Viacom v. YouTube, Mother of All DMCA Copyright Cases (part 2 of 2-part post)

by Lee Gesmer on January 26, 2014

Viacom v. YouTube, Mother of All DMCA Copyright Cases (part 2 of 2-part post)

[This is part 2 of a 2-part post. To read part 1, click here]

[Update: Viacom v. Youtube was settled before the Second Circuit rendered its decision on the appeal discussed in this post]

After the events described in part 1, Kevin Kickstarter, founder of YouPostVid, meets with his lawyer, Mr. Jagger, to discuss whether YouPostVid needs to change its approach to managing copyrighted videos posted by users of the site. In preparation for this meeting Kevin has read the decisions in Viacom v. YouTube, and Mr. Jagger* has familiarized himself with YouPostVid’s compliance practices under the DMCA.

*[Note] Mr. Jagger’s name is a  play on the infamous  lawyer in Great Expectations, by Charles Dickens.

Kevin Kickstarter: Mr. Jagger, what I don’t understand is this – we comply with valid DMCA takedown notices. We take down thousands of video clips a month in response to takedown notices.

However, the DMCA also says that we can lose our  immunity if we have “actual knowledge” of infringement, or if we are “aware of facts or circumstances from which infringing activity is apparent” — what you call “red flag” knowledge — or if we engage in “willful blindness,” a concept I don’t understand at all. At the same time the DMCA says that we have no obligation to monitor for infringement. How can I run a business based on this confusing set of rules?

And, as if this were not enough, I see that in the first appeal in the YouTube case the Second Circuit said that we could lose immunity if we have induced infringement. And, I read some of the briefs  filed in the second appeal, and I see that Viacom is arguing that web sites don’t have to take any actions to “induce infringement” – this can be found based on the owner’s intent or state of mind. I’m totally confused. It seems that in terms of protecting YouPostVid the DMCA has more holes than swiss cheese.

Mr. Jagger: You’re right, Kevin – this is a confusing statute, and if Viacom gets its way in this appeal, the DMCA’s protection of Internet service providers will be narrowed. You need to play it safe in anticipation of an adverse ruling in this case. OK?

Kevin: Yes, I understand. But this is an intolerable situation for my company, and I hope the Second Circuit is able to clarify the law, and soon. We need to know what the rules are. I can’t believe that the online industry doesn’t have clear rules for web site liability based on user generated content 15 years after this law was passed.

Lets get going – I have a hard stop at 3:00 today.

Mr. Jagger: OK. Let me begin by reminding you that there are a lot of ways that you can lose DMCA protection that are easy to avoid. We know that your company has registered an agent to receive takedown notices, and that you have a repeat infringer policy, both of which are essential under the DMCA. You’ve also told me that you have told your employees that they may not upload videos to YouPostVid, since the DMCA only protects uploads by third parties. More than one video sharing site has been caught doing this and denied DMCA protection for employee uploads. You monitor for pornography and hate speech, but you don’t monitor for  copyright infringement by means of employee monitoring or automated blocking software, and the law is clear, you have no obligation to do so, although whether you should use blocking software is something we’ll touch on at some point today.

These are all areas of  the DMCA that are relatively clear. However, there are additional ways to lose the DMCA’s “safe harbor” protection that are at issue in the Viacom case and other cases pending in the federal courts in New York, and that are not so clear. I want to talk about those.

Kevin: OK, but make it quick – I don’t have much time today. I have a business to run.

Induced Infringement

Mr. Jagger: Understood. Lets start with what I think, in your company, is the easiest issue, “induced infringement.” You know that Viacom has argued, based on the Supreme Court’s 1995 Grokster decision, that it is illegal to distribute a device (including software, and by implication a web site), “with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement.” There is no question that this is true – a service provider that “fosters” or encourages  infringement risks copyright liability for acts of infringement by third parties who use its software, and cannot rely on the DMCA as a defense.

However, I think Viacom is overreaching on this issue  – it argues that the service provider’s state of mind or “secret intent” is a factor in determining whether there has been inducement. In effect, it is arguing that YouTube should lose immunity under the DMCA safe harbor based on a “thought tort.” This argument seems particularly weak where, as in YouTube’s case and in your company, the service has substantial non-infringing uses.

I think that the Second Circuit will hold that an Internet service provider must engage in purposeful expression or conduct — affirmative steps — to induce infringement, and you have never done that.

But, better safe than sorry. I’m going to suggest that you hedge your bets – no emails like the ones you showed me in which you tell employees that popular, copyrighted videos are good for business. In fact, I recommend you stop emails discussing the pros and cons of various clips altogether – they have been YouTube’s worst enemy, and they can be your worst enemy.

Kevin: OK, I understand, I’ll do that.  I hope you’re right.  We have never encouraged or “fostered” copyright infringement in any way. Should I destroy the emails you’re referring to?

Mr. Jagger: No, I think it’s too late for that.  The publisher we met with had its lawyer send me a letter demanding that we preserve internal communications, and you have to comply with that. Sorry.

Kevin: Darn ….

Actual or “Red Flag” Knowledge

The next two ways to lose protection involve what the law calls actual knowledge and “red flag” knowledge. As you noted, the law doesn’t actually use the term “red flag,” it uses the expression “facts and circumstances,” but “red flag” is a common shorthand. And, it’s difficult to separate these two concepts, so I’m going to discuss them together.

What a lot of people don’t appreciate is that since the Second Circuit’s first ruling in Viacom v. YouTube in April 2012 DMCA protection has actually narrowed. Courts in New York applying the Second Circuit decision have held that a website can lose DMCA protection if it becomes aware of a specific infringement, or if it is aware of facts that would make it “obvious to a reasonable person” that a specific clip is infringing. Rather than go into the legal theory I’m going to tell you what this means as a practical matter.

  • First, if you receive a valid takedown notice you must act on it. We have discussed what a valid takedown notice is in the past, so I won’t repeat that here, but you might want to review the rules on that.
  • Second, if you receive any information from a non-copyright owner — for example, the “good samaritans” you told me about that have sent you emails informing you that there are specific infringing works on your site — you must investigate and remove those specific clips if you find that they were copied without the permission of the owner. In other words, something less than a formal takedown notice may establish “red flag” knowledge, requiring a site owner to investigate whether the clip is copyrighted, and if so whether it has been posted with permission.
  • Third, and perhaps most difficult, if you or any employee becomes aware of a specific clip where it would be objectively obvious to a reasonable person that the work is copyrighted, you must investigate whether it is an authorized or an illegal copy. The courts have held that if an employee of a web site “interacts” with a copyrighted clip — views the clip, “likes” it, features it or promotes it to a different location on the site — the site must apply the “objectively obvious” test. If it doesn’t, and the owner sues for copyright infringement, the site may not be protected by the DMCA.

Kevin: Whoa, Mr. Jagger, hold on a minute, hold up, please. I don’t get it. This makes no sense.

We have no obligation to look for copyrighted clips, but if we’re told about one, or one of my employees becomes aware of one, we need to take it down? This makes no sense. I understand that we need to investigate these “good samaritan” emails identifying infringing clips, but I don’t get the second piece of this. If an employee becomes aware of a specific clip I need to decide whether it would be “objectively obvious to a reasonable person” that the clip is infringing? If that’s the case I’m going to have to tell my employees not to browse the site. Is that what the law requires? You’ve got to be kidding me!

Mr. Jagger:  I agree with you, Kevin, but I do not make the laws, would that I did. I am reminded of the comment by Mr. Bumble in Oliver Twist, “If the law supposes that the law is a ass – a idiot.”

Kevin: Mr. Jagger you are always quoting Dickens, or some other long-dead writer, most of whom I have never heard of. Stop your literary peregrinations, and get to the point, please! I haven’t had a migraine in years, but I feel one coming on now ….

Mr. Jagger:  Sadly, I often hear this from my clients. I am sorry.

Kevin: Proceed, sir, please. Get this over with. This is worse than a root canal procedure.

Mr. Jagger: Very well. Yes, the safest legal course of action is to tell your employees to limit their viewing of uploads to your site.

Kevin: But our employees organize clips by subject, and move popular clips to the home page and various topic pages. They have to look at the clips to do that. Are you suggesting we stop this? That we can’t even look at video uploads on our own site? That what we’ve done in the past could lead to liability?

Mr. Jagger:  I am afraid so. If you don’t you will need to train your staff to recognize copyrighted works under the “objectively obvious” test, and you will need to take down clips that satisfy that test, at least until the law is further clarified.

Kevin: You want me to provide legal training to my staff? Half of these people are high school students, interns, engineers . . . They aren’t lawyers; I can’t possibly ask them to apply this test.

Besides, this is not as simple as you — or these courts — appear to assume What if the clip uses copyrighted material but it falls under fair use? What if the clip is just a bunch of kids lip dubbing a song? Is that illegal or fair use? What if its a home-made video that uses only 20 or 30 seconds of a copyrighted song – is that infringement or fair use? How about an amateur music lesson of a copyrighted song? What if its a creative video mashup? You expect me to tell my employees that they need to make these kinds of distinctions? They are not lawyers, and frankly I’m not convinced that even lawyers could sort infringing from fair use clips, given the confusing court decisions on fair use!

Mr. Jagger: You can, and you must, or you must tell them not to view clips on the site, unless you are willing to risk a lawsuit. Or, of course, you can license Audible Magic. I can give you guidelines on how to apply the “objectively obvious” test or identify fair use, and when they are in doubt you can send a link to the clips to me, and I’ll advise you.

Kevin: I bet you will ….

Mr. Jagger: So, shall we continue?  I’m afraid I have more bad news …..

Kevin: Before you do that Mr. Jagger, let me just point out how ridiculous this has become. I know enough about copyright law to know that not only are network and cable shows and Justin Bieber songs and music videos copyrighted, but the fact is that almost every video clip on my site is protected by copyright law. If someone creates a cat video, or a baby video, isn’t that automatically protected by copyright law? Isn’t the Charlie Bit My Finger video copyrighted?  How am I supposed to apply this “red flag” standard when almost every video on my site is copyrighted? Even Audible Magic won’t block those videos. You’re telling me that I, the founder and owner of this company, can’t look at my the video clips on the site without applying the “red flag” test to every clip I view?

Mr. Jagger: You are 100% correct, Kevin. Very likely, all of those videos are protected by copyright law. It’s difficult to reconcile the “notice and takedown” parts of the law with the “actual knowledge”/”facts or circumstances” sections. I think that this is the key issue the Second Circuit will have to deal with in the Viacom/YouTube appeal, and in an appeal in a case involving Vimeo, presenting this precise issue. In that case the court held that Vimeo had to weigh the type of music (professional v. amateur), how well-known the artist is, and other factors that could be used to distinguish amateur material from professional material. The court seems to assume that amateur material has been posted with the consent of the owner, but professional material has not. The court held that a “recognizable song,” played essentially in its entirety and in unedited form triggers the red flag, and the website owner must either take it down, or investigate to confirm it is not a copyright violation. And songs that are lip synced or mashups are no exception.

Unfortunately, the court ignores the fact that what is immediately “recognizable” to one person may not be recognizable in the least to another, so for now the best rule of thumb is, “if in doubt, take it down.” You cannot be liable for taking down a clip (the DMCA expressly states this), but you can be liable if you make the wrong decision and leave it up.

I know we are past your 3:00 stop time, but I should also mention that the Second Circuit in Viacom stated that a web site could be liable for “willful blindness” where the site owner is “aware of a high probability of the fact of infringement and consciously avoids confirming this fact.” However, it’s not clear how this is different from “red flag” knowledge, so I suggest we leave it be until the courts provide more guidance.

Kevin: Thanks Mr. Jagger, are we done.

Mr. Jagger: I do have one more issue I need to warn you about. One federal district court in New York has held, in the MP3Tunes case, that the DMCA safe harbor applies to sound recordings — in other words music — recorded before February 15, 1972. However, more recently a different court in the same district, in the Vimeo case, held that the DMCA does not apply to pre-1972 sound recordings.  The judge in the Vimeo case has authorized the parties to ask the Second Circuit to decide this issue while the Vimeo case is still pending — an “interlocutory” appeal — but there’s no guarantee the Second Circuit will exercise its discretion and hear this issue at this point in the case.  This is obviously a question of great importance, but at the moment the law is not clear.

Kevin: Wait a minute – if we don’t take down pre-1972 sound recordings we risk liability, but if we review our clips to try to find pre-1972 recordings, we have to evaluate every clip we review to determine if it is an infringing copy? This is a catch-22 that we just can’t win.

Mr. Jagger: I agree ….

Kevin: Mr. Jagger, let me ask you a question – what do you see as the big picture here? Where are the courts trying to guide companies like mine with this ridiculous line of cases.

Mr. Jagger: I will tell you my theory, Kevin. Under the language of the DMCA the courts cannot force web sites like yours to use filtering software like Audible Magic, or ContentID, a system developed by Google. However, they can use the law to make it so difficult to avoid liability that, as a practical matter, that will be the only option. I think that, in the not too distant future, we may see an Internet in which almost every significant site that allows a significant number of uploads will either have some form of licensing agreement with content owners, or will use filtering software to block most copyrighted works. Other than renegade sites that can’t be reached by the courts, the early days of sites like YouTube, Vimeo, Veoh and MP3Tunes will become as much a distant memory as 5 1/4 inch floppy disks.

Kevin: I need to go. I think I can sell my company for a decent profit before the forces of darkness you describe put me out of business.

Mr. Jagger: Good luck, Kevin . . ..

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