Mass Law Blog

Aereo captures over-the-air television broadcasts and streams them to Aereo subscribers over the Internet. While the broadcasters claim this is copyright infringement (unauthorized public performance), Aereo has created an “antenna-farm” system designed to avoid allegations that its rebroadcast is a public performance under U.S. copyright law. CBS Broadcasting and other broadcasters brought suit for copyright infringement in federal court in New York.  However, Aereo convinced both the federal district court and the Second Circuit Court of Appeals that Aereo does not violate copyrights in the broadcasts. (Aereo shows “how it works” here).

Aereo rolled out its first implementation in New York, and the Second Circuit “test case” was decided there. Now, Aereo plans to launch its service in 22 cities before year end. Boston is scheduled to launch on May 30th. Apart from the legalities of the underlying copyright claim, this raises the question whether the broadcasters can re-challenge the Aereo service as it launches in new locations outside the Second Circuit (which is comprised of New York, Connecticut and Vermont). Unfortunately, federal law in the U.S. is not always uniform. For example, Aereo may have prevailed in the Second Circuit (i.e., New York), but the broadcasters may be able to successfully challenge Aereo in the First Circuit (Boston) when it launches here, and perhaps get a different result. In fact, according to Aereo CBS has threatened to do just that, stating  (after losing in New York), “we will sue in Boston.”

Aereo, whose legal acumen should not be underestimated, does not want to wait to be sued in Boston (or anywhere else in the U.S.), at least not by CBS Broadcasting or CBS’s affiliates. On May 6th it filed a preemptive suit in the Southern District of New York, asking that court to enjoin CBS from filing what Aereo calls “duplicative follow-on suits” or “do overs.” Its new lawsuit was assigned to the same federal district court judge that refused to enjoin Aereo’s system in the first place.

After reviewing Aereo’s complaint, it seems that this suit is tactical rather than strategic.

The suit names 12 defendants in cities where Aereo intends to offer its service, but they are all owned by or are affiliates of CBS Broadcasting. Aereo asserts that CBS’s New York lawsuit sought a nationwide injunction against Aereo, and therefore the outcome of the New York suit governs the nationwide legal relationship between Aereo and CBS, including CBS subsidiaries and affiliates. CBS should not, Aereo argues, be entitled to relitigate the same issue in another federal court.

CBS may be the most aggressive Aereo plaintiff, and it is possible that Aereo believes that by excluding CBS from follow-on cases it will weaken the plaintiff side of the case. But even if CBS is precluded from filing suits outside the Second Circuit (not a foregone conclusion), that will leave several large broadcasters free to file suit in those districts. For example, even though NBC, ABC, PBS and Fox were parties to the New York case, they are not named in Aereo’s declaratory judgment suit. Even if they were added to the suit, it should not be difficult for the broadcasters to find a broadcaster that was not a party to the New York case to carry the flag for them outside of New York. The broadcasters’ strategy may be to challenge Aereo in every federal circuit that Aereo enters, obtain at least one favorable decision (which shouldn’t be hard to do — the Second Circuit’s Aereo decision is controversial and vulnerable to a different interpretation of the law),* and seek Supreme Court review when a split in the circuits develops.

*A federal district court in California has already ruled that an Aereo-like system violates broadcaster copyrights. (Fox v. BarryDiller, CD Cal. 2012). 

The bottom line is that the Second Circuit decision favoring Aereo was, as far as the broadcasters are concerned, a battle, not the war. I anticipate that the broadcasters will ultimately prevail, and that Aereo’s attempt to block additional suits by CBS will turn out to be a minor impediment in the broadcasters’ campaign to have Aereo’s “antenna farm” system of rebroadcast declared illegal under U.S. copyright law.

Let me begin with the bottom line: this was a excellent course. If Professor Fisher offered another course (such as trademark or Internet law, two areas identified on his online bio), I would not hesitate to take it or audit it.

Background

edX is a collaboration formed by Harvard and MIT to produce “Massive Online Open Courses,” or “MOOCs.”  (I will use the phrase “online courses” as well as “MOOC”). edX is something of a latecomer to the still-new world of MOOCs. The leaders to date (with the most courses), are Coursera and Udacity. However, there are many “smaller” and legacy offerings. (See 700 Free Online Courses From Top Universities). My impression is that until edX, Coursera and Udacity arrived, most online courses were nothing more than hit-or-miss video recordings of classroom lectures. They were not produced with an online audience in mind, and often suffered from poor production quality. Listening to the professor discuss homework assignments, papers, exams, office hours and teaching assistants–none of which are relevant to viewing the lectures online–was frustrating.

Until recently online courses tended to focus on the hard sciences, and I hadn’t come across any legal courses. This changed when, late last year, I received an edX email notice for “HLS1x Copyright.” Or, as it came to be known, “CopyrightX.” Here are some excerpts from the course description I received:

HLS1x Copyright, an experimental course offered on edX, explores in depth the law, theory, and practice of copyright. Approximately two thirds of the course focus on the copyright system of the United States; the remainder is devoted to the laws pertaining to copyright and “neighboring rights” in other countries. Considerable attention is devoted to the relationship between copyright law and creative expression in a variety of fields: literature; music; film; photography; graphic art; software; comedy; fashion; and architecture. The course commences on January 28, 2013, and lasts for 12 weeks. . . .

Applicants [must be] willing to devote eight hours per week to learning and discussing the material.

Several methods of instruction are used. Participants watch pre-recorded lectures, engage in interactive live webcasts of events in which guest speakers address especially controversial issues, discuss legal problems in online forums, and (most importantly) participate once a week in an 80-minute online seminar. Those seminars are taught by teaching fellows, all of whom are currently students at Harvard Law School.

At the conclusion of the course, each participant takes a three-hour exam, designed to assess his or her knowledge of copyright law and policy. Those exams are graded by the teaching fellows. Participants who receive passing grades are to be awarded certificates of completion and provided written assessments of their degree of proficiency.

COURSE INSTRUCTOR

William Fisher III

Professor Fisher received his undergraduate degree (in American Studies) from Amherst College and his graduate degrees (J.D. and Ph.D. in the History of American Civilization) from Harvard University. Between 1982 and 1984, he served as a law clerk to Judge Harry T. Edwards of the United States Court of Appeals for the D.C. Circuit and then to Justice Thurgood Marshall of the United States Supreme Court. Since 1984, he has taught at Harvard Law School, where he is currently the Wilmer Hale Professor of Intellectual Property Law and the Director of the Berkman Center for Internet and Society.

What a great opportunity! When I was in law school there was no course on copyright law. I could make up for that omission now.

I realized that by limiting the enrollment to 500 students, requiring participation in online seminars (which, due to the anticipated world-wide student body would take place at times quite inconvenient for people in U.S. Eastern Standard Time), asking people to take a three-hour exam and awarding passing students a certificate of completion, this MOOC was making a serious effort to set itself apart. Most MOOCs have no enrollment limits (tens of thousands of people register), so limiting the course to 500 students alone sent a message that this course would be different.

Unfortunately, I didn’t get to find out just how different the course would be. The application was concise, and included  demographic information and a short essay on why the applicant wanted to take the course and could contribute. I applied, but was not selected.  I didn’t take it personally, since it’s likely that the applicants numbered in the tens of thousands.

Still curious, I resolved to “audit” the course using the lectures that were posted on Youtube. I didn’t participate in the weekly online seminars, nor did I take the three-hour exam or earn a “certificate of completion.” I watched the pre-recorded lectures and read some (but by no means all) of the associated reading materials, which were extensive. I watched two of the six “Special Events” in full, and parts of the remaining four events.  And, I didn’t view the lectures or the Special Events in sync with the class—I watched them in  late March and April.

The list of lectures, with links to the videos on Youtube, is here. The list of reading materials here. And, the list of Special Events (with links to Youtube), here.

Observations on the Course

Other than CLEs, the last time I sat in a classroom and listened to academic lectures was 1979 – my last year of law school. And, frankly, I’m not sure there were many academic lectures in law school similar to what Professor Fisher presented in this course. So, it took me some effort to adjust to the format of this course. As I discuss below, this was not education disguised as entertainment to make it easier to digest—this was education served “neat.”

First, and perhaps most importantly, since I was just auditing the videos I had no interaction with other students. That made it more difficult, since I had no external motivation to watch each lecture. I’ve heard it said that the best motivator to showing up at the gym at 7:00 a.m. is knowing your workout partner will be expecting you. However, I had no external pressure to keep up with the course.

Motivation to complete an online course is not a trivial concern. At  this early stage in the evolution of online courses the drop out rate is extremely high—as high as 90% in many courses. The high non-completion rate may be due to the curiosity factor—people are registering for these courses just to see what a “MOOC” is all about, but with no intention of taking the full course—or it may be a question of self-motivation. I haven’t seen any statistics on what percentage of the 500 students enrolled in CopyrightX took the final exam, or what percentage passed the course. It would be interesting to see if the use of a selection process and online seminars led to a high completion rate.

The best motivator for CopyrightX was probably the knowledge that you are 1 of 500 people selected for the course and are expected to participate in the online forums and take the final exam. I wasn’t able to kibitz with other students, exchange ideas or ask questions. And, I have no way of knowing how much value that would have added to the course.

I confess that when I first began watching the lectures I found them a bit tedious. The lectures are comprised primarily of an upper-body shot of Professor Fisher in a dark sports coat that blends into a black background. He is often looking off-camera, presumably at an outline of the lecture. In other words, this was a visually non-stimulating format. The course was given in tandem to Harvard Law School students, but this was not a course where you saw the professor walking around in the front of a lecture hall and could see that students were present. So far as I could tell, the online course videos were shot in a studio specifically for the MOOC. Whether the law students taking the course for credit had live lectures, or were expected to watch the online lectures independent of the online lectures, I don’t know. However, I do know that you would be hard-pressed to find a less visually stimulating form of presentation:

Professor Fisher, CopyrightX, Harvard Law School

Prof. Michael Sandel, Justice, Harvard

After a while I adjusted to this format. Professor Fisher is a serious scholar, and he was not there to put on a teaching show (see Michael Sandel, image right), perform classroom tricks (see Walter Lewis, image right), or make any effort to entertain in order to hold the interest of the students. This was hard core, Harvard Law-style lecturing, nothing more, nothing less. No jokes, no anecdotes, not even much movement; just a fire-hose of concentrated information presented in a narrow dynamic range.

Unlike MOOCs such as those on Coursera, there was no attempt to break up the videos into small segments and intersperse quizzes to maintain the viewer’s attention. For example, Coursera explains its pedagogy as follows:

A key factor in the design of the Coursera system is the extensive use of interactive exercises, which we believe are critical for student engagement and learning. Even within our videos, there are multiple opportunities for interactions: the video frequently stops, and students are asked to answer a simple question to test whether they are tracking the material. This strategy has value not only in maintaining student focus and engagement. Research shows that even simple retrieval questions have significant pedagogical value.

Prof. Walter Lewis, Physics, MIT

I had started a couple of Coursera MOOCs out of curiosity, just to see how Coursera implemented this teaching style. It was interesting to see that edX was not, at least in this course, using Coursera’s pedagogical approach to online learning.Professor Fisher’s CopyrightX videos had no “interactive exercises” and no “retrieval questions.” It had no cute sketches, like Udacity sometimes has (image lower right). Whether this will be true for all edX courses I don’t know, but it was for this one. I adjusted to the style of the course and this didn’t bother me, but I can imagine that some people might have difficulty with this approach.

I also wondered, as I progressed through the course, whether the course would be accessible to someone who was not a lawyer or a second or third year law student. The course was presented as a law school course for students at Harvard Law School, not an introductory course on copyright law for non-lawyers. The course made frequent reference to complex statutes, treaties, cases and law review/journal articles, many of which were made available on the reading list. The online lectures made no accommodations for non-lawyers. I question what someone who had no previous legal education would have made of this massive amount of sophisticated legal material.

Coursera

As far as the substance of the course goes, it was quite broad. A full list of topics covered is provided in the schedule of lectures. After beginning with international copyright treaties (not the best topic to launch the course with, in my opinion, given how complex and arcane this topic is), Professor Fisher moves through a wide range of topics, including each of the exclusive rights granted by statute, the idea-expression dichotomy, copyright formalities, authorship, fair use and remedies. In fact, there are few topics he doesn’t at least touch upon.

The course often departs from an exposition of “black letter” law to address the philosophical and historical origins of copyright law, the economic rationale for various aspects of the law (or lack thereof) and Professor Fisher’s own views on copyright policy. Professor Fisher also contrasted U.S. copyright laws with the copyright laws and policies of other countries, with most of the focus on the EU. In other words, the course aspired (and I think succeeded) in questioning how aspects of copyright law have evolved to where they are today, and how the law could be improved. Professor Fisher appears to have strongly held beliefs in that regard, which he presented in his cerebral, mild-mannered style.

Slide from CopyrightX re Copyright Terms

One thing the course made clear is that copyright law is a vast topic. Professor Fisher acknowledges this often, cutting off topics at a certain point and suggesting that students read statutes, cases or articles cited in his Copyright Map (discussed below) for more detail or greater understanding. One gains an understanding, as the course progresses, for just how complex copyright law is, particularly when the Internet (which knows no borders) is layered on top of a world-wide system of copyright laws that is highly parochial. (See, for example, Pandora CEO: The Complexity Of International Copyright Law Is A Big Problem; and Want To Get A Sense Of Just How Complex And Confusing Copyright Law Really Is? by Mike Masnick). His discussion of copyright duration and termination rights was a valiant attempt to bring clarity to one of the most confusing areas of the law (see one of his many slides on this topic, left).

Each weekly topic in the course consisted of between three and six videos, ranging in length from 15 minutes to 50 minutes each. I would estimate the weekly videos ran, on average, between one and one-and-one-half hours. Professor Fisher has created an outline that he calls Maps of Intellectual Property using MindJet. When you download a pdf file created with MindJet from his site the file has a built-in “MindJet Player” that allows you to view an expandable outline, or “map.” Here is the top level of the Copyright Map, which he used extensively during his lectures:

Top-Most Level of Prof. Fisher’s Copyright Map

Each of the six peripheral boxes on the map is the top level of a large outline containing many sub-topics (along with statutory, case and journal citations). As long as there is a “+” symbol beside a topic, clicking the “+” will lead to more content. For example, here is part of the outline that expands out of the major topic heading, “What Is Protected”:

Copyright Map, Expanded

I haven’t explored this outline in full, but from what Professor Fisher demonstrated it seems that it is very large, and includes many subsections that he didn’t have time to go into in the course. It also appears that he updates it often.

Professor Fisher also used traditional powerpoint screens, such as this example, discussing the Grokster decision:

And, he used more elaborate color graphics such as this one, which illustrates the overlapping principles of fair use:

I soon realized that I couldn’t watch these lectures like one would watch a TED Talk.  This was nothing like sitting in a law school classroom, where lectures are broken up by student questions and discussions, or the socratic dialog method of teaching. Apart from the Special Events (which did not seem intended to closely follow the lecture topics), this was just a straight lecture format.

While I assumed that I knew enough about copyright law that this would be nothing more than a refresher course, that proved to be anything but the case; there was a lot of information that was either new to me, or presented in a manner that required me to rethink my understanding of the topic. I realized that I had to fall back on something I haven’t done in a classroom for 34 years – take notes. I created a new Evernote file for each lecture topic, and took notes on the lectures. I think that helped me retain far more than I would have had I simply watched the lectures, but it slowed down the time it took to watch a video lecture.

There were also one or two times when I thought Professor Fisher may have given the wrong impression of how the courts treat a particular copyright law doctrine, but of course I had no one with whom I could discuss this, and no means of raising the point with Professor Fisher.

I found the six Special Events—all of which focused on guest speakers—the weakest part of the course. Ironically, unlike the studio-produced video lectures, these were classroom events, and you could see that the students enrolled in the course were present. In his introductions of the guest speakers Professor Fisher addressed both the online and classroom students, and the speakers answered questions from both audiences.

Harvard Law Professor Larry Lessig gave what appeared to me to be his standard “remix” copyright presentation, which has been published on the web many times before. His presentations (which make extensive use of his “patented” ”Presentation Zen” slide style) are excellent, but he didn’t add much (if anything) to his stock deck.

The Special Event I found most interesting featured Robert Darnton and John Palfry discussing the Digital Public Library of of America, which went “live” in April.  The legal challenges the DPLA faces are significant, and they are discussed frankly during the presentation and discussion at this event.

Brewster Kahle, founder of the Internet Archive, was a no-show for this event, which was disappointing. By archiving vast swathes of the Internet from 1996 to present Kahle has been center-stage at the creation of the largest repository of online Internet resources available to the public. It would have been interesting to hear his thoughts on the copyright challenges faced by the Internet Archive, the Google Books project, and now the Digital Public Library of America.

I watched parts of each of the remaining four Special Events, but they didn’t hold my attention, which is not to say they may not have been the most interesting part of the course for some of the students.

Coda

As I said at the opening of this post, this was an excellent course for people interested in a scholarly, detailed review of copyright law. I have been unable to find any comparable elucidation of copyright law on the Internet, and I suspect there are only a handful of copyright practitioners in the U.S. that could pull off the tour de force that Professor Fisher does in this course. There is room, in the emerging world of MOOCs, for courses presented in this style, as well as courses in the more relaxed style of Coursera and Udacity. I hope that Professor Fisher and edX decide to create similar programs for trademark and Internet law.

[Note: As Professor Fisher would make sure you knew if you watched the CopyrightX course, the CopyrightX online videos are protected by U.S. copyright law. The online lectures for CopyrightX are subject to the Creative Commons Attribution-Noncommercial-Sharealike 2.5 License. The screenshots I've used from the lectures are subject to this license.]

The recording companies have consistently maintained that the Digital Millennium Copyright Act’s (DMCA) notice-and-takedown regime does not apply to pre-1972 works. However, the law on this arcane issue has been scarce. In Capital Records v. MP3tunes (SDNY 2011), the court ruled that pre-1972 works were covered by the DMCA. After this decision the recording companies decided to make their argument in state court. Their strategy paid off – the New York State intermediate appellate court (the New York Supreme Court, Appellate Division), has issued a decision contrary to MP3tunes. In UMG Recordings v. Escape Media (often referred to as the Grooveshark* case), the court held that “Congress intended for the DMCA only to apply to post-1972 works.”

*Grooveshark is a music streaming service that allows users to upload sound recordings.  According to Wikipedia, Grooveshark streams over one billion sound files a month.

The Grooveshark case arises out of two legal oddities: first, Congress did not extend copyright protection to “sound recording” until it passed the 1972 Copyright Act (the effective date of protection being February 15, 1972); and second, before 1972 copyright was subject to state law. The upshot of this is that although the federal courts have exclusive jurisdiction over most copyright law claims, pre-1972 sound recordings are an exception. Claims for breach of pre-1972 sound recordings can be brought in state court and decided under the antiquated state copyright laws.*

*Pre-1972 sound recordings remain protected under state copyright laws. All post-1972 copyrighted works are subject to federal copyright law. Under current law, state law jurisdiction over pre-1972 sound recordings continues until 2067, at which time all state protection will be preempted by federal law and pre-1972 sound recordings will enter the public domain. Yes, this is bizarre and inexplicable. If this strikes you as bizarre, you are normal.

Clearly, as I stated in the title of this post, this holding has the potential to blow open a hole in the DMCA system of safe harbors. For example, is Google now liable for every pre-1972 sound recording uploaded to Youtube, if the owner of the copyright files suit in New York state court? Must Google review every upload by a user to ensure that it is not a pre-1972 sound recording (a well-nigh impossible task)? Can New York state law trump federal law for sound recordings under the DMCA for the next 54 years?

This decision is only one step in this ongoing case. The trial court must now determine whether Grooveshark is liable for copyright infringement under the theory of secondary liability (since Grooveshark’s users, not Grooveshark, posted the pre-1972 sound recordings). However, there is little or no legal precedent upon which to base secondary liability for state copyrighted works. There is also the question of whether a small company like Grooveshark can afford this ongoing litigation, or whether the case will force it to fold.

This decision creates a new element of uncertainty under the DMCA, a statute that recently had been clarified by the federal courts. Ten steps forward, five steps back.

UMG Recordings v. Escape Media (Grooveshark) (April 23, 2013)

Assume I were to take a well-known, in-copyright work of art, modify it in a variety of ways and publish the results as a coffee table book. To make this thought experiment easy, assume that the Statute of Liberty is covered by a U.S. copyright registration today—in fact, the Statue of Liberty was registered with the U.S. Copyright Office in 1876, but its registration has long-since expired. Assume I took 30 photographs of the Statue and published my book with the images modified in various ways. For example, I created collages, altered the face of the Statue and superimposed various objects on the Statue. Instead of holding a torch and a tablet, in one picture she is holding a photo of the head of Osama Bin Laden, and in anther she is holding a day-glo image of the World Trade Center buildings. In some cases I used only parts of the Statue, and in others I painted objects that obscured the face. You get the idea.

Would the sculptor be able to assert copyright infringement, or would my book be protected by the copyright doctrine of fair use? The legal question, more precisely, would be: is my use of the Statue sufficiently transformative to qualify as fair use?

An issue like this faced the Second Circuit Court of Appeals in a much-watched case, Cariou v. Prince. The court released its decision last Thursday, reversing a Southern District of New York District Judge’s decision that 30 images copied from Patrick Cariou’s Yes Rasta book of photographs of  Rastafarians in Jamaica and modified and recontextualised  by “appropriation artist”* Richard Prince were not covered by the fair use defense to copyright infringement. The district court’s rationale for rejecting the fair use defense was that Prince’s works (contained in a collection entitled “Canal Zone”) `did not comment on, or critically refer back to, Cariou’s original works. The Second Circuit rejected this reasoning, holding that “the law imposes no  requirement that a work comment on the original or its author in order to be considered transformative.”

*”Appropriation art” refers to taking photographs and other images that others have produced and incorporating them into paintings and collages that the appropriation artist then presents, in a different context, as his own.

The Second Circuit’s reversal of the district court did not come as great surprise. Prince had a seemingly strong argument that the district court had  ignored established fair use principles, and had issued an injunction ordering the destruction of Prince’s works without weighing any of the free speech interests at issue. Nevertheless, the case is likely to be viewed as an important precedent in the area of fair use as applied to appropriation art. The heart of the court’s rational was stated as follows

[O]ur observation of Prince’s artworks themselves convinces us of the transformative nature of all but five, which we discuss separately below. These twenty-five of Prince’s artworks manifest an entirely different aesthetic from Cariou’s photographs. Where Cariou’s serene and deliberately composed portraits and landscape photographs depict the natural beauty of Rastafarians and their surrounding environs, Prince’s crude and jarring works, on the other hand, are hectic and provocative.

The court found that the the “composition, presentation, scale, color palette, and media are fundamentally different and new compared to the photographs, as is the expressive nature of Prince’s work.” The court stated that “[T]he fair use determination is an open-ended and context-sensitive inquiry.” If the original work “is used as raw material, transformed in the creation of new information, new aesthetics, new insights and understandings – this is the very type of activity that the fair use doctrine intends to protect for the enrichment of society.”

The Second Circuit concluded that 25 of the 30 Prince images were transformative as a matter of law, requiring no further fact finding (and no trial) on remand. It sent five pictures back to the lower court judge to decide whether they violated Cariou’s copyrights under the legal standard set forth in the opinion. One of the judges on the three-judge panel dissented from the majority’s decision to assess the transformative nature of some of Prince’s works, but not others, and argued that all of the works should be remanded to the district court for analysis under the proper legal standard.

Of course, the key question in cases involving “appropriation art” is how a judge or jury is to determine whether the appropriated work is sufficiently transformative. The “gray area” in cases of this sort can be large, and highly subjective. What one judge or jury may conclude is transformative, another may not, making it difficult to eliminate all risk when publishing works of this sort. Judges and juries who may have little of no art experience will be asked to make judgments as to whether a piece of appropriation art uses a sufficiently “different aesthetic” or  whether it is something “new and different” than the original work. Moreover, the willingness of the Second Circuit to decide the issue of fair use as to 25 of the 30 works without providing Mr. Prince with a jury trial may encourage trial judges to decide appropriation art cases on summary judgment, adding to the trend away from jury trials in copyright cases.

Left: Patrick Cariou, Photograph from Yes Rasta. Right: Richard Prince, Graduation

Cariou v. Prince (2nd Cir. April 25, 2013)

[The images on this web page are from Richard Prince's work, "Canal Zone." All photos at issue in the case, both the originals and the "transformed" works by Richard Prince, are available on the Second Circuit website, here.]

The copyright content industry has launched two no-holds-barred legal challenges against non-piratical websites that host third-party videos. That is, service providers whose intent is not obviously to induce or encourage copyright infringement and that follow the “notice and take down” rules of the Digital Millennium Copyright Act (DMCA).  Until last Thursday the outcome had been a complete loss for the content industry in one case, UMG v. Veoh (9th Cir. 2013). In the second case, Viacom v. YouTube, the content owners were hanging on by their fingernails following an adverse summary judgment ruling by Southern District of  New York District Court Judge Louis Stanton in 2010, followed by a largely (but not entirely) affirming decision by the Second Circuit in 2012. However, following Judge Stanton’s post-remand decision, issued on April 18, 2013, the content owners are left with a complete loss in the second case as well. Absent another appeal to the Second Circuit, Viacom v. YouTube is over.

The outcome of these two cases in the influential Second and Ninth Circuits is not only a loss for the copyright owners, but a significant level of clarification as to what hosting sites such as YouTube and Veoh should do to ward off future attempts to pierce the copyright liability safe harbors created by the DMCA.

The conclusion of the YouTube case (assuming no further appeal) is particularly significant. When Google purchased Youtube for $1.65 billion in 2006 it took a huge legal risk that it would be responsible for copyright infringement damages of as much as six times that amount.*

*Viacom alleged infringement of 63,060 video clips. Assuming the videos had been timely registered, at the maximum statutory damages of $150,000 per clip, the theoretical damages in the case exceeded $9.4 billion.

Last week’s district court decision shows that Viacom did not come close to prevailing on the issues that were the subject of the Second Circuit’s remand.

Did YouTube Have Knowledge or Awareness of Specific Infringements? The Second Circuit instructed the district court to determine whether YouTube actually knew of (or was willfully blind to) specific instances of infringement of video clips at issue in the case, or whether there were facts or circumstances indicating such specific infringement. Viacom was unable to do so. In fact, Viacom admitted that “neither side possesses the kind of evidence that would allow a clip-by-clip assessment of actual knowledge.” Judge Stanton rejected Viacom’s argument that the burden fell on YouTube to prove lack of knowledge (in effect to prove the negative), stating that the foundation for this argument was an “anachronistic,” pre-DMC concept. Given the DMCA’s statutory scheme—which places the burden on copyright holders to provide a statutory “take down” notice—the burden of showing that YouTube knew of or was aware of specific infringements could not be shifted to YouTube to disprove.

Did YouTube Willfully Blind Itself to Specific Infringement? The Second Circuit held that “the willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA.” This may have been the most controversial aspect of the Second Circuit’s 2012 decision. Not only is the doctrine vague, but it seems inconsistent with the DMCA’s “notice-and-takedown” procedure. The Second Circuit’s holding suggests that awareness of specific infringement may lead to infringement liability even in the absence of a take-down notice.

On remand Judge Stanton construed the Second Circuit’s holding narrowly: he held that “willful blindness” required blindness to ”specific and identifiable instances of infringement.” He found that the specific locations of the infringements (the URLs) were not provided, and YouTube had no duty to look for infringing clips, even among a number as small as 450 clips. Nevertheless, the fact that the Second Circuit imported a “willful blindness” standard into the DMCA remains one of the most troubling “here be dragons”* aspects of the DMCA, and is the most obvious basis for an appeal by Viacom.

*”Here be dragons” refers to the medieval practice of putting dragons, sea serpents and other mythological creatures in uncharted areas of maps.  As noted above, parts of the DMCA still remain unexplored. They are “terra incognita.”

Did YouTube Have the “Right and Ability to Control” Infringing Activity?  By this point in the decision Viacom was no longer hanging on my its fingernails, it was in free fall. Judge Stanton reviewed the precedents in which service providers have been found to control infringing activity (Perfect 10 v. Cybernet Ventures (service provider provided detailed instructions regarding layout, appearance and content); Metro-Goldwyn-Mayer Studios v. Grokster (“purposeful , culpable expression and conduct” might rise to level of control under DMCA)),* and found that YouTube’s conduct satisfied neither of these standards. YouTube’s decision to exclude whole movies and TV shows, nudity and pornography, along with several other content catagories, did not rise to the level where YouTube had the right and ability to control infringing activity.

*The “purposeful, culpable expression and conduct” standard is another troublesome interpretation of the law in the Second Circuit. However, It shouldn’t be difficult for service providers to stay on the safe side of this line by avoiding the types of encouragement or inducement of infringing behavior that typified Grokster and similar cases.

Did Youtube Improperly Syndicate Clips to Third Parties? YouTube did deliver some video clips to Verizon Wireless, but they were not the clips-in-suit. Apparently some clips-in-suit were provided to Apple, AT&T and others, but this was done at the direction of users in order to enable people to access the videos in various mobiles formats. The court found this process is protected under the DMCA

Implications of YouTube and Veoh. The online copyright infringement liability provisions of the DMCA comprise a singularly complex set of rules for online copyright infringement where the offending works are posted by third parties. This amendment to the Copyright Act was signed into law in late 1998, before music and video sharing were even a twinkle in the eyes of Internet entrepreneurs. The first music file sharing system, Napster, was not released until mid-1999, and YouTube not until 2005. Neither Congress nor the copyright content industries foresaw these technologies and their impact in 1998. As a result, interpretation and application of the DMCA has been a legal battleground for the last 13 years. At first, lawsuits by the copyright content industry were like taking candy from babies—early entrepreneurs lacked the legal sophistication to avoid liability for copyright infringement, and they were easily mowed down by industry lawsuits. The Napster (2001), Aimster (2003) and Grokster (2005) cases are representative of “the early years” of DMCA litigation. The second generation cases—Veoh and YouTube, present a completely different picture. Today, it’s hard to imagine that anyone with competent legal representation would make the mistakes made by Napster, Aimster and Grokster. While, as discussed above, the “here be dragons” label may still apply to some parts of the DMCA safe harbor map, the YouTube and Veoh cases have illuminated enough of the map that online service providers can stay well clear of potential liability for third-party content, and last week’s decision in YouTube only adds to this body of knowledge.