Viacom and YouTube Contest DMCA Safe Harbor Provisions in Appeal to Second Circuit, Bloomberg Law Reports®
Viacom International Inc. v. YouTube, Inc.,1 a closely-watched case involving the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”), is currently being appealed by Viacom to the Second Circuit. Appellate briefs have been filed by Viacom and YouTube, as well as numerous amici curiae. This article will review the DMCA safe harbor provisions and the lower court decision, highlight the key issues raised by the parties on appeal, and briefly discuss the amicus briefs that have been filed in the action.
DMCA Safe Harbor Provisions
The DMCA shields service providers from liability “for infringement of copyright 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” if certain conditions are met.2 Specifically, a service provider must not have actual knowledge of infringement, must not be aware “of facts or circumstances from which infringing activity is apparent,” and if it has actual knowledge or is aware of infringement, it must “act expeditiously to remove, or disable access to, the material.”3 The 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.”4 Further, the availability of the safe harbor is conditioned on the service provider appointing a designated agent to receive notices of claimed infringement in accordance with the statutory requirements of 17 U.S.C. § 512(c)(2); to be effective, such notices must follow the statutory requirements of17 U.S.C. § 512(c)(3). The DMCA explicitly states that the availability of the safe harbor protections is not dependent on “a service provider monitoring its service or affirmatively seeking facts indicating infringing activity.”5
SDNY Rules YouTube Is Entitled to Safe Harbor
Viacom International Inc. and a number of its subsidiaries (collectively, “Viacom”) filed suit against YouTube, Inc., YouTube, LLC, and Google, Inc. (collectively, “YouTube”) in the Southern District of New York. YouTube operates a website onto which users can upload and view videos free of charge. In its complaint, Viacom alleged that “tens of thousands of videos on YouTube, resulting in hundreds of millions of views, were taken unlawfully from [its] copyrighted works without authorization,” and asserted claims for direct and secondary copyright infringement, including a claim for inducement.6 Both parties moved for summary judgment. YouTube argued that it was a “service provider” within the meaning of 17 U.S.C. § 512(k)(1)(A) and that it was entitled to safe harbor protection under 17 U.S.C. § 512(c) because it did not have sufficient notice of the specific infringements at issue. Viacom argued that the DMCA safe harbor did not shield YouTube from liability because YouTube: (1) had “actual knowledge” of the infringements and was “aware of facts and circumstances from which infringing activity [was] apparent,” but failed to “act expeditiously” to stop it; (2) “receive[d] a financial benefit directly attributable to the infringing activity” and “had the right and ability to control such activity”; and (3) engaged in infringement which did not result solely from providing “storage at the direction of a user.”7
The district court granted YouTube’s summary judgment motion. The court initially determined that YouTube was a “service provider,” and hence eligible for safe harbor protection, because YouTube provides online services or network access. The “critical question” facing the court, therefore, was whether “the statutory phrases ‘actual knowledge that the material or an activity using the material on the system or network is infringing’ and ‘facts or circumstances from which infringing activity is apparent’ in § 512(c)(1)(A)(i) and (ii) mean a general awareness that there are infringements,” as urged by Viacom, or instead mean “actual or constructive knowledge of specific and identifiable infringements of individual items,” as proffered by YouTube.8 The court agreed with YouTube’s interpretation, finding it supported by the legislative history of the DMCA as well as recent case law, including Perfect 10, Inc. v. CCBill LLC,9 UMG Recordings, Inc. v. Veoh Networks Inc.,10 and Tiffany (NJ) Inc. v. eBay Inc.,11 a case involving contributory trademark infringement in the Internet context.
The court rejected Viacom’s reliance on Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd.,12 in which the U.S. Supreme Court found the proprietors of a peer-to-peer file sharing system liable under a theory of inducement, and its progeny. The court noted that the peer-to-peer system in Grokster was not covered by the DMCA safe harbor provisions, that Grokster concerned the more general law of contributory copyright liability, and that “its application to the particular subset of service providers protected by the DMCA is strained.”13 The court also rejected Viacom’s argument that YouTube’s actions—including the replication, transmittal, and display of videos—fell outside the scope of Section 512(c)(1), which requires that service providers store content at the direction of a user to be eligible for safe harbor protection. Lastly, in addressing the requirement that a service provider “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 court concluded that the right and ability to control requires item-specific knowledge of the infringing activity, which YouTube did not have.14
For further analysis of the district court decision, see Southern District of New York Holds YouTube Is Entitled to DMCA Safe Harbor Protection, Grants Motion for Summary Judgment, Bloomberg Law Reports – Intellectual Property, Vol. 4, No. 26 (June 28, 2010).
Viacom’s Appellate Brief
In the opening paragraphs of its brief, Viacom warned that the district court’s construction of Section 512(c), if affirmed, “would radically transform the functioning of the copyright system and severely impair, if not completely destroy, the value of many copyrighted creations,” and “would immunize from copyright infringement liability even avowedly piratical Internet businesses.”15 According to Viacom, “[n]othing in the text or history of the DMCA even remotely suggests that Congress intended such absurd, disquieting, and disruptive results.”16
Viacom emphasized the district court’s characterization of YouTube as “welcom[ing] copyright-infringing material being placed on [its] website,” as well as the court’s observation that such material was “attractive to users” and “enhanced defendants’ income from advertisements.”17 Viacom noted that YouTube was eventually acquired by Google, Inc. for $1.65 billion in 2006, and that prior to the acquisition, “Google’s own due diligence team warned thatmore than half of YouTube’s views infringed copyrights.”18 As such, Viacom contended that YouTube was at least “aware of facts or circumstances from which infringing activity is apparent” within the meaning of the DMCA.
Viacom further contended that even under the district court’s interpretation of Section 512(c), ample evidence in the record suggested that YouTube had specific information regarding at least some of the works at issue. Viacom argued that but for YouTube’s willful blindness to its users’ infringements—namely, “disabling its own community flagging feature and  selectively implementing commercially-available fingerprint filtering solutions”—YouTube would have had specific information as to all of Viacom’s works.19
With respect to the requirement of Section 512(c)(1)(B), Viacom noted that YouTube received advertising revenue in connection with copyright-infringing material on its site. YouTube had the right and ability to control this infringing activity, Viacom argued, because it “explicitly retained the right to remove uploaded videos, and available technology [e.g., Audible Magic filtering] would have enabled YouTube to easily find and remove the infringing material.”20Viacom also contended that both the language in Section 512(c)(1)(B) and the legislative history of the DMCA tracked the common law rule of vicarious copyright liability, and consequently, that only financial benefit and control were required to negate the safe harbor, not item-specific knowledge as held by the district court.
Lastly, Viacom argued that YouTube was disqualified from safe harbor protection because it was actively involved in its users’ infringements. Viacom noted that YouTube “displays, reproduces, performs, and licenses  infringing material as part of its self-described ‘broadcast’ business,” and “actively seeks to guide viewers to videos, including infringing videos, that may interest them.”21 As such, Viacom reasoned, infringement did not occur “by reason of the storage at the direction of a user,” as required for the safe harbor.
YouTube’s Appellate Brief
YouTube asserted that the text of the DMCA, its legislative history and purpose, the cases interpreting it, and sound public policy all supported the district court’s grant of summary judgment in its favor. YouTube emphasized that “plaintiffs themselves complicated any infringement inquiry exponentially in the way they used YouTube to advance their business interests,” namely, by “extensively and aggressively post[ing] clips of their copyrighted material on YouTube [and] authoriz[ing] their agents and licensees to do likewise,” and leaving up “countless other videos containing their works that they found on YouTube but purposefully chose not to take down.”22 YouTube further noted that the “stealth marketing” practices of the plaintiffs “made it difficult even for them to tell whether YouTube clips containing their material were authorized,” and pointed out that Viacom’s own lawyers “submitted two documents under penalty of perjury that incorrectly swore that Viacom had not posted any of the clips at issue.”23
In response to Viacom’s argument that it “welcomed” infringement, YouTube acknowledged the district court’s statement that “a jury could find that the defendants not only were generally aware of, but welcomed, copyright-infringing material being placed on their website.”24 YouTube noted, however, that the district court cited no evidence supporting this statement, and argued that in any event, a subjective “welcoming” of infringement is legally irrelevant. “Inducement liability demands proof of encouragement or other affirmative steps to foster infringement,” YouTube observed, “and no jury could conclude that YouTube encouraged or took active steps to foster infringement.”25YouTube emphasized that it was founded “with a legitimate purpose,” that it “has never invited its users to infringe,” that it “houses a massive array of non-infringing videos,” and that it has taken “industry-leading steps to deter copyright violations.”26 Further, the district court had found the inducement principles of Grokster inapplicable, and “no court has ever held a DMCA-compliant service liable for inducement.”27
YouTube also contended that the district court’s interpretation of the safe harbor was correct. It argued that Viacom’s reading of the statute—”which would require service providers to take an indeterminate series of ‘commercially reasonable’ steps in response to general awareness of unidentified infringement of something, somewhere”—was at odds with the DMCA’s text, purpose, and legislative history, as well as the case law interpreting it.28 YouTube further argued that Viacom misconstrued the DMCA’s “red-flag” knowledge provision, Section 512(c)(1)(A)(ii), in asserting that the provision “cannot be limited to specific infringing material because then it would (supposedly) be satisfied only when a service provider already has actual knowledge.”29 According to YouTube, “[t]he difference between the two provisions is not between specific and generalized knowledge, but instead between a subjective and an objective standard.”30 “Whereas the actual-knowledge provision relies on a determination of what [a] service provider actually or subjectively knew,” YouTube elaborated, “the facts-or-circumstances provision allows consideration of objective factors to determine whether the provider was aware of facts that would have made the infringement at issue obviousto a reasonable person.”31 YouTube asserted, contrary to Viacom’s allegations, that Viacom presented no evidence of specific knowledge.
In addition, YouTube noted that Viacom’s willful blindness argument “distorts the DMCA, the record, and the concept of willful blindness itself.”32 YouTube reiterated that there was no dispute that it promptly responded to takedown notices sent by Viacom. “What plaintiffs label willful blindness,” YouTube observed, “is actually allegiance to the DMCA, which expressly relieves online services of any obligation to affirmatively monitor their sites for infringement.”33
With respect to Section 512(c)(1)(B), YouTube argued that it did not receive “a financial benefit directly attributable to the infringing activity” while maintaining “the right and ability to control such activity,” as required by the statute. Basing a finding of control on a service provider’s failure to affirmatively police for infringement, YouTube noted, would be inconsistent with Section 512(m). Further, “[b]oth as a legal and a practical matter, the methods plaintiffs say were available to YouTube to forestall the alleged infringing activity (keyword searching, community flagging, Audible Magic fingerprinting) cannot give a service provider ‘control’ within the meaning of the statute.”34 YouTube emphasized that plaintiffs themselves had “recurring difficulties, even in this litigation, in distinguishing authorized from unauthorized postings of their own material on YouTube.”35 As to the financial benefit element, YouTube argued that its business model was legitimate and protected by the DMCA, as it earns advertising revenue from non-infringing uses and does not favor infringing ones. Lastly, YouTube disagreed with Viacom that the DMCA codified vicarious copyright liability. It noted that the legislative history relied upon by Viacom was associated with a preliminary version of the DMCA, not the final version.
As to Viacom’s contention that infringement did not occur “by reason of the storage at the direction of a user,” YouTube observed that “[a]n unbroken line of cases confirms that 512(c) applies to service providers like YouTube that facilitate third-party access to user-stored material.”36
Numerous briefs have been filed by amici curiae—12 in support of Viacom, 13 in support of YouTube, and three in favor of neither party. The latter briefs were filed by the American Intellectual Property Law Association (“AIPLA”)37and filtering technology companies Audible Magic38 and Vobile.39 While AIPLA’s brief was neutral, it urged the Second Circuit “to reject Viacom’s broad attempt to deprive Internet service providers (“ISPs”) of the benefits of the safe harbor provisions of the DMCA based on generalized knowledge that infringing activity is occurring on a site.”40
Notable briefs in support of Viacom include those filed by: (1) “professors and scholars who, from various perspectives, focus their work on the economic incentives of legal liability rules, including questions about efficiency and deterrence”;41 (2) “law professors who teach and write about copyright law and Internet law at law schools throughout the United States,” including Marquette Law professor Bruce Boyden;42 (3) professors and scholars—including Harvard Law professor Stuart N. Brotman, Ronald A. Cass, Dean Emeritus of Boston University School of Law, and Raymond T. Nimmer, Law Professor and Dean of the University of Houston Law Center—who are “personally concerned with the status and development of the law” and “believe that the questions raised by this case are of the highest importance”;43 (4) Microsoft and Electronic Arts;44 (5) the International Intellectual Property Institute;45 (6) organizations such as Broadcast Music, Inc., the American Society of Composers, Authors and Publishers, Sesac, Inc., and the Songwriters Guild of America, among others;46 and (7) the Motion Picture Association of America, Inc. and Independent Film & Television Alliance.47
Notable briefs supporting YouTube include those filed by: (1) content owners whose combined videos have been viewed on YouTube “over 3.3 billion times”;48 (2) the Consumer Electronics Association;49 (3) Human Rights Watch, Freedom House, and Reporters Without Borders and Access;50 (4) MP3tunes, Inc.;51 (5) the National Venture Capital Association, which noted that companies such as Google, Twitter, Facebook, eBay, and Yelp “exist only because the DMCA’s safe harbor, 17 U.S.C. § 512, shields them from liability for their users’ activities, providing investors with certainty that they will not face the sort of ruinous damages Viacom seeks in this case”;52 (6) eBay Inc., Facebook, Inc., Yahoo! Inc., and IAC/InterActiveCorp, which filed their brief “to provide the perspective of online service providers who have developed popular and innovative services in reliance on the safe harbor provisions of the [DMCA]“;53 (7) Public Knowledge;54 and (8) various intellectual property and Internet law professors, whose interest “is in seeing that copyright law is applied in a manner most likely to fulfill its constitutional mandate ‘to promote the Progress of Science,’ taking into account both the protections afforded to, and the obligations imposed upon, copyright holders and users of copyrighted works.”55
1 718 F. Supp. 2d 514 (S.D.N.Y. 2010).
9 488 F.3d 1102, 1113 (9th Cir. 2007) (holding that the notification procedures of the DMCA “place the burden of policing copyright infringement . . . squarely on the owners of the copyright,” and declining to shift that burden to a service provider).
10 665 F. Supp. 2d 1099, 1108 (C.D. Cal. 2009) (“CCBill teaches that if investigation of ‘facts and circumstances’ is required to identify material as infringing, then those facts and circumstances are not ‘red flags.’”).
11 600 F.3d 93, 107 (2d Cir. 2010) (“For contributory trademark infringement liability to lie, a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods. Some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary.”).
14 17 U.S.C. § 512(c)(1)(B).
17 Id. at 4.
18 Id. at 2.
19 Id. at 20.
20 Id. at 20-21.
21 Id. at 21.
23 Id. at 2.
24 Id. at 22 n.5.
26 Id. at 26.
27 Id. at 82.
28 Id. at 24. YouTube cited various cases in support of its argument that knowledge of specific infringing activity is required to disqualify a service provider from safe harbor protection. Among those cases was UMG Recordings, supra note 10, andWolk v. Kodak Imaging Network, Inc., No. 10-CV-04135, 2011 BL 70331 (S.D.N.Y. Mar. 17, 2011), a recent decision in which the Southern District of New York held, among other things, that the plaintiff’s prior DMCA-compliant notices were insufficient to provide the defendant, an Internet service provider that hosted user-generated photos for storage and sharing, with actual or apparent knowledge of other present or future infringements. For analysis of the Wolk decision, seeDistrict Court Rules Prior Takedown Notices Insufficient to Give Service Provider Actual or Apparent Knowledge of Future Infringements, Bloomberg Law Reports – Intellectual Property, Vol. 5, No. 14 (Apr. 4, 2011).
29 Brief for Defendants-Appellees, supra note 22, at 31-32.
30 Id. at 32.
31 Id. (citing S. Rep. No. 105-190, at 44 (1998)).
32 Id. at 37.
33 Id. at 37-38.
34 Id. at 25.
36 Id. at 26. YouTube noted that two recent cases have held that video-hosting services akin to YouTube are protected by the DMCA safe harbor. See UMG Recordings, Inc. v. Veoh Networks, Inc., 620 F. Supp. 2d 1081 (C.D. Cal. 2008); Io Group, Inc. v. Veoh Networks, Inc., 586 F. Supp. 2d 1132 (N.D. Cal. 2008).
39 Brief of Amicus Curiae Vobile, Inc. Providing the Court with Information Only and Taking No Position as to the Merit of this Appeal, Viacom Int’l Inc. v. YouTube, Inc., No. 10-3270 (2d Cir. Dec. 10, 2010).
40 Brief of Amicus Curiae, American Intellectual Property Law Association, supra note 37, at 2.
47 Brief for Motion Picture Association of America, Inc. and Independent Film & Television Alliance as Amici Curiae Supporting Appellants, Viacom Int’l Inc. v. YouTube, Inc., No. 10-3270 (2d Cir. Dec. 10, 2010).
55 Brief of Amici Curiae Intellectual Property and Internet Law Professors in Support of Defendants-Appellees and Urging Affirmance at 1, Viacom Int’l Inc. v. YouTube, Inc., No. 10-3270 (2d Cir. Apr. 7, 2011).
Storage at Direction of Users
Internet Service Providers
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