BY:
Neil J. Rosini, Michael I. Rudell(Originally published in the Entertainment Law column in the New York Law Journal on Friday, April 27, 2012)
In the ongoing battle between copyright rights holders and online content providers who make available others’ copyrighted works without a license, the Second Circuit Court of Appeals recently rendered a decision in a closely-watched litigation between Viacom and YouTube.[1] The Court was required to interpret one of the safe harbor defenses from the 1998 Digital Millennium Copyright Act (“DMCA”) in light of YouTube’s activities during the period from 2005, the year YouTube was launched, through 2008. Neither side emerged triumphant.
Civil suits that vanquished Aimster, Grokster and others have not restored exclusive online control to rights holders over their works, and one reason is the safe harbor defense for “service providers” afforded by the DMCA. When the defense applies, the defendant is protected from monetary claims for direct copyright infringement and secondary infringement (vicarious, contributory, and inducement liability). Its shelter is not available to everyone, however. The DMCA was no help to Aimster and Grokster because the former invited users to infringe repeatedly and disabled itself from doing anything to stop it,[2] and the latter similarly partook of “purposeful, culpable expression and conduct.”[3]
In the YouTube decision, the Court addressed the threshold question of whether the DMCA safe harbor would avail YouTube, without reaching the merits of “affirmative claims” of direct and secondary infringement. The District Court had granted YouTube summary judgment in 2010, holding that the DMCA protected its unlicensed use of about 79,000 “clips-in-issue,” including content from Family Guy, South Park, MTV Cribs, Daily Show, and Reno 911. The Second Circuit did not hold that the safe harbor was beyond YouTube’s reach and rejected an interpretation that would have narrowed its protection considerably. But it vacated the grant of summary judgment and remanded the case for further proceedings.
In this article, we will review the details of that safe harbor and why the Court decided that a trier of fact might deny its protection to YouTube. Lastly, we will touch upon the “content management” options that YouTube presents to rights holders today.
The Safe Harbor
Section 512 of the DMCA offers protection to “service providers” against liability for copyright infringement through four safe harbors.[4] Each comes with a set of conditions. The only safe harbor in issue in YouTube[5] covers claims that arise “by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider,” which can cover consumer uploads. To obtain its benefit, a service provider must satisfy various conditions of eligibility including three that relate to knowledge and awareness:
(i) the service provider must “not have actual knowledge that the material or an activity using the material … is infringing”;
(ii) “in the absence of such actual knowledge, [the service provider must not be] … aware of facts or circumstances from which infringing activity is apparent” (sometimes referred to as “red flag” awareness); and
(iii) “upon obtaining such knowledge or awareness, [the service provider must act] … expeditiously to remove, or disable access to, the material.”
Further conditions also apply: the service provider cannot “receive 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.” (Emphases added.)
The service provider does not lose safe harbor protection if it fails to monitor its service for infringements or affirmatively seek facts indicating infringing activity, “except to the extent consistent with … standard technical measure[s],” which a service provider must accommodate to identify or protect copyrighted works. Other conditions also apply, such as having a policy of banishing repeat infringers from the service and responding “expeditiously” to notices from rights holders who demand a takedown of copyrighted works (in accordance with a detailed scheme).
The DMCA does not define “actual knowledge” or explain the elements of red flag awareness or its interplay with the reservation of protection for those who do not affirmatively look for infringements. Nor does it explicate “the right and ability to control” infringing activity, or the outer bounds of “storage at the direction of a user.” In YouTube, the Second Circuit considered the meaning of each of these key phrases in the context of YouTube’s activities.
Specific Knowledge or Awareness
The Court described YouTube’s “basic function” as “permit[ting] users to ‘upload’ and view video clips free of charge.” Each upload “triggers a series of automated software functions.” First, exact copies are made in the original format of the upload; additional copies in “Flash” format are made in a process known as “transcoding,” which makes it available for viewing by most users. The system then allows users to access the video by streaming in response to a playback request. A computer algorithm also identifies and displays links to “related” clips.
In its start-up days, YouTube was not yet the utilitarian source of all things audiovisual that it is today and employees evidently associated the availability of unlicensed copyrighted content with enhanced value. A July, 2005 email advised rejection of Bud Light commercials; but a reply showed that many had been “added back.” In August, 2005, an internal email urged colleagues to “start being diligent about rejecting copyrighted/inappropriate content,” referring to a particular CNN clip. In response, an employee suggested that if the clip were left up, it would take weeks before a takedown letter would arrive, after which the clip could be removed. A March 2006 report stated that “[a]s of today[,] episodes and clips of …well-known shows can still be found [on YouTube],” listing six of them. The report opined that YouTube would benefit by removing “content that is blatantly illegal and likely to attract criticism,” but apparently deferred that removal pending “a more thorough analysis.”
Also, internal YouTube communications from 2007 included a request for the number of daily searches relating to copyrighted soccer league content, in preparation for a bid to obtain rights to that content. Another note requested that “clearly infringing, official broadcast footage” from soccer league clubs be taken down, but the content allegedly remained.
In addition, evidence showed that YouTube employees “conducted website surveys and estimated that 75-80% of all YouTube streams contained copyrighted material.” Credit Suisse, as financial advisor to Google (which acquired YouTube in 2006), allegedly estimated that more than 60% of YouTube’s content was “premium” copyrighted content and only 10% of that premium content was authorized.
The Second Circuit affirmed the District Court’s holding that “actual knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement will disqualify a service provider from the safe harbor.” (Emphasis added) The Court noted that a service provider could not “act[] expeditiously to remove, or disable access to the material” – as the statute requires for both actual knowledge (based on subjective belief) and red flag awareness (based on objective reasonableness) – without knowing of specific and identifiable infringements. It rejected the plaintiffs’ argument that the red flag provision requires less specificity than the actual knowledge provision.
But the Court disagreed with the District Court’s holding that YouTube lacked specific actual knowledge or red flag awareness as a matter of law. Although the surveys and estimates of infringing content cited by the plaintiffs were insufficient by themselves to create a triable issue, the internal YouTube communications that referred to particular clips or groups of clips could create such an issue. The next question, however, was whether the clips mentioned in the internal YouTube emails were among the 79,000 “clips-in-suit.” The answer was “unclear” and the Court remanded the issue to the District Court.
Whatever the answer to that question, the Court next raised a potentially more difficult issue from YouTube’s perspective: could specific knowledge or awareness alternatively be proved by a showing of common law “willful blindness”—through which a person is “aware of a high probability of the fact in dispute and consciously avoided confirming that fact”? As a matter of first impression, the Court answered affirmatively. Even though “safe harbor protection cannot be conditioned on affirmative monitoring,” the “willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.” Whether or not the defendants had made a “deliberate effort to avoid guilty knowledge” (quoting the Aimster decision[6]) was another fact issue remanded to the District Court.[7]
Control and Benefit
As noted above, in addition to passing the knowledge/awareness eligibility test for the “storing” safe harbor, a service provider must “not receive 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 held that the right and ability to control an infringing activity required “item-specific” knowledge, and the Ninth Circuit agrees.[8] But the Second Circuit rejected this construction. Nor did the Court accept the plaintiffs’ argument that the DMCA’s control provision “codifies the common law doctrine of vicarious copyright liability” under which the “ability to block infringers’ access to a particular environment for any reason whatsoever is evidence of the right and ability to supervise.” (Emphasis added.) If that were so, the DMCA would not presume that service providers have the ability to block access in the section relating to takedown notices.
Accordingly, the Court concluded that “something more than the ability to remove or block access to materials” was required to establish the “right and ability to control” infringing activity. What was that “something more”? The Court acknowledged this to be a difficult question and suggested that exertion of “substantial influence on the activities of users” (even without “acquiring knowledge of specific infringing activity”) might be the key. The District Court was left to consider whether a reasonable jury could conclude that YouTube had the right and ability to control the infringing activity and received a financial benefit directly attributable to it.
Storage
The Court next considered a more fundamental question than the eligibility tests: the meaning of “storage at the direction of a user,” which describes the activity that the safe harbor is intended to defend. The Court upheld the District Court’s holding that the conversion or transcoding of videos “into a standard display format”; the “playback of videos on ‘watch’ pages”; and the function that automatically presents links to “related videos,” all fell within the bounds of “storage at the direction of a user.”
In reaching this result, the Court noted that the storage safe harbor lacked a limitation on the ability of a service provider to modify user-submitted material, which applies to a different safe harbor. Accordingly, the safe harbor for storage is meant to cover more than “mere electronic storage lockers.” Rather, it extends to software functions performed “for the purpose of facilitating access to user-stored material,” such as transcoding, playback, and the indexing and display of related videos.
A fourth software function – “third-party syndication” of manually selected videos to Verizon Wireless and other companies – was not deemed necessarily to fit within the bounds of the safe harbor. But because it again was unclear whether any of the “clips-in-suit” had been used for third party syndication, the Court also remanded that issue for fact-finding.[9]
Today: Content ID
YouTube’s current content management practices – which need to accommodate copyrighted material intentionally uploaded by copyright rights holders as well as the unauthorized kind — are not at issue in the ongoing YouTube litigation. A system known as Content ID gives copyright owners a means of combating unauthorized uploads and playbacks without having to send a limitless series of takedown notices. The burden of dealing with infringing material, however, still largely falls on the rights holder.
Content ID requires rights holders to deliver reference files to YouTube with their content, accompanied by descriptive metadata and instructions as to what they want YouTube to do when a “match” is automatically identified. The rights holders’ choices are these: (a) leave the material on YouTube and share in advertising revenue; (b) leave the material on YouTube and merely collect tracking data relating to usage; or (c) take the material down. Users who feel a match was wrong or otherwise want to dispute a takedown can avail themselves of a dispute process that is separate from the DMCA takedown mechanism.[10]
YouTube claims that the Content ID system is “very accurate in finding uploads that look similar to reference fields that are of sufficient length and quality to generate an effective ID.” According to YouTube, Content ID is “the latest in a series of the tools that YouTube offers content owners to more easily identify and manage the use of their content on the site.” [11]
Conclusion
Whatever the outcome in YouTube, the frustrations of copyright owners, who would prefer exclusive control over their works online without having to concern themselves with unauthorized users, are not expected to abate. Even in the extremely unlikely event that unregenerate pirate sites could be eradicated by criminal prosecutions (like that brought against Megaupload and its alleged conspirators); or by a resurrected version of the Stop Online Piracy and Protect IP Acts (that Google, Wikipedia and others accused of overreaching) — or that unauthorized peer-to-peer file sharing of copyrighted works could be halted by the new Copyright Alert consumer notification plan (being implemented by Verizon, Time Warner Cable, AT&T, Comcast and Cablevision)[12] — the DMCA safe harbors still will offer substantial protection to those who are eligible.
[1] Viacom International, Inc. et al. v. YouTube, Inc. et al., No. 10-3270-cv (2d Cir. April 5, 2012). The appeal arose from two related actions, the second being Football Ass’n Premier League Ltd. v. YouTube, Inc., No. 10-3342-cv, a class action. All told, the plaintiffs included “various film studios, television networks, music publishers, and sports leagues.”
[2] In re Aimster, 334 F.3d 643 (7th Cir. 2003).
[3] Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005).
[4] 17 U.S.C. §§ (a)-(d).
[5] 17 U.S.C. §512(c).
[6] 334 F.3d at 650.
[7] In a footnote, the Court offered YouTube some comfort by observing that in eBay’s case, its knowledge “as a general matter that counterfeit Tiffany products were listed and sold through its website,” was “insufficient to trigger liability,” under Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d Cir. 2010).
[8] UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022, 1041 (9th Cir. 2011).
[9] The Court also held that YouTube’s refusal to provide access to mechanisms by which it affirmatively conducted network searches and identified infringing material did not violate the DMCA, especially where the plaintiffs had not argued that the identification tools constitute “standard technical measures.”
[10] See, http://www.youtube.com/t/contentid and related pages.
[12] Johnson, Ted, “Copyright Alert plan has sheriff,” Variety, April 3, 2012, http://www.variety.com/article/VR1118052211?refcatid=1009&printerfriendly=true.