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Red flag knowledge of infringement under Section 512(c) Digital Millennium Copyright Act is determined by a subjective reasonable standard, the U.S. Court of Appeals for the Second Circuit held April 5, affirming the district court's interpretation that general awareness of infringement cannot trigger an internet service provider's duty to remove content (Viacom International Inc. v. YouTube Inc., 2d Cir. No. 10-3270, 4/5/12).
The court also agreed with the trial court that YouTube's “conscious” knowledge that unauthorized copyrighted material accounted for “significant quantities” of the content on YouTube's servers did not, by itself, create a triable issue of fact as to whether the ISP knew of any particular instances of infringement. However, the court remanded the case after determining that internal emails among YouTube's co-founders, in which they discuss specific infringing clips, could possibly demonstrate red flag knowledge as to the videos identified.
The court also 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.
Another portion of the court's decision, regarding YouTube's right and ability to control the infringing activity on its servers, creates a circuit split with the U.S. Court of Appeals for the Ninth Circuit.
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 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 title 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 the videos they had viewed. According to Viacom, the data was necessary 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 its copyright interest 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).
YouTube moved for summary judgment 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 its 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, and in doing so 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, Viacom International Inc. v. YouTube Inc., 718 F. Supp.2d 514, 95 USPQ2d 1766 (S.D.N.Y. 2010).
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 on Aug. 11, 2010. Numerous amicus briefs were filed on behalf of both parties.
Section 512 (c)(1)(A)(ii) states that an internet service provider's (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.”
Viacom, and those that field briefs in support of the content company, argued that the district court rendered Section 512 (c)(1)(A)(ii) superfluous by holding that the red flag standard is met only 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 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 Jose 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 court 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 court noted that this 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 comports with the U.S. Court of Appeals for the Ninth Circuit's recent decision in UMG Recordings Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022, 101 USPQ2d 1001 (9th Cir. 2011) (245 PTD, 12/21/11).
Shelter Capital, which concerned a video-hosting service, Veoh, that was similar to YouTube,, 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 court here said that its determination also was supported by Capitol Records Inc. v. MP3tunes LLC, 101 USPQ2d 1093 (S.D.N.Y. 2011) (213 PTD, 11/3/11) and Shelter Capital'spredecessor, UMG Recordings Inc. v. Veoh Networks Inc., 665 FSupp2d 1099, 93 USPQ2d 1010 (C.D. Cal. 2009).
The court, in striking a heavy blow to content owners who hoped for an alternative reading of red flag knowledge, 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.”
In a blog post, Public Knowledge's Sherwin Siy expressed his support for this portion of the court's decision.
“Crucially, the Court rejected Viacom's attempt to create a new duty of those hosting content to monitor actively for infringement in order to qualify for the law's safe-harbor provisions,” Siy said. “The Court upheld the need for knowledge of specific instances of infringement in the DMCA, and that a general awareness of possible infringement is not sufficient.”
After determining that the district court identified the correct standard for red flag knowledge, the court considered the red flag evidence that was proffered by Viacom.
The court was not persuaded by figures detailing the extent of copyrighted materials that appeared on YouTube. One survey suggested that between 75 and 80 percent of all content on YouTube's servers contained copyrighted material. Another report, this one authored by one of Google's financial advisors prior to the search engine's purchase of YouTube, claimed that more than 60% of the content on YouTube was copyrighted and that only 10% of this content was authorized. “But such estimates are insufficient, standing alone, to create a triable issue of fact as to whether YouTube” had actual knowledge or red flag awareness of infringement, the court said.
The court did not stop there. It looked at internal emails between YouTube employees that detailed specific instances of infringing videos.
One string of emails from 2007 demonstrated that YouTube was aware that users were searching for YouTube clips of copyrighted Premier League content. One employee instructed his colleagues to keep tabs on how many times users searched for terms such as “soccer,” “football,” and “Premier League” in advance of a potential bid to get right to Premier League content. The same employee instructed colleagues to remove from YouTube's servers all “clearly infringing, official broadcast footage” of certain Premier League teams prior to a meeting with representatives from a number of teams. YouTube never did bid on the rights to Premier League content, but the court noted that much of infringing content allegedly remained on the servers.
In a 2006 report, YouTube's founder, Jawed Karim, noted that, while YouTube was not legally required to monitor content for infringement, “we would benefit from preemptively removing content that is blatantly illegal and likely to attract criticism.” In that report, Karim identified a number of clips that were clearly infringing. The court said that, based on this report, a juror could conclude both that Karim knew of Viacom-owned content on YouTube, and that the content was infringing.
Similarly, a 2005 email exchange between other YouTube co-founders suggested that they were aware of specific instances of infringing content on YouTube, but opted against taking action until they were confronted by rights holders.
“These are not findings of fact since this is an appellate decision, but 'ouch,' ” Michael J. Remington of Drinker Biddle & Reath, Washington, D.C., told BNA. “This also raises the question, how in the world with this evidence could the district court have decided this issue on summary judgment?” Remington added.
Indeed, the court said, “[S]ummary judgment to YouTube on all clips-in-suit, especially in the absence of any detailed examination of the extensive record on summary judgment, was premature.”
However, the court said that it was not clear if any of the clips that were identified in the internal documents are among the clips that are subject to the instant law suit. “Accordingly, we vacate the order granting summary judgment and instruct the District Court to determine on remand whether any specific infringements of which YouTube had knowledge or awareness correspond to the clips-in-suit in these actions.”
Viacom's complaint alleged that YouTube “willfully blinded” itself to specific instances of infringement. Before the court could address the merits of Viacom's claim, on which YouTube was awarded summary judgment by the district court, Cabranes first considered whether the willful blindness doctrine applies to the DMCA. The court concluded that it does, in what it noted was an issue of first impression.
A common law doctrine, the court, quoting United States v. Aina-Marshall, 336 F.3d 167, 170 (2d Cir. 2003), said, “A person is 'willfully blind' or engages in 'conscious avoidance' amounting to knowledge where the person was aware of a high probability of the fact in dispute and consciously avoided confirming that fact.' ”
The court noted that, in Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93, 94 USPQ2d 1188 (2d Cir. 2010), it addressed the doctrine in a trademark infringement context. Though Tiffany ultimately declined to hold eBay liable for willful blindness, it held that a service provider could be liable for it if it “look[ed] the other way” in order to avoid confirming instances of infringement.
More recently, the U.S. Supreme Court recognized the doctrine in a patent infringement case, Global-Tech Appliances Inc. v. SEB S.A., 131 S.Ct. 2060, 98 USPQ2d 1665 (U.S. 2011) (105 PTD, 6/1/11).
After noting that the DMCA does not explicitly mention the doctrine, the court quoted Matar v. Dichter, 563 F.3d 9, 14 (2d Cir. 2009) for the proposition that, “As a general matter, we interpret a statute to abrogate a common law principle only if the statute 'speak[s] directly to the question addressed by the common law.' ”
Analyzing the statute, the court determined that Section 512(m) contained language that was closest in scope to the willful blindness doctrine. 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.” 17 U.S.C. 512(m)(1). Section 512(m) thus explicitly states that the DMCA safe harbor provisions are “incompatible with a broad common law duty to monitor,” the court said. “That fact does not, however, dispose of the abrogation inquiry,” the court said, adding “willful blindness cannot be defined as an affirmative duty to monitor.”
The court thus concluded that Section 512(m) “limits--but does not abrogate--the [willful blindness] doctrine.” As a result, the court said, “[T]he willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.”
On remand, the district court was instructed to consider whether YouTube deliberately failed to confirm specific instances of infringement.
Professor Ralph Oman of George Washington University Law School hailed the decision as one that “makes a major change in the direction of judicial thinking--toward what Congress intended when it enacted the Digital Millennium Copyright Act in 1998.” In a statement to BNA, Oman added, “The technology is available to permit effortless monitoring and control, and Judge Cabranes has nudged the internet giants, gently but firmly, in that direction.”
Section 512(c)(1)(B) 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.”
Viacom argued that the control provision should be interpreted in light of the common law vicarious copyright liability doctrine. Under that doctrine, which was recognized by the Supreme Court in Metro-Goldwyn-Mayer Studios Inc. v. Grokster Ltd., 545 U.S. 913, 75 USPQ2d 1001 (2005), a defendant can be vicariously liable if it profits from another's infringing activity that it had the right and ability to control.
YouTube, on the other hand, argued that a service provider only has the ability to control material of which it is aware. The district court accepted YouTube's argument, holding “the 'right and ability to control' the activity requires knowledge of it, which must be item-specific.”
The court noted that Shelter Capital agreed with this interpretation. Shelter Capitalheld that a service provider cannot exercise control over infringement “until it becomes aware of specific unauthorized material.”
Cabranes said that this interpretation, in effect, renders 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 court said. “No additional service provider would be excluded by § 512(c)(1)(B) that was not already excluded by § 512(c)(1)(A).” Accordingly, the court rejected the district court's interpretation.
Remington applauded the court's focus on the statute as a whole.
“I can understand how you have to be item specific for notice and take-down purposes," Remington said. But by requiring specific knowledge in a control context, “It was fairly clear that [the district court] departed from statutory language.” He added, “I thought this decision did an excellent job of statutory construction by paying careful attention to the statutory intent and the statutory structure.”
The court also rejected Viacom's vicarious liability argument. Under Viacom's reasoning, the court said, any internet service provider that responded to a DMCA take-down notice by removing infringing content, as it is required to do, would “be admitting the 'right and ability to control' the infringing material.” That action, therefore, would both qualify the service provider for protection under Sections 512(c)(1)(A)(iii) & (C), and disqualify the ISP for protection under Section 512(c)(1)(B).
Such a result would make little sense, the court said. Moreover, it said that, if Congress had wanted to import vicarious liability standards into the statute, then it easily could have done so.
“Accordingly, we conclude that the '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 court said, quoting MP3Tunes.
It remanded the issue, and instructed the lower court to consider first whether YouTube could control the infringing activity, and second, if it received a financial benefit from the activity.
The district court also was instructed to further develop the record in regard to whether third-party syndication of videos uploaded to YouTube constitutes storage “at the direction of a user.” Under Section 512(c)(1) only infringement that occurs due to storage that is done on behalf of a user qualifies for safe harbor protection. Clips stored pursuant to a business relationship may not be stored at the direction of a user, the court said. Thus, it asked the district court to determine if any of the clips that are subject to this suit “were in fact syndicated to any other third party.”
Cabranes was joined on the opinion by Judge Debra Ann Livingston. Judge Roger J. Miner was assigned to the case, but died before the case was resolved.
Viacom was represented by Paul M. Smith of Jenner & Block, Washington, D.C. YouTube was represented by Andrew H. Schapiro of Mayer Brown, New York.
The opinion can be found at http://pub.bna.com/ptcj/103270April512.pdf.
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