Viacom v. Youtube: Mother of All DMCA Copyright Cases Settles

by Lee Gesmer on March 20, 2014

According to my count, I’ve written seven posts on the Viacom v. Youtube DMCA copyright case. The first time I mentioned Youtube and the DMCA was in October 2006, over 7 years ago. Referencing Mark Cuban’s comment that Youtube would be “sued into oblivion” I stated:

Surprisingly few observers have asked the pertinent question here: do the Supreme Court’s 1995 Grokster decision and the DMCA (the Digital Millennium Copyright Act) protect YouTube from liability for copyright-protected works posted by third parties . . ..?

In fact, Youtube was acquired by Google for $1.65 billion. It was then sued by a group of media companies, resulting in a marathon lawsuit that never went to trial, but yielded two district court decisions and one Second Circuit decision on the issues I identifed in 2006. As I described in a two-part post in December 2013/January 2014, the second appeal to the Second Circuit had been fully briefed and was awaiting oral argument. Now the case has settled, on confidential terms of course. However, demonstrating the extent to which the interests of the media companies and Youtube have converged, the joint press release contained the unusual statement that the “settlement reflects the growing collaborative dialogue between our two companies on important opportunities, and we look forward to working more closely together.”

We may never know the terms of the settlement, but rumor has it that the plaintiffs received no money in this settlement. My guess is they recovered a  token amount, if anything. All three decisions favored Youtube, and Viacom’s case had been whittled down to next to nothing, even if it had been able to persuade the Second Circuit to crack the door a bit and remand the case a second time for damages on a limited number of video clips.

However, the settlement leaves some important questions unanswered:

  • Viacom’s argument that web sites don’t have to take any actions to “induce infringement” – that this basis for liability can be found based on the owner’s intent or state of mind alone – remains unresolved. This is the Grokster issue I identified in 2006. While I think Viacom’s argument was weak, it would have been helpful to have the Second Circuit resolve it.
  • Since the Second Circuit’s first ruling in April 2012 the courts have read the decision to reduce protection for web sites. 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. Because the case has settled, the Second Circuit will have no opportunity to clarify this standard, at least in this case.
  • The Second Circuit will have no opportunity to clarify the  “actual knowledge”/”facts or circumstances” sections of the DMCA. The distinction between these two provisions remains confusing to the lower courts and to lawyers who must advise their clients under this law.
  • The Second Circuit will have no opportunity to clarify its controversial comments (in its first decision) on “willful blindness,” and help the courts reconcile this concept with the DMCA’s notice-and-takedown procedure. As noted above, the settlement leaves in place the Second Circuit’s implication that awareness of specific infringement may result in infringement liability even in the absence of a take-down notice.

It’s likely that other cases presenting these issues will make their way to the Second Circuit (arguably the nation’s most influential copyright court), but it could be years before that happens. The industry could have used additional guidance in the meantime, and one consequence of this settlement is that it will  get it later rather than sooner, if at all.

 

 

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