shelter Capital. There, in addition to determining that a service provider's right ability to control was triggered by specific instances of infringement, the Ninth Circuit had also failed to consider whether the Veoh could be liable under the willful blindness doctrine.

The Ninth Circuit, however, in March withdrew its 2011 Shelter Capital decision and issued a superseding opinion adopting the Second Circuit's reasoning as to both the willful blindness doctrine and a service provider's duties under Section 512(c)(1)(B).UMG Recordings Inc. v. Shelter Capital Partners L.L.C., 2013 BL 67727, 106 U.S.P.Q.2d 1253 (9th Cir. 2013).

No Knowledge of Specific of Infringement

To assess the first issue on remand, whether the record demonstrates that YouTube was aware of specific instances of infringement concerning Viacom clips that are subject to the lawsuit, Stanton asked each party to identify what, precisely, YouTube knew about the infringing nature of each clip-in-suit.

In response, YouTube identified over 60,000 clips that were subject to the suit, but for which it never received DMCA takedown notices.

Viacom said that it lacks the ability to conduct a “clip-by-clip assessment of actual knowledge.” Indeed, due to the sheer volume of material that is uploaded to YouTube on a daily basis, neither party truly has the capacity to determine actual knowledge on a clip-by-clip basis, Viacom maintained. But that is immaterial, Viacom argued, because YouTube is the party claiming that it is protected by the DMCA safe harbor provisions, and thus YouTube must affirmatively demonstrate that it lacked knowledge or awareness that every clip-in-suit was infringing.

“This argument is ingenious, but its foundation is an anachronistic, pre-Digital Millennium Copyright Act …  concept,” the court said. “The Act places the burden of notifying … service providers of infringement upon the copyright owner or his agent.”

The court called Viacom's argument that the volume of the videos in question deprived YouTube of safe harbor protection “extravagant.” The fact that there are so many clips that a service provider will have difficulty determining what is and is not infringing only shows that Congress got it right when it placed the burden on the copyright owner to identify instances of infringement, the court said.

“Plaintiffs' acknowledgement that they lack 'the kind of evidence that would allow a clip-by-clip assessment of actual knowledge' … supplies the answer to [the first issue]: plaintiffs lack proof that YouTube had actual knowledge or awareness of any specific infringements in the clips-in-suit,” the court said.

YouTube Emails Do Not Demonstrate Willful Blindness

The court turned to the second issue, whether YouTube intentionally avoided confirming instances of specific infringement.

Section 512(m) states that safe harbor protection cannot hinge on “a service provider monitoring its service or affirmatively seeking facts indicating infringing activity, except to the extent consistent with a standard technical measure complying with the provisions of subsection.” The Second Circuit determined that this language “limits--but does not abrogate--the [willful blindness] doctrine.”

The appeals court determined that the common law willful blindness doctrine “may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.”


   

“I was not aware of the fact that the DMCA required the provider to 'influence or participate in the infringement' ” in order to lose safe harbor protection.  

 

 

--Michael J. Remington, Drinker Biddle & Reath

Both the Second Circuit's decision in this dispute, and the Ninth Circuit in its superseding Shelter Capital decision, make clear that willful blindness can deprive a service provider of safe harbor protection only if it knows of, and does nothing about, specific instances of infringement, the court said.

Applying that standard here, the district court noted that in none of the internal YouTube documents that Viacom proffered as proof of the service provider's willful blindness did YouTube executives discuss specific instances of infringement.

“There is no showing of willful blindness to specific infringements of clips-in-suit,” the court said.

'Something More' Lacking in This Case

After rejecting the district court's interpretation of Section 512(c)(1)(B), the Second Circuit quoted MP3Tunes for the proposition that, “[T]he 'right and ability to control' infringing activity under §512(c)(1)(B) 'requires something more than the ability to remove or block access to materials posted on a service provider's website.' ”

The Second Circuit noted that in only one case has a service provider been deemed to have had the right and ability to control under Section 512(c)(1)(B). In that case, Perfect 10 Inc. v. Cybernet Ventures Inc., 213 F. Supp. 2d 1146, 60 U.S.P.Q.2d 1879 (C.D. Cal. 2002), the service provider instituted a thorough monitoring program, prohibited certain content from being uploaded, and blocked users that failed to comply with its instructions.

The district court also found instructive Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 545 U.S. 913, 75 USPQ2d 1001 (2005), where the Supreme Court said a defendant can be vicariously liable if it profits from another's infringing activity that it had the right and ability to control.

These cases make clear that a service provider's participation in, or profit from, its users' infringing activities can satisfy the “something more” requirement, the court said.  

But the governing principle must remain clear: knowledge of the prevalence of infringing activity, and welcoming it, does not itself forfeit the safe harbor. To forfeit that, the provider must influence or participate in the infringement.  

 

 

Viacom argued that YouTube's willingness to allow infringing content on its servers, and its “ultimate” control over its website, constitute the “something more” required under Section 512(c)(1)(B).

Viacom's latter argument, that YouTube has editorial control of its site, is in reference to the fact that when YouTube launched it proactively removed certain infringing content, such as full-length feature films and TV episodes. Moreover, YouTube continues to monitor its servers to make sure that certain material, such as pornography, is removed. Thus, YouTube could monitor its servers for any and all infringing copyrighted content, Viacom argued.

The court noted that YouTube has since changed its policy of proactively removing potentially infringing content and it now relies on takedown notices from content providers to alert it to instances of infringement. The also noted that YouTube has streamlined the takedown process and content providers such as Viacom can now use YouTube's content ID program to automatically block infringing clips from being uploaded to YouTube's servers in certain circumstances.

The changes in its copyright policies were mere business decisions on YouTube's part, the court said. In any event, by changing its procedures and shifting the burden onto content owners YouTube was doing no more than what was envisioned under the DMCA, the court said.

Are Safe Harbors Too Broad?

Michael J. Remington of Drinker Biddle & Reath, Washington, D.C., told BNA that judicial interpretations of the DMCA's safe harbor provisions make it challenging for content owners to protect their rights in the digital arena.

Congress may not have intended to create such broad protection for service providers, he said. For instance, “I was not aware of the fact that the DMCA required the provider to 'influence or participate in the infringement' ” in order to lose safe harbor protection, Remington said, quoting the district court.

Kent Walker, general counsel of Google Inc., said in a statement, “The court correctly rejected Viacom's lawsuit against YouTube, reaffirming that Congress got it right when it comes to copyright on the Internet.”

Viacom, however, vowed to appeal. “This ruling ignores the opinions of the higher courts and completely disregards the rights of creative artists,” the company said in a statement posted to its blog. “We continue to believe that a jury should weigh the facts of this case and the overwhelming evidence that YouTube willfully infringed on our rights, and we intend to appeal the decision,” Viacom said.

Remington said that he too was surprised that after the Second Circuit remanded on numerous issues, the district court once again issued summary judgment.

“It is surprising to me that there is no genuine dispute as to any material fact in this case,” Remington said. “In fact, it would seem to me that there is a plethora of material facts of substance that are in dispute.”

“We will just have to see what the Second Circuit thinks about whether the district court did what it was asked to do,” Remington said.

Viacom was represented by Amy L. Tenney of Jenner & Block, Washington, D.C. YouTube was represented by A. John P. Mancini of Mayer Brown, New York.