Viacom International Inc. v. YouTube, Inc: The Adventure So Far, and What May Be Yet To Come
Obtaining copyrighted material without paying the customary price is easier today than ever. The Internet is full of websites that host copyrighted content and allow users to access such content for free. For example, there is the popular Internet service provider YouTube. YouTube prides itself for being "the world's most popular online video community, allowing millions of people to discover, watch and share originally-created videos." YouTube Fact Sheet, YOUTUBE, Oct. 10, 2010, http://www.youtube.com/t/fact_sheet. Today, YouTube is one of the most "popular" sites on the Web, as evidenced by this statement: "People are watching 2 billion videos a day on YouTube and uploading hundreds of thousands of videos daily. In fact, every minute, 24 hours of video is uploaded to YouTube." Id.
Because copyright exists from the moment of creation in a qualifying work, each of these hundreds of thousands of videos posted daily on YouTube that is an original work of authorship is entitled to copyright protection. See 17 U.S.C. §102 (2006). In a perfect world, every one of the videos on YouTube would be posted by, or with the permission from, the actual copyright owner of the content in the video; unfortunately, this is not the case. Each video containing copyrighted content posted on YouTube without the copyright owner's authorization infringes the owner's copyright. See Id. §106.
In 2007, one copyright owner, Viacom Inc., filed a complaint against YouTube alleging copyright infringement. Viacom announced that YouTube was hosting almost 160,000 unauthorized clips containing Viacom's content, and that these videos had been viewed more than 1.5 billion times. Viacom Files Federal Copyright Infringement Complaint Against YouTube and Google, VIACOM NEWS, Nov. 10, 2010, http://www.viacom.com/news/News_Docs/Viacom%20Press%20Release.pdf. The ensuing litigation proved to be a landmark case that affects not only the rights of content owners, but the obligations of those hosting their content.
In Viacom International, Inc. v. YouTube, Inc. ("Viacom"), the United States District Court for the Southern District of New York ("district court") granted summary judgment in favor of defendant YouTube, and explained that YouTube is protected from Viacom's copyright infringement claims by way of the Digital Millennium Copyright Act's ("DMCA") §512 safe harbor provisions. Viacom Int'l Inc. v. YouTube, Inc., 718 F.Supp.2d. 514 (S.D.N.Y. 2010). Under 17 U.S.C. §512(c)(1), a service provider is protected from claims of copyright infringement if the service provider:
(A) (i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;
(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent (commonly referred to as the "red-flag" knowledge provision); or
(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;
(B) does not receive 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; and (C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.
Specifically, Judge Louis L. Stanton reasoned that because YouTube lacked item-specific knowledge of infringing activity, it did not "receive 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." Viacom, 718 F.Supp.2d 516-17. Moreover, Judge Stanton construed the safe harbor provision that requires that a service provider not be "aware of facts or circumstances from which infringing activity is apparent," as actually requiring knowledge of specific and identifiable instances of infringement. Id.
This article contends that the district court erred in requiring that YouTube possess item-specific knowledge of infringement before it forfeits DMCA safe harbor protection. By requiring such item-specific knowledge of infringement, the district court ignored relevant precedent and rendered the so-called "red-flag" knowledge provision in the safe harbor superfluous.
Details Of The Case
In Viacom, plaintiff Viacom International, Inc. ("Viacom" or "Plaintiff"), one of the world's leading creators of programming and content across all media platforms, filed suit against YouTube, Inc. ("YouTube" or "Defendant") for copyright infringement. Specifically, Viacom alleged violations of its exclusive rights to reproduce, publicly perform, and publicly display its copyrighted content. According to Viacom, the tens of thousands of videos on YouTube containing copyrighted Viacom content, resulting in hundreds of millions of views, were taken unlawfully from Viacom's copyrighted works without authorization. Complaint, Viacom Int'l Inc. v. YouTube, Inc., 2010 U.S. Dist. LEXIS 62829 (S.D.N.Y. 2010).
A brief discussion on the forms of copyright infringement is necessary to understand Viacom's claims against YouTube. Under United States copyright law, a defendant may be found liable for copyright infringement in two different forms: direct infringement and secondary infringement. See, e.g., MGM Studios v. Grokster, Ltd., 545 U.S. 913, 930 (2005). A "direct" infringer is anyone who violates one of the copyright owner's exclusive rights in §106 of the Copyright Act. On the other hand, an "indirect" infringer, also known as a "secondary" infringer, is anyone who causes or permits another to engage in an infringing act. Melville B. Nimmer & David Nimmer, 3-12 NIMMER ON COPYRIGHT §12.04 (2010). Secondary infringement is actually a broader class that includes three distinct methods of infringement: vicarious infringement, contributory infringement, and inducement of copyright infringement. Id.
Vicarious liability for copyright infringement exists when two requirements are met: first, the defendant must have both the right and ability to control the infringing conduct; and second, the defendant must have a direct financial interest in the infringing act. Id. For contributory liability for copyright infringement to exist, a defendant must materially contribute to an act of direct infringement, and the defendant must have knowledge of the direct infringement. Id. Liability for inducement of copyright infringement exists when a defendant distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement. Grokster, 545 U.S. 936. Viacom sued YouTube for direct, vicarious, and contributory copyright infringement, as well as inducement of copyright infringement.
At trial, YouTube moved for summary judgment on the ground that it is entitled to the DMCA's §512 safe harbor protection, and thus could not be held liable under any theory of copyright infringement, whether direct or secondary. Viacom cross-moved for partial summary judgment that YouTube was not eligible for safe harbor protection partly because: (1) YouTube had actual knowledge and was aware of facts and circumstances from which infringing activity was apparent, but failed to act expeditiously to stop it; and (2) YouTube "receive[d] a financial benefit directly attributable to the infringing activity" and "had the right and ability to control" such activity. Viacom, 718 F.Supp 2d. 516.
In granting summary judgment to YouTube, the district court held that YouTube satisfied all the requirements of the DMCA § 512(C) safe harbor provision. Id. at 529. The district court rejected Viacom's claim that YouTube was aware of facts or circumstances from which infringing activity is apparent, explaining that the so-called "red-flag" knowledge requirement actually requires knowledge of specific and identifiable instances of infringement. Id. at 520. The district court also rejected Viacom's claim that YouTube received a financial benefit directly attributable to the infringing activity, in a case where it had the right and ability to control such activity, explaining that "'the right and ability to control' the activity requires knowledge of it, which must be item-specific." Id. at 527.
Interpretations And Consequences
This article contends that by erroneously reading an item-specific knowledge requirement into both the "right and ability to control" necessity of §512(c)(1)(C) and the "red-flag" knowledge provision, the district court deviated from relevant precedent and rendered the "red-flag" knowledge provision superfluous. The district court ignored certain principles from landmark infringement cases such as Grokster and Napster that, if properly followed, would have paved the way for a Viacom victory. As a practical matter, this decision imposes too great an obligation on copyright owners to police their own content, rather than a balanced effort between copyright owners and services which foster and allow infringement to take place by providing the means. Indeed, under the district court's decision, copyright owners will be vested with a responsibility far greater than the one Congress intended when it crafted the DMCA safe harbor protection.
If a service provider receives 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 service provider loses safe harbor protection. 17 U.S.C. §512(c)(1)(B) (2006). It is important to note that the district court chose not to explicitly state that YouTube is receiving a financial benefit directly attributable to the infringing activity, opting instead to center its analysis around YouTube's right and ability to control the activity. Viacom, 718 F.Supp.514.
However, the district court, in a decision issued merely one month before Viacom, recognized that financial benefit exists where the availability of infringing material acts as a draw for customers and the service provider receives increased advertising revenue as a result. Arista Records LLC v. Lime Group LLC, 2010 U.S. Dist. LEXIS 46638, at *85-86 (S.D.N.Y. 2010). It should be fair to say that the amount of infringing material on YouTube acts as a draw for customers considering the infringing videos containing Viacom's content were allegedly viewed hundreds of millions of times. Viacom,718 F. Supp. 518. Furthermore, the district court noted that a jury could find that this increased usage enhanced YouTube's income from advertisements. Id. Applying the foregoing principles, the district court should have explicitly stated that YouTube receives a financial benefit directly attributable to the infringing material.
Contrary to the district court's decision that the "right and ability to control" infringing activity requires item-specific knowledge of infringement, the Court of Appeals for the Ninth Circuit in Napster correctly stated otherwise. A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004 (9th Cir. 2001). In Napster, a group of copyright holders sued Napster, a peer-to-peer computer file sharing program, for copyright infringement. Id. at 1011. The plaintiffs' theories of infringement were based on contributory and vicarious copyright infringement doctrines, which as discussed above, can hold the service provider liable for the direct infringement of its users. Addressing the vicarious infringement claim, the court reasoned that the ability to block infringers' access to a particular environment for any reason is evidence of the right and ability to supervise its users' conduct. Id. at 1023.
The court went on to explain that because Napster retained the right to control access to their system and terminate accounts at their discretion and had the ability to locate infringing material listed on its search indices, the lower court correctly found that Napster had the right and ability to control its users' conduct. See id. at 1024. Parallel to the Court's reasoning in Napster, one scholar suggests that "a service provider clearly has the ability to control the infringing activity when it hosts the infringing material, can remove it, block access to the system and filter incoming works through manual or technological means." Scott Zebrack, Viacom v. YouTube: a Missed Opportunity, THE NATIONAL LAW JOURNAL, July 26, 2010, http://www.law.com/jsp/nlj/PubArticleNLJ.jsp?id=1202463839409&iViacom_v_YouTubei_a_missed_opportunity&slreturn=1&hbxlogin=1.
Using the foregoing principles, it appears that YouTube does actually possess the right and ability to control both their users' conduct and the content they host. In fact, YouTube parallels Napster in reserving a control right in the following language taken from YouTube's terms of service:
"YouTube reserves the right to decide whether Content violates these Terms of Service for reasons other than copyright infringement, such as, but not limited to, pornography, obscenity, or excessive length. YouTube may at any time, without prior notice and in its sole discretion, remove such Content and/or terminate a user'su [sic] account for submitting such material in violation of these Terms of Service." Terms of Service, YOUTUBE, http://www.youtube.com/t/terms (last updated June 9, 2010).
The district court's reasoning that the "right and ability to control" infringing activity requires item-specific knowledge of infringement is also at odds with the United States Supreme Court's reasoning in Grokster. Grokster, 545 U.S. 913. In Grokster, a group of copyright holders sued Grokster, a peer-to-peer file downloading service similar to Napster, for inducement of copyright infringement and vicarious copyright infringement. Id. at 919. Since the Court was able to decide the case on the inducement theory, it opted not to analyze the vicarious liability claim. Id. at 931 n.9.
However, the Court did take the opportunity to interpret the phrase "right and ability to control" to impose liability even if the defendant initially lacks knowledge of the infringement. See id. The district court in Viacom explained that it believed Grokster to be inapplicable to the case at hand because the Grokster opinion addresses the phrase "right and ability" in context with vicarious and contributory liability, rather than with safe harbor provisions of the DMCA. See Viacom, 718 F.Supp. 525-26.
However, it is a common principle of statutory construction that where Congress uses terms that have accumulated settled meaning under common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms. Neder v. United States, 527 U.S. 1, 21 (1999). The Court of Appeals for the Ninth Circuit correctly applied this well-established principle of statutory construction when it explained that the safe harbor provisions of the DMCA should be interpreted consistent with the common law standard for vicarious copyright liability. Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102, 1117-1118. By choosing to ignore the Supreme Court's interpretation in Grokster that the phrase "right and ability to [control]" does not require actual knowledge of infringement, the district court erred in its interpretation of the safe harbor provisions.
The district court further erred in requiring that YouTube possess item-specific knowledge of infringement before it is considered to possess "red-flag" knowledge. As discussed earlier, under the safe harbor provisions, if a service provider is aware of facts or circumstances from which infringing activity is apparent and fails to act expeditiously in removing it, the service provider is ineligible for safe harbor protection. Congress distinguished actual knowledge from "red-flag" knowledge by dividing the two into separate factors within the statute. Digital Millennium Copyright Act, Pub. L. No. 105-304, 112 Stat. 2860 (1998) (codified as amended in scattered sections of 17 U.S.C.).
It appears that by requiring item-specific knowledge of infringement for "red-flag" knowledge, there is no longer a distinction between the actual and "red-flag" knowledge provisions. I cannot think of a situation in which a service provider would possess item-specific knowledge of infringement and yet somehow fall short of possessing actual knowledge of that same infringement; the district court fails to provide an example of such a situation. The district court's holding that renders the "red-flag" knowledge provision superfluous within the statute could be acceptable if not for perhaps the most basic canon of statutory interpretation: "[a] statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant . . . ." E.g., Corley v. United States, 129 S. Ct. 1558, 1566 (2009). The district court should have reserved meaning for "red-flag" knowledge other than explaining that this knowledge must be item-specific. A basic reading of the statute that the service provider not be "aware of facts or circumstances from which infringing activity is apparent" (emphasis added) suggests that once YouTube received a take-down notice for some 100,000 videos from Viacom, it became aware of either facts or circumstances from which infringing activity is apparent. Thus, the responsibility to seek out subsequent infringing videos should have fallen on YouTube rather than Viacom.
In summary, the district court decided to adopt an interpretation of the safe harbor provisions of the DMCA with serious legal and practical implications. The district court's decision is not only at odds with the Napster and Grokster decisions, but it also ignores two of the most settled rules of statutory construction. Moreover, the district court's decision imposes a burdensome obligation on copyright owners. By requiring copyright owners to identify each and every video containing infringing content on websites before the service provider is required to take any action, YouTube is perfectly situated to ignore infringement so long as it responds to take-down notices sent by the copyright owner. The obvious result is that there is no incentive on the part of the service provider to affirmatively seek out the infringing activity it fosters -- a result that hardly seems fair in light of the obvious truth that it is the service provider who is best situated to police its own website.
Joseph Gregory is a 2L at New York Law School. He is currently an intern in Warner Music Group's legal department and plans to focus his work on intellectual property and entertainment law after law school.