Viacom v. YouTube and the Capricious Contours of the DMCA Safe Harbors
On April 5, the Court of Appeals for the Second Circuit filed its highly anticipated decision in Viacom International, Inc., v. YouTube, Inc.
In 1998, Congress passed the Online Copyright Infringement Liability Limitation Act (OCILLA) as part of the Digital Millennium Copyright Act (DMCA). OCILLA was conceived as a compromise between the interests of the content industries on one hand, and Internet intermediaries—Internet Service Providers (ISPs), search engines, and webhosts—on the other. As such, the Act establishes four “safe harbors,” which exempt Internet intermediaries from liability for certain types of conduct, provided they comply with a series of requirements.
Section 512(c) of the Act creates one such safe harbor for webhosts that allow users to store content on their networks. Subsection (1) provides three conditions that such a webhost must meet in order to exempt itself from liability: The first of these, the knowledge requirement, is itself a three-pronged, disjunctive condition: (i) the webhost must not have actual knowledge of specific infringement, or, (ii) in the absence of such knowledge, awareness of “facts or circumstances from which infringing activity is apparent,” or (iii) in the event that the webhost obtains knowledge or awareness of infringing activity it must “act expeditiously to remove, or disable access to, the material.” Provided the webhost complies with the knowledge provisions, it must also show that, if it had the right and ability to control the infringing activity, it did not receive a financial benefit therefrom. Finally, the webhost must also show that it responded expeditiously to takedown notices that comply with the formal requirements of § 512(c)(3).
In 2005, three former Paypal employees started YouTube, a website that displays videos uploaded by its users. YouTube has since been bought by Google, and is now the third most-visited website both in the United States and worldwide. In 2007, Viacom sued YouTube in the southern district of New York, arguing that the site should be held liable for its users’ many infringing posts. The suit was later consolidated with a class action filed by the English Premier League. In 2010, the district court dismissed both actions on the ground that YouTube had complied with the requirements of § 512(c) and was thus entitled to a complete exemption from liability.
This post will discuss the Second Circuit’s analysis of the key DMCA provisions: those that concern the knowledge requirement and financial benefit/right and ability to control.
YouTube argued, and the district court agreed, that both §§ 512(c)(1)(A)(i) and (ii) require specific knowledge of particular infringing files. This standard has been adopted consistently in a recent line of cases. In contrast, the plaintiffs submitted that subsection (ii), the awareness or “red flag” provision, could be satisfied by generalized knowledge of widespread infringement. If the same level of specificity was required for both (i) and (ii), they claimed, (ii) would be rendered superfluous.
On this point, the Second Circuit held that violation of the red flag provision does indeed require specific knowledge of particular instances of infringement. This reading of the statute does not render subsection (ii) duplicative of subsection (i), the court argued, because the existence of actual knowledge is determined by a wholly subjective standard, whereas the existence of red flag awareness is determined by a two-pronged inquiry with subjective and objective components: “whether the provider was subjectively aware of facts that would have made the specific infringement objectively obvious to a reasonable person.” This position is well supported by the legislative history.
Though the appellate court substantially agreed with the district court on the proper interpretation of the red flag provision, it disagreed with the district court’s application of that provision to the facts of the case, at least at the summary judgment stage. The court pointed to several internal e-mails which indicated that YouTube’s proprietors had identified clips which they thought were infringing, and had nonetheless declined to remove the clips from their site. Because a reasonable juror could have decided that these e-mails showed either actual knowledge or red flag awareness, the court held that the grant of summary judgment was premature.
Importantly, the court also held that the DMCA did not abrogate the common law doctrine of willful blindness, and that the doctrine may therefore be used to support claims of actual knowledge or red flag awareness. Though it is unclear how successful this claim will be on remand, the court’s willingness to apply willful blindness in a DMCA case is notable, as it reinvigorates a debate between the Ninth and Seventh Circuits that was left unresolved by the Supreme Court’s Grokster decision.
Financial Benefit/Right and Ability to Control
Creating a split with the Ninth Circuit, the Second Circuit reversed the district court’s holding that a service provider cannot exercise the right and ability to control infringing activity if it does not have specific knowledge of that activity. This interpretation, the court held, reads the right and ability to control requirement out of the statute by equating it with the knowledge requirement. The court further disagreed with Viacom’s suggested standard, which would have made the subsection (B) requirement co-extensive with common law vicarious infringement. Equally flawed, this interpretation would make the same factual circumstance a requirement of the statute under the provisions that require removal of noticed material, and a disqualifier under the right and ability to control provision. Unfortunately, the court declined to provide its own rule, saying only that a subsection (B) violation would “involve a service provider exerting substantial influence on the activities of users, without necessarily—or even frequently—acquiring knowledge of specific infringing activity.”
In my opinion, this decision is important for four principal reasons. First, the court confirmed that generalized knowledge that infringing activity is taking place does not suffice to support a claim of red flag knowledge. Second, the court indicated that red flag knowledge could be shown by internal e-mails that identify specific works. Since, in Shelter Capital, the Ninth Circuit suggested in a footnote that third-party notifications could constitute red flags, plaintiffs now have two identified methods of proving knowledge under § 512(c)(1)(A)(ii). Third, the court reintroduced explicit discussion of willful blindness into the DMCA debate. And fourth, the court strongly rebuked the Ninth Circuit’s § 512(c)(1)(B) analysis, but declined to clearly announce its own interpretation of that provision.
1. No. 10-3270-cv, 2012 WL 1130851.
2. 17 U.S.C. § 512 (2009).
3. See generally, S. Rep. No. 105-190, at 2-8 (1998) (discussing the incorporation into the legislative process of negotiations between these parties).
4. Each safe harbor incorporates a tailored set of requirements, though all four are subject to two threshold requirements: implementation of a repeat-infringer policy, and accommodation of standard technical measures. 17 U.S.C. § 512(i).
5. See YouTube: Frequently Asked Questions, http://www.youtube.com/t/faq (last visited Apr. 21, 2012).
7. Alexa.com: Youtube.com Site Info, http://www.alexa.com/siteinfo/megaupload.com (Last visited Apr. 22, 2012).
8. Complaint, Viacom International, Inc. v. YouTube, Inc., 718 F.Supp.2d 514 (S.D.N.Y. 2010) (No. 07 Civ. 2103).
9. Slip Op. at 8.
10. Viacom International, Inc. v. YouTube, Inc., 718 F.Supp.2d 514, 529 (S.D.N.Y. 2010).
11. 718 F.Supp.2d at 525.
[I]f a service provider knows (from notice from the owner, or a “red flag”) of specific instances of infringement, the provider must promptly remove the infringing material. If not, the burden is on the owner to identify the infringement. General knowledge that infringement is “ubiquitous” does not impose a duty on the service provider to monitor or search its service for infringements.
12. See, e.g. UMG Recordings, Inc v. Shelter Capital LLC, 667 F.3d 1022 (9th Cir. 2011), Capitol Records, Inc. v. Mp3Tunes, LLC, 101 U.S.P.Q.2D (BNA) 1093 (S.D.N.Y. 2011).
13. Slip Op., at 17.
14. H.R. Rep. No. 105-551(II), at 54.
The ‘red flag’ test has both a subjective and an objective element. In determining whether the service provider was aware of a ‘red flag,’ the subjective awareness of the service provider of the facts or circumstances in question must be determined. However, in deciding whether those facts or circumstances constitute a ‘red flag’–in other words, whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances–an objective standard should be used.
15. Slip Op., at 22.
16. See 3-12 Nimmer on Copyright § 12.04[A][b][ii].
17. See Shelter Capital, 667 F.3d 1022, at 1043.
18. Slip Op., at 25.
19. Id. at 28.
20. 667 F.3d 1022, at 1040 n. 14.
A user email informing Veoh of infringing material and specifying its location provides a good example of the distinction [between actual and red flag knowledge]. Although the user’s allegations would not give Veoh actual knowledge under § 512(c)(1)(A)(i), because Veoh would have no assurance that a third party who does not hold the copyright in question could know whether the material was infringing, the email could act as a red flag under § 512(c)(1)(A)(ii) provided its information was sufficiently specific.