« Poindexter v. EMI | Main | Unraveled: A Film Review »

Second Circuit Interprets DMCA Safe Harbor Provision in Viacom International v. YouTube

By Brendan Mee
www.bmeelaw.com

On April 5, 2012, the Court of Appeals for the Second Circuit vacated a summary judgment order from the Southern District for the State of New York in the closely watched Viacom case. (Viacom International v. YouTube, No. 10-3270, 2012 WL 1130851 (2d Cir. Apr. 5, 2012)). The suit now returns to the District Court on remand for fact finding as to whether the defendants had "actual knowledge or awareness" of specific acts of copyright infringement, and whether the defendants made "deliberate effort to avoid guilty knowledge" of infringement (i.e., were willfully blind to specific acts of infringement). (Id. at *34). However, damages may only be recovered where the defendants are shown to have knowledge of specific acts of infringement. Thus, the massive damages award sought by the plaintiffs at the outset of the suit is no longer on the table.

Background

The Digital Millennium Copyright Act,17 U.S.C. § 512 (the DMCA) provides a safe harbor for internet service providers, such as YouTube, so that the service providers are not liable for copyright infringing material on their websites provided they meet the criteria set forth in the statute and expeditiously comply with the "take-down" provisions. The Viacom case has been viewed as an important test of the DMCA safe harbor. No less than 28 amicus briefs were filed in the appeal of the District Court decision, and the decision to vacate the summary judgment order has already been widely reported in the general press.

In reaching its conclusions, the Second Circuit construed several aspects of the DMCA safe harbor provisions, specifically 17 U.S.C. § 512(c), which "covers infringement claims that arise '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.'" (Id. at *10).

"Actual knowledge" Under 17 U.S.C. § 512(c)(1)(A)

The safe harbor applies only if a service provider "does not have actual knowledge that the material or an activity using the material on the system or network is infringing." 17 U.S.C. § 512(c)(1)(A). Thus, the principal issue in this case was what constitutes "actual knowledge" of infringement that will disqualify a defendant such as YouTube from taking advantage of the DMCA safe harbor provisions.

Although the Second Circuit remanded, it adopted the essential aspects of the District Court's construction of the DMCA safe harbor provision: Actual knowledge means "knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement." (Id. at *15). The Second Circuit pointed out that this interpretation flowed from the statute, because "the nature of the removal obligation itself contemplates knowledge or awareness of specific infringing material." (Id. at *16).

The initial suit sought infringement damages for copyright infringement of some 79,000 YouTube clips. (Id. at *8). Of course, showing specific knowledge of each such infringement would be a monumental burden of proof. Thus, under the knowledge standard adopted by the Second Circuit, a huge damages award of the type initially sought will be impossible to win.

However, the Second Circuit did find evidence in the record that YouTube executives had knowledge of specific cases of infringement, and remanded to the district court to determine whether any of those cases were among the 79,000 charged. (Id. at *21). The court also held that actual knowledge could be shown by willful blindness, and on remand the District Court will review whether the defendants were willfully blind with respect to any of the 79,000 specific acts of infringement charged. (Id. at *24).However, discovery on both actual knowledge and willful blindness is over; the Second Circuit deems the record to be complete with respect to these issues. (Id. at *35).

"Right and ability to control" Under 17 U.S.C. § 512(c)(1)(B)

The Second Circuit also remanded to the District Court on a second aspect of the safe harbor provision, in Section 512(c)(1)(B), which provides that an eligible 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." The question was what constitutes "right and ability to control" infringing activity under the statute. (Id. at *28).

The Southern District had favored the defendant's view that "right and ability to control" the infringing activity required item-specific knowledge of the infringement, which essentially merged the issue with the "actual knowledge" requirement. The Second Circuit rejected this interpretation, as it would have rendered the neighboring provision in Section 512(c)(1)(A) superfluous. (Id. at *25).

Likewise, the court rejected the theory advanced by the plaintiffs, who argued that the common law standard for vicarious liability for copyright infringement should apply. Instead, the Second Circuit indicated that "'something more than the ability to remove or block access to materials posted on a service provider's website'" was required to show the right and ability to control. (Id. at *27). The "something more" required to show control under the statute was left somewhat vague, but the court remanded to the District Court for fact finding on the issue of whether the defendants "exerted substantial influence on the activities of users, without necessarily--or even frequently--acquiring knowledge of specific infringing activity."(Id. at *28).

Given the original decision from the District Court, it appears very unlikely that the Southern District would find that YouTube exerted that kind of control over its users' content. Rather, the detailed directions to the District Court on remand indicate the Second Circuit's intent to have its interpretation of the DMCA safe harbor provision completely articulated in the record, conscious that its interpretation may become the "gold standard" for other Circuits going forward.

"By reason of storage at the direction of a user. . ." 17 U.S.C. § 512(c)(1)

The final statutory construction issue addressed by the appellate court involved functionality offered by YouTube to its customers. The statute limits application of the safe harbor to instances where the infringement occurs "by reason of the storage at the direction of a user of a material . . . ". The question was whether certain activities on YouTube met this criterion, because the infringement in these instances occurred (at least arguably) at the direction of YouTube rather than at the direction of the user.

The court reached the conclusion that transcoding of videos into a standard display format, and the playback of videos on "watch" pages merely facilitated access to user-stored material, and consequently the safe harbor applied. Likewise with the thumbnail function in YouTube, which displays related content in a side bar when a video is viewed--the court agreed with the District Court that to allow such activities to fall outside the scope of the safe harbor would have eviscerated the protection afforded to service providers under the DMCA, even though the display of additional content is generated automatically by YouTube. (Id. at *30).

The court did allow that certain activities undertaken by YouTube, specifically licensing of certain videos to mobile telephone companies for use with mobile devices would likely not fall within the scope of the safe harbor. However, in order to avoid delivering an advisory opinion on the challenged activities, the court chose to remand the case to the district court for confirmation that none of the clips asserted in the litigation were ones that had been licensed to the mobile companies. (Id. at *31-32).

Conclusion

YouTube spins the Second Circuit's decision as a victory, notwithstanding the remand, because "actual knowledge" requires knowledge of specific acts of infringement, which likely precludes the kind of huge damages award that was originally sought. However, the Second Circuit opinion contains some subtleties regarding the boundaries of the safe harbor provision, of which all of the service providers will have to take careful note to ensure that they fall within the protections of that provision.

The decision can be reviewed at: http://www.ca2.uscourts.gov/decisions/isysquery/fb25d6fa-bee5-4c8d-8748-a1989496c9dc/5/doc/10-3270_10-3342_opn.pdf#xml=http://www.ca2.uscourts.gov/decisions/isysquery/fb25d6fa-bee5-4c8d-8748-a1989496c9dc/5/hilite/

Post a comment

(If you haven't left a comment here before, you may need to be approved by the site owner before your comment will appear. Until then, it won't appear on the entry. Thanks for waiting.)

About

This page contains a single entry from the blog posted on April 7, 2012 11:09 AM.

The previous post in this blog was Poindexter v. EMI .

The next post in this blog is Unraveled: A Film Review.

Many more can be found on the main index page or by looking through the archives.