Technically Legal

It’s been three years since Stephanie Lenz posted this home video to YouTube which depicts her then 13-month-old child rocking out to the Prince song “Let’s Go Crazy.” It’s a 29-second video of a toddler bouncing around to fuzzy-sounding music playing from small bookshelf speakers in the background. After the video had been up for about four months, YouTube took it down pursuant to a DMCA takedown notice they received from UMG, the holder of the copyright. With the help of the EFF, Lenz sued UMG and asked the court to declare that UMG violated the DMCA when it sent the original takedown notice to YouTube.

This case raises some interesting DMCA-related questions. First, are copyright owners required to take fair use into account before sending a DMCA takedown notice? Second, if fair use is not taken into account, can copyright owners be liable for damages for “materially misrepresent[ing] … that material or activity is infringing” under §512(f)?

The district court answered the first question affirmatively in August 2008, stating that “in order for a copyright owner to proceed under the DMCA with a ‘good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law,’ the owner must evaluate whether the material makes a fair use of the copyright.” (Order Denying MTD, Pg. 6).  The court also held that “[a]n allegation that a copyright owner acted in bad faith by issuing a takedown notice without proper consideration of the fair use doctrine … is sufficient to state a misrepresentation claim under §512(f).” (Order Denying MTD, Pg. 6). This was not an obvious conclusion for the court to reach—due, in part, to the nature of fair use and some controlling precedent from the Ninth Circuit.

An official finding that a use of a work is a “fair use” is a legal determination by a judge after weighing the four fair use factors in litigation. This reality sometimes makes predicting whether a use of a copyrighted work will ultimately be adjudicated as a fair use challenging prior to filing a lawsuit. Given the range of user creativity that YouTube so readily inspires, the addition of even a small portion of a copyrighted work to another’s original expression can sometimes make this determination extraordinarily difficult.

The court addressed this concern in the opinion noting that “there are likely to be few [cases] in which a copyright owner’s determination that a particular use is not a fair use will meet the requisite standard of subjective bad faith required to prevail in an action for misrepresentation under §512(f).” (Order Denying MTD, Pg. 6). Based on this somewhat wishy washy language, it seems that an instance where a failure to identify a fair use might qualify for §512(f) damages is when the use is so unequivocal fair that it’s obvious to the person reviewing the use before sending a notice.

Fast forward to last week. Nearly two years after this decision (and extensive discovery), Lenz and UMG filed motions for summary judgment (Lenz’s Motion, UMG’s Motion) on whether UMG violated the DMCA takedown notice requirements under §512(f). As articulated in the statute, 512(f) prohibits “[a]ny person from knowingly materially misrepresent[ing] … that material or activity is infringing” and awards “any damages, including attorneys’ costs and fees, incurred by the alleged infringer … who is injured by such misrepresentation.”

The Copyright Act doesn’t state a definition for “knowingly materially misrepresents.” Under these circumstances a judge usually interprets the proper meaning. Since the DMCA was enacted, two prominent cases have issued opinions that interpreted the phrase “knowingly materially misrepresents” differently: Online Policy Group v. Diebold, 337 F.Supp.2d 1195 (N.D. Cal. Sept. 30, 2004) and Rossi v. MPAA, 391 F.3d 1000 (9th Cir. Dec. 1, 2004). Note here that the Rossi case was decided by the Ninth Circuit; consequently, this means the Rossi interpretation is the controlling precedent in the Lenz case. Still, it’s important to see the distinctions illustrated by these rulings.

The Diebold court interpreted the term “knowingly” to mean that “a party actually knew or should have known if it acted with reasonable care or diligence, or would have had no substantial doubt had it been acting in good faith.” (Diebold, 337 F.Supp.2d at 1204). This has been termed the “objective standard” and is the more liberal interpretation–obviously, if a party “should have known,” then the onus is far greater on rights holders to correctly identify instances of fair use.

In contrast, the Ninth Circuit in Rossi took a more conservative approach by juxtaposing the phrases “good faith,” as used in §512(c)(3), with “knowing misrepresentation” and reasoned that §512(f) requires some literal form of knowledge, i.e., that the copyright owner is actually aware of facts that legally transform an allegation of copyright infringement into a false allegation of copyright infringement, otherwise copyright owners could be liable for simple mistakes. (Rossi, 391 F.3d at 1004).

Based on the subjective standard, Lenz (and the EFF) now has to show that the UMG employee(s) who reviewed the video prior to sending the takedown notice were subjectively aware that the video was a fair use prior to sending the notice. However, in the Lenz/EFF memorandum filed last week, she states this:

The undisputed evidence demonstrates Universal failed to form a good faith belief that the Video is infringing, either because it never considered whether it was a fair use and therefore authorized by law, or because it chose to be willfully blind to that fact. (Lenz MSJ, Pg. 8).

I think this excerpt is a fair, albeit very brief, summary of Lenz’s factual framework in support of her motion—the unredacted portions at least. This framing definitely supports the objective standard in Diebold, where a defendant could be liable when s/he should have known the video was likely a fair use; but, it feels factually light under the subjective Rossi standard, were they have to actually be aware the video was likely a fair use. Recall that the Ninth Circuit explicitly rejected the objective standard. (Rossi, 391 at 1004 (“A copyright owner cannot be held liable simply because an unknowing mistake is made, even if the copyright owner acted unreasonably in making the mistake. Rather, there must be a demonstration of some actual knowledge of misrepresentation on the part of the copyright owner.”)).

So what now? Back in the 2008 ruling on fair use, the court appeared poised to rule that this video was an unequivocal instance of fair use worthy of §512(f) damages. If that is the outcome on the current motions, I’m not sure the Ninth Circuit will agree based on their narrow circumscription of §512(f) misrepresentations. Unfortunately, if the district court rules this is not a violation, it removes almost all the teeth from §512(f), as copyright owners would then have a statutory incentive to issue takedown notices blindly, without looking carefully at the content in question, and, potentially, without repercussion.

However resolved, this issue smells ripe for appeal.

EFF’s Lenz v. Universal page.

Comments Off Posted in: Analysis, Commentary on October 29, 2010

Today, the Ninth Circuit issued its opinion in Vernor v. Autodesk, reversing the district court’s ruling which held a sale of software transferred ownership of the copy to a customer and not a mere license.

This case hits on a number of fascinating legal topics (first sale, UCC, licensing rights, statutory interpretations of copyright act, copyright misuse, etc) that are not easily explained in a simple blog post.  Hopefully we can pick this one up for discussion on this week’s podcast and give it some more thought.  In the meantime, here’s a quick rundown of facts/holdings and some quick observations:

Copies of AutoCAD are normally sold from Autodesk (the developer/marketer) with a software license agreement (a/k/a a EULA).  Although there are a few different versions of the license, all of them clearly state that Autodesk retains title to all copies and the customer is receiving a non-exclusive, non-transferable license to use the software.  Also, these agreements state the license terminates upon non-compliance and, if the software is an “upgrade,” the customer “must destroy [any AutoCAD software] previously licensed” to them,  “including [hard and soft] copies, within 60 days of purchas[ing] the upgrade.”

A person named Vernor bought several copies of used AutoCAD, from a few different sources — includes at least a garage sale and an office sale (think “going out-of-business” sale) from a company named “CTA.” Each copy was apparently in a product box, which had already been opened (no shrink wrap on the outside), contained the necessary optical media, and activation code. Vernor never installed any of the copies on his computer — and instead listed them for sale on eBay.

Autodesk, threatened to sue for copyright infringement and sent takedown notices each time they found an eBay listing. Vernor counter noticed each time and sold a bunch of copies.

Eventually, after nearly losing his eBay account, Vernor wrote to Autodesk and argued that he had the right to sell copies of the software under the first sale doctrine (which limits a copyright holder’s ability to collect royalties following the first sale of a hard copy, see 17 USC § 109) since he bought it used.  Vernor also argued that the license agreement did not apply to him, because he never agreed to it or installed the software (no “I agree” click-through UI splash).

Autodesk disagreed. Then, Vernor sued Autodesk seeking a declaratory judgment (asking the judge to declare he was not infringing) and alleged copyright misuse. The District court (see MTD and MSJ orders) held Vernor’s sales were not copyright infringements based on the first sale doctrine but never resolved the misuse of copyright claims. Autodesk appealed to the Ninth Circuit.

Interesting questions posed and the ninth circuit’s (paraphrased) answers:

(1) Were the original copies sold or licensed by Autodesk, despite what the license said?

Ninth cir: The AutoCAD EULA is a license, because Autodesk called the EULA a license, restricted the customer’s ability to transfer a copy of the software upon sale, and had a series of additional restrictions on use.

(2) Since the Autodesk EULA allowed “indefinite” possession of the software in perpetuity, can it still be a license?

Ninth Cir: Yes, it’s still a license. The ability to hold rights in perpetuity is a factor in analysis, but not dispositive by itself.

Result: The right to use software is distinct from the right to own it, at least in this case.

Why is this opinion important? There are a lot of journal articles that devote hundreds of pages to this topic and argue both sides fervently on the merits – instrument drafting and UCC Art. II sale/license distinctions, software policy. They are all worth reading — I love thinking about these things as a lawyer.

But, as a consumer, I’m bummed by what I perceive to be the death throes of the first sale doctrine. I wonder if it’s only a matter of time before (possibly not even within my own lifetime) that all (or at least most) media will only be available in these restrictive formats, with licenses or DRM, the concept of a secondary media market is lost, and the first sale doctrine will be as dusty and forgotten as the 3d Amendment.

1 Comment Posted in: Analysis, Commentary on September 10, 2010

Less than a week after the Library of Congress released the latest round of DMCA anti-circumvention exemptions, word is out that the iPhone 4 has been jailbroken.  In fact, a new website called “jailbreakme.com” offers a software app to accomplish exactly this.

Apple’s support site continues to state that jailbreaking is a violation of the iOS license agreement.  Perhaps the obvious conclusion is that Apple will continue to include anti-jailbreaking/iOS modification restrictions within the license agreement.   The bottom line:  if you jailbreak your iPhone, you still lose your warranty, and an update push might brick your device.  That’s been the norm for some time, so nothing terribly new here.  Apple remains within their legal rights also, since the DMCA exemptions do not affect contract law.

Despite the tech media’s positive support for the new exemptions, I have not seen a detailed discussion of the limitations of the exemptions (Dominik and I discussed some of them on this week’s podcast in detail).  Based on our reading, the exemptions are not a sweeping authorization for all jailbreaking activities.  Websites that provide “jailbreaking” apps or services, like jailbreakme.com,  may still have legal concerns.

If you read the official release from the US Copyright Office, you might have noted this little quirky sentence in the first paragraph:

“Persons making noninfringing uses of following six classes of works will not be subject to the prohibition against circumventing access controls (17 U.S.C. § 1201(a)(1)) until the conclusion of the next rulemaking.”

Important here is that the exemptions only apply to § 1201(a)(1) and no other section.  If you read the entire statute, you can see that § 1201(a)(2), which is not exempted, still prohibits the:

“manufactur[ing], import[ing], offer[ing] to the public, provid[ing], or otherwise traffic[king] in any technology, product, service, device, component, or part thereof, that –

(A) is primarily designed or produced for the purpose of circumventing a technological measure that effectively controls access to a work protected under this title”

Unfortunately, this means that it is still unlawful to provide an application or service for jailbreaking.  App developers should take notice that they are probably not exempt from these prohibitions, should Apple decide to pursue them in court.  However, based on the 5th Circuit’s latest opinion, there is still some argument that a violation of § 1201(a) does not stand on its own without an underlying infringement of a copyright owner’s exclusive rights.  Still though, I would not consider the 5th Circuit’s opinion on § 1201 to be the ultimate fix.   Be careful when dancing near the lines on these rather complex statutory provisions and don’t forget that an applicable EULA or ToS  may still be enforceable in court.

Comments Off Posted in: Commentary on August 3, 2010

Library of Congress releases new DMCA anti-circumvention exemptions, 5th Circuit rules in favor of Fair Use under the DMCA’s anti-circumvention provisions, and a few major companies sued for using features in flash cookies.

Please download the podcast or subscribe to the feed.  Feel free to e-mail us with comments and suggestions.

New DMCA Anti-circumvention Exemptions

Read about it on our blog.

U.S. Copyright Office Release

Provisions in DMCA: 17 U.S.C. § 1201

5th Circuit, Section 1201, and MGE v. GE, No. 08-10521 (5th Cir. 2010)

Read about it on Ars Technica

5th Circuit’s Opinion

Flash cookies: Valdez, et al. v. Quntcast, MySpace, Hulu, NBC, ESPN, et. al

Read about it on Ars Technica

Complaint (courtesy of Wired)

In other news, Ben and David Lu!! are traveling around the country and had to miss this week’s recording.  Also, audio quality might be a little poor (some nasty background noise and a few bad audio splices while editing); apologies in advance.

1 Comment Posted in: Podcast on August 2, 2010

Yesterday, we recorded a special edition of our podcast and devoted approximately 2/3 of the show to discussing the Viacom v. YouTube/Google arguments which were presented in their respective cross-motions for summary judgment. One of the most important pieces of the litigation is whether the DMCA section 512(c) safeharbor will apply to Google and whether Google might be secondarily liable for copyright infringement.  I felt it would be helpful to provide a quick and dirty guide to some of the liability principles at stake in the case.

Secondary liability, or “indirect liability,” attaches liability to certain intermediary entities and other persons who are not participating in an infringing act, but are somehow contributing, profiting, or inducing another person’s act of infringement. For example, this might apply to a person who owns and operates a website for the sole purpose of facilitating copyright infringement of song recordings–that operator is not downloading or uploading the sound recordings herself, and therefore is not directly infringing any copyrights, but is providing a medium for others to participate in infringing activities.  For you legal history afficionados, secondary liability dates has been recognized in various forms by courts at least as far back as the late 19th century (see e.g., Fishel v. Lueckel, 53 F. 499 (S.D.N.Y. 1892) (recognizing liability for profiting from infringement as a joint tortfeasor)).  Despite this, secondary liability has still not been codified in the Copyright Act.  Consequently, across federal jurisdictions the standards of secondary liability vary a little from court-to-court.  Nonetheless, secondary liability can be parsed into two categories: (1) contributory liability and (2) vicarious liability.

Scholars and practitioners devote hundreds of pages to discussing contributory and vicarious infringement.  I’m not here to make your eyes bleed.  So, please consider the following points a very broad overview:

Contributory Infringement: When a person, who has knowledge of a direct instance of infringement (e.g., another person uploading a unauthorized video), materially contributes to, *or*, actively induces the infringing conduct.

By a Materially Contribution: The contribution generally needs to add something to the original act of infringement.  For example, some courts have ruled that adding either software, hardware, and webspace, to provide a conduit to unlawfully exchange copyrighted works is enough.  In another case, the Ninth Circuit held the operators of a swap meet where independent vendors sold unauthorized copies of copyrighted works was sufficient to survive a motion to dismiss. Note, however, that under a contributory liability theory, a defendant must have knowledge that an act of infringement is occurring to be liable.

Or, by Inducement:  In 2005, the Supreme Court held in MGM v. Grokster that a person is liable for contributory infringement when she “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.”

Vicarious Infringement: When a person has the right and ability to supervise an infringing activity and derives a direct financial interest from the infringing activity.  Some courts have interpreted that this does not necessarily mean earned revenue, merely deriving some form of financial interest or financial incentives for tolerating unlawful from the infringing activity may suffice.   For example, check out the Napster litigation from 2001: A&M v. Napster, 239 F.3d 1004 (9th Cir. 2001).

As a final note, it’s important to remember that both the contributory and vicarious liability theories require there to be an original act of direct infringement.  In other words, there has to be another individual who violates the Copyright Act by directly misappropriating the exclusive rights of a copyright owner.

Enter Google, YouTube, and Viacom. Among the most interesting factoids which have surfaced from the summary judgment motions in the Viacom v. YouTube case, is that prior to Google’s acquisition, the founders and executives at YouTube were aware that the website was being used to upload unauthorized copyrighted content. Viacom’s motion quotes email excerpts from the executives who discuss the importance of allowing users to upload arguably infringing content because it was driving up website traffic, making the site an attractive acquisition target based on traffic metrics. Along one line of reasoning, the executives were inducing users to upload infringing content and may have actually participated in some of this. This would be the “smoking gun” argument. See, once YouTube was acquired by Google, Google has arguably assumed liability from actions which took place before the closing date–this is a very common occurrence in any corporate acquisition, but is often subject to the language in the agreement (buyer and seller can negotiate for certain terms and indemnity of liabilities).

What remains unclear, to some extent, is the amount of knowledge needed by the operators to impute secondary liability beyond the DMCA safeharbor. For instance, just because the YouTube executives knew that some videos were likely to have been uploaded without authorization that doesn’t mean they *actually* knew they were unauthorized. Consider this theory plausible deniability. Unless the executives took the time to check with the actual copyright owners, or unless they received a takedown notice or cease and desist notice, they arguably didn’t know with certainty that a particular upload was expressly unauthorized.

Here’s where the DMCA section 512 safeharbor comes into play.  In the past on our podcast and blog (here’s a more thorough overview I wrote), we’ve beaten to death the 17 U.S.C. 512(c) language, but it’s helpful to take a fresh look to see how the precise wording of the statute comes into play:

(c) Information Residing on Systems or Networks At Direction of Users.—

(1) In general.— A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, 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 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; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) does 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; 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.

Note 512(c)(1)(A)(i)-(iii), in bold above.  That’s the statutory language concerning the level of knowledge that potentially implicates a service provider with infringement by a user.   Of particular interest to me is (ii), which states that if a service provider is aware of “facts or circumstances from which infringing activity is apparent,” the service provider cannot take advantage of the safehabor.   Depending on how the court applies this language, Google might find themselves in hot water based on the email exchanges of the previous YouTube executives.   However, it’s not black and white.  Just last year, we saw the UMG v. Veoh case, in which a California Federal Court ruled that a “blanket notice” for the purposes of DMCA takedowns was insufficient to shift the burden of copyright policing to Veoh.  This is important, because if the Viacom and YouTube court decides to follow this reasoning,  it gives YouTube some of the aforementioned plausible deniability– if there were no notices specifically indicating the exact uploads which were infringing, it might be insufficient to impute actual knowledge on YouTube.

Google has separately argued in their motion that Viacom participated in stealth marketing tactics which would have made it very difficult to determine whether an upload was in fact authorized by Viacom but uploaded by another person.  Additionally, Google points to evidence that Viacom had disparate internal policies under which they allowed certain unauthorized videos to remain on YouTube, without flagging or sending any notices to YouTube.  This obviously would make it much more difficult for the YouTube executives to independently determine an upload to be infringing without notice.  You simply can’t act as a filter if you don’t actually know who is responsible for a particular file.

I do think this is a factually fascinating case and it’s too close to speculate what the court is likely to do.  There’s also more detail worthy of  discussion on this case that would make this post pages and pages long.  Check out the plethora of commentary from the legal blogosphere  for additional takes on this case.  It’s also worth listening to our show (which will post tonight, around 12AM EST) and hearing myself, Ben, and Dominik debate the merits from different points of view.  We dove into much deeper detail on the specifics.

Other Bloggers’ takes:

Ben Sheffner (Copyrights & Campaigns)

Eric Goldman (Technology Law and Marketing)

EFF (Deeplinks)

Mike Masnick (TechDirt)

Nate Anderson (Ars Technica)

Comments Off Posted in: Analysis, Commentary on March 22, 2010

Over the last couple of months, we’ve seen some interesting cases (e.g., Veoh and Scribd) crop up where parties claimed the “safeharbor immunity” of the Digital Millennium Copyright Act’s (DMCA) section 512.  This seemed like the perfect time to give you a rundown on section 512 and its application to User Generated Content (UGC) websites.

So, grab a cup of coffee or your favorite beverage, sit back, and prepare to dive into an abyss of procedural nuance and murky definitions!

(Prefatory note: This is NOT a comprehensive analysis of all section 512 issues.   So please don’t treat this as a guide or an authority on this area of law, as it includes as much opinion as it does statutory language.  As always,  this is NOT intended to be advice.  If you think you have legal problem consult with an attorney and DO NOT rely on the information here.)

THE BASICS OF 17 U.S.C. §512 and §512(c)(1)

DMCA §512 has multiple parts that limit liability of service providers for infringement of online content.  The main provisos that apply to the hosting and storage of UGC on a website including §§ 512(c), 512 (g),  512(i), and 512(k).  Each of these sections imposes requirements on online service providers in order to qualify for a limitation of liability.  §512(c) sets forth the basic components of the limitation of liability, 512(g) gives us the “notice and takedown” procedures and counter notification process, 512(i) imposes some additional requirements on website service providers to create policies to inform and handle users of site DMCA procedures, and 512(k) is chock full of useful definitions.

The language that provides the teeth of the safeharbor is found in §512(c)(1)which states:

(c)  Information Residing on Systems or Networks At Direction of Users.—

(1)  In general.— A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, 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 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; or

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) does 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; 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.

§512(c)(1) is a mouthful.  More concisely stated, if you qualify as a “service provider” (as is defined under section 512(k)), you are immune from liability as long as you do not have “actual knowledge” of infringing material or infringing activity on your network, OR, if you are not aware of apparent facts  or circumstances which would give inference to the presence of infringing materials or activity, OR, if you do become aware, you act “expeditiously to remove or disable access to the material.”  Note that in addition to 512(c)(1)(A)(i),(ii), and (iii), requirements under (B), no financial benefits from infringing activity, and (C), takedown request compliance, will also need to be satisfied for the safeharbor to apply to a service provider (Sidenote– if you are wondering why this is, or have no experience with interpreting statutory construction, use of the word “;and” following (B) as well as the hierarchy of (A), (B) and (C) read together accomplish this.).

The definition of “service provider” is found separately in §512(k)(1)(A) and (B) and means “a provider of online services or network access, or the operator of facilities therefor, and includes [an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received].”  As the statute is worded, many entities can qualify as a “service provider” for immunity, as long as the other criteria in §512(c)(1) is satisfied.  This broad definition allows websites like YouTube and Veoh to potentially qualify for protection, as well as ISPs and other network conduits that send infringing packets between routers.

A separate section, §512(i), adds additional conditions.  It’s labeled “conditions for eligibility” and sets forth some requirements to be eligible for liability immunity under all of section 512.  §512(i) requires a service provider must have “adopted and reasonably implemented,” a “policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers; and accommodates and does not interfere with standard technical measures.” That phrase “standard technical measures” goes on to be defined as “technical measures that are used by copyright owners to identify or protect copyrighted works and– have been developed pursuant to a broad consensus of copyright owners and service providers in an open, fair, voluntary, multi-industry standards process; are available to any person on reasonable and nondiscriminatory terms; and do not impose substantial costs on service providers or substantial burdens on their systems or networks.”

§512(i) is a little more clearly worded than some of the other portions of §512.  Just as the language reads, a service provider needs to have implemented a policy and system for notifying users of policies and identifying and terminating repeat infringer accounts.  YouTube has some great examples of how they appear to have implemented these requirements, see YouTube’s Terms of Service, Content Management, DMCA Notification pages.

Provided that the requirements are met,  the effect of §512(c) is that a website will not be held liable for an infringement of online content which is being hosted at the direction of a user.  Prior to 1998, the year the DMCA was enacted, websites that hosted content at the direction of users were at risk for lawsuits based on the legal theory of contributory infringement.   This form of liability arises when at least 2 parties are involved–  a “direct” infringer who is actually violating the copyright, and the contributory infringer, who has (i) knowledge of the infringing activity and (ii) some form of material contribution to the infringement, either through assisting the direct infringer or inducing infringement.  In some early cases, the mere inference that some infringing activity was afoot or that the service was being used to facilitate acts of copyright infringement were enough for courts to find a service provider liable.  Even though the website was merely hosting a service and data, they could still find themselves embroiled in costly lawsuits even though they did not intend to participate in infringing activity.  This would have chilled innovation in this market chasm if the DMCA hadn’t been enacted.  Interestingly, during the legislative process of promulgating the DMCA, the concept of Web 2.0 was hardly as developed as it is today– so it’s hard to imagine the legislators envisioned the safehabor would be applied as it is today.   Nonetheless, it has played an absolutely critical role to ensure the continuation of similar innovations.

Note, however, that there are gray areas in the broad statutory language that is used.  For example, at what point does a service provider who is manipulating third-party content lose immunity because they are inserting or pre-rolling advertisements into user videos?  What is a financial benefit “directly attributable to the infringing activity”?  Some of these provisions are particularly troubling to website owners as there isn’t always a clear answer.  Moreover, certain groups of plaintiffs have an interest in ensuring the safeharbor is not broadly applied to new web services that become new conduits for hosting infringing materials.  Case law has provided some guidance, but often these decisions are highly fact dependent to the case at issue, leaving the application of immunity obfuscated and subject to well-developed technical arguments that simply aren’t addressed in the statutory language.

NOTICE AND TAKE DOWNS, §512(c)(3)

§512 has spawned what we’ve come to know as the “notice and take down” system for UGC websites like Veoh, YouTube, and Scribd.  If a lawful content owner finds his protected works being infringed on one of these websites, section §512 provides a remedy for the “expeditious” removal of the offending material.   The take down notice requirements are laid out in section 512(c)(3):

(c) . . . .

(3)  Elements of notification.—

(A) To be effective under this subsection, a notification of claimed infringement must be a written communication provided to the designated agent of a service provider that includes substantially the following:

(i) A physical or electronic signature of a person authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.

(ii) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site.

(iii) Identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material.

(iv) Information reasonably sufficient to permit the service provider to contact the complaining party, such as an address, telephone number, and, if available, an electronic mail address at which the complaining party may be contacted.

(v) A statement that the complaining party has a good faith belief that use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.

(vi) A statement that the information in the notification is accurate, and under penalty of perjury, that the complaining party is authorized to act on behalf of the owner of an exclusive right that is allegedly infringed.

So, assuming a proper notice is sent to the correct “Designated Agent” of a service provider, the service provider must “act expeditiously” to “remove, or disable access to, the material.”   If the service provider complies with the take down procedure, they will be able to enjoy immunity from liability of copyright infringement under 512(c)(A)(iii).  This is why we see those wonderful notices on websites like YouTube such as “This video contains an audio track that has not been authorized by UMG. The audio has been disabled.” or “This video is no longer available due to a claim of ownership by UMG.”

COUNTER NOTICE AND PUT BACK PROCEDURES FOR UPLOADERS, §512(g)(3)

If you are a third-party user of an online service whose uploaded content was removed by the service provider, you are not without recourse if you have a “good faith” belief that the uploaded content does not infringe as suggested by the copyright holder.  §512(g)(3) lays out the requirements for a counter notification:

(g) . . . .

(3)  Contents of counter notification.— To be effective under this subsection, a counter notification must be a written communication provided to the service provider’s designated agent that includes substantially the following:

(A) A physical or electronic signature of the subscriber.

(B) Identification of the material that has been removed or to which access has been disabled and the location at which the material appeared before it was removed or access to it was disabled.

(C) A statement under penalty of perjury that the subscriber has a good faith belief that the material was removed or disabled as a result of mistake or misidentification of the material to be removed or disabled.

(D) The subscriber’s name, address, and telephone number, and a statement that the subscriber consents to the jurisdiction of Federal District Court for the judicial district in which the address is located, or if the subscriber’s address is outside of the United States, for any judicial district in which the service provider may be found, and that the subscriber will accept service of process from the person who provided notification under subsection (c)(1)(C) or an agent of such person.

After a notice is received by the service provider, the material may be replaced on the site without subject the service provider to further liability.  The essential effect of the counter-notice is that the third-party user acknowledges the claim of infringement and individually bears the liability from that point forward.  Once the counter notice is received by the service provider, they must wait 10-14 days to see if a lawsuit is filed.  If no suit is filed, the material can be put back onto the website.

An interesting point of contention is whether a claim of “fair use” suffices the “mistake or misidentification” requirement under 512(g)(3)(C).  The answer is yes, probably.  This comes with a huge caveat:  fair use is a defense to copyright infringement, not an inalienable or affirmative right, and, whether something qualifies as a fair use is by no means black and white.  The only true way to determine whether something qualifies as a fair use is a judicial determination in the course of litigation.  This hinges on the four factors set forth under 17 U.S.C. §107.  Even then, you could be looking at an extended period of litigation (as well as the associated costs!) that is subject to appeal before you have a finalized determination.

The characterization of fair use as a defense, rather than an affirmative right, underscores the opposing argument against allowing a fair use counter notice– if it’s not a right immediately conferred to a third party, then it cannot be grounds for “mistake” in a take down notice.  Due to the inherent ambiguity in pre-litigation fair use determinations, a person considering using such a counter-notice should understand the full implications before using one.  That said, there may be certain scenarios where the fair use claim is so strong that a copyright holder might not be willing to test it in court.  An interesting example from several years back which involved Wendy Seltzer (a friend and former law professor of mine) and a notorious NFL clip on YouTube that grabbed headlines for a period of time.

Some of the copyright research and public advocacy organizations (See e.g., the EFF, Citizen Media Law Project, and Chilling Effects) acknowledge fair use to be grounds for counter notices, but simultaneously caution against using such grounds without the advice of an intellectual property attorney.  Indeed, this is advice well heeded.

WHERE’S THE BEEF?: FINAL THOUGHTS

A quick reading of 512 might make the purposes of the section appear clear; however, the application of the safehabor is mired in shades of imprecise phrasing– perhaps even intentionally as is often done in legislative drafts.  If your brow is wrinkled after reading the statutory language, you are definitely not alone.

Certain phrases or words have become key points of litigation.  For instance, the latest UMG v. Veoh case, where UMG attempted to argue that  meant that because Veoh’s web service was frequently used for infringing uploads, UMG (or the RIAA) did not have to send individual notices per infringement.   This argument compounded the phrasing of the notice requirements under 512(c)(3) and the ambiguity of the phrase “facts or circumstances from which infringing activity is apparent” in 512(c)(1)(A)(ii).  Also argued in the same case was whether the “reasonable technical measures” described in 512(i)(1)(B) and 512(i)(2) and consequential imputation of “actual knowledge” under 512(c)(1)(A)(iii) would require a putative service provider to enable the best technology available to identify repeat infringers and other filter infringing content.  The court in UMG v. Veoh disagreed with these readings, and held that compliance with the notice and take downs and other requirements was sufficient to grant immunity to Veoh.  We will have to wait and see the reaction from other jurisdictions and whether this issue continues to be challenged by copyright owners.

The above points only represent a smattering of the problems when interpreting the 512 safeharbor.  Some other questions you might ask yourself include: “What is an ‘expeditious’ removal of material? Two hours? Four days?”;  “Does my online activity qualify as a ‘Service Provider’ under 512(k)?”; “What if the material alleged in a take down notice may qualify as a ‘fair use’?”; “What if it’s unclear that the material alleged in a take down notice is even protectable as ‘copyrightable subject matter’?”‘; “Where is the exact point ‘actual knowledge’ get imputed onto service providers?”

Many of these questions are not well defined under section 512.  Various jurisdictions have also provided some guidance in case law, although some splits in opinion still exist as a result of quirky facts, clever arguments, and unclear meaning.  Even so, the facial ambiguity of §512, like many areas of codified law, is not without purpose.  If the drafters of §512 made the statutory language more precise the law would not be well adapted to changes in technology paradigms or trends in UGC websites.  To some extent, we do want to rely on the ability of the parties and judges to clarify the imprecision to ensure a proper application of the underlying purposes of §512.

That should cover the tip of the DMCA safeharbor iceburg!  I can feel my co-bloggers cringing at the thought of such a long post.  As I noted before, this wasn’t mean to cover everything; but, hopefully it brings to light some of the nuances and functionality of the statute.  Hopefully in the near future we can dive into the case law that actually interprets some of the more murky provisions in section 512!

Comments Off Posted in: Commentary on October 9, 2009