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 by 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.