Viacom v. YouTube, S.D.N.Y. April 18, 2013

On remand from the Second Circuit, the district court decided that YouTube is entitled to safe harbor protection under the Digital Millennium Copyright Act. The court examined whether YouTube had knowledge or awareness of specific infringements; whether YouTube was willfully blind to specific infringements; and whether YouTube had the ‘right and ability to control’ infringing activity.

The court found that Viacom had failed to present evidence establishing that YouTube had knowledge of specific content and that Viacom had the burden of showing that YouTube knew or was aware of specific infringements of the works involved because Viacom failed to present evidence that it had provided adequate notice of specific infringing content.

The court reiterated that “willful blindness is not the same as an affirmative duty to monitor” and that the evidence of infringing content that Viacom had presented to YouTube failed to indicate the specific locations of infringements. Because Viacom had failed to provide specific locations of infringements (such as URLs) and instead left YouTube to find the precise locations of infringing material, the court found that YouTube had not been willfully blind.  

The court also determined that YouTube did not have the requisite “right and ability to control” infringing activity within the meaning of § 512(c)(1)(B), finding that “knowledge of the prevalence of infringing activity, and welcoming it, does not itself forfeit the safe harbor. To forfeit that, the provider must influence or participate in the infringement.” Notably, the court set a high standard for what qualifies as influence or participation, differentiating situations in which the service provider is involved in “prescreening content, rendering extensive advice to users regarding content and editing user content” from those in which the service provider is not actively participating “in the listing, bidding, sale and delivery of any item.”

Viacom v. Youtube, 676 F.3d 19 (2d Cir. 2011)

Copyright holders recently alleged direct and secondary infringement based on the public performance, reproduction, and display of thousands of clips continuing copyrighted content that appeared on YouTube. Neither YouTube nor its users paid for any licenses for the use of this content. YouTube argued that it was protected by §512(c), one of the four safe harbor provisions contained in the Digital Millennium Copyright Act (DMCA). In order to receive protection under these safe harbor provisions, however, a service provider must meet certain requirements. To receive protection, service providers may not have actual or constructive knowledge that a material or activity using the material on the system is infringing unless they act quickly to remove such material, may not receive a direct financial benefit from infringing activity, and must respond expeditiously to remove any infringing material upon notice.

Interpreting the requirements under §512(c), the Second Circuit concluded that “actual or constructive” knowledge requires knowledge of specific, identifiable infringing activity and that knowledge of general infringing activity on the service is not enough.  The court reasoned that the difference between actual and constructive or “red flag” knowledge is between a subjective and objective standard. Actual knowledge refers to whether the service provider subjectively knew of specific infringing activity whereas red flag knowledge occurs when specific infringement is objectively obvious to a reasonable person.

The court also attempted to define what the “right and ability to control” infringing activity means, explicitly disagreeing with the Ninth Circuit’s interpretation in UMG Recordings. Instead, the Second Circuit chose to define the “right and ability to control” as “requir[ing] something more than the ability to remove or block access to materials posted on a service provider’s website.”

UMG Recordings v. Shelter Capital Partners, 667 F.3d 1022 (9th Cir. 2011)

Copyright holders recently alleged direct and secondary infringement against the operator of a website that allows users to share and download videos containing songs owned by the copyright holders. The website’s operator claimed that it was protected by §512(c) of the DMCA, which protects defendants from claims that arise “by reason of the storage [of material] at the direction of the user.”

In order to receive protection, service providers may not have actual or constructive knowledge that a material or activity using the material on the system is infringing unless they act quickly to remove such material. In this case, the copyright holders claimed that the service provider did have constructive knowledge or “red flag” awareness of infringing activity. The court first noted that the copyright owners had failed to identify to the website operator any specific infringing activity, so they could not claim that the website operator had actual knowledge of infringing activity. Further, with respect to “red flag” awareness, the court decided that “if merely hosting material that falls within a category of content capable of copyright protection, with the general knowledge that one’s services could be used to share unauthorized copies of copyrighted material, was sufficient to impute knowledge to service providers, the §512(c) safe harbor would be rendered a dead letter.” Therefore, the court reasoned, a website operator could not be held liable based on general knowledge and must have specific knowledge of infringing activity in order to lose safe harbor protection.

United States v. American Society of Composers, Artists, and Publishers, 627 F.3d 64 (2d Cir. 2010)

In this case, the Second Circuit defined the rights at issue when a song is downloaded via Internet to an end user. As the court explained, “[a] download is a transmission of an electronic file containing a digital copy of a musical work that is sent from an on-line server to a local hard drive.” Copyright owners argued, when a song is downloaded via Internet to an end user, both the reproduction and public performance rights are implicated and that copyright owners must be compensated separately for both the reproduction and public performance of their works.

The court, however, noted that the language of Section 101 of the Copyright Act defines that “[t]o ‘perform’ a work means to recite, render, play, dance or act it, either directly or by means of any device or process. The court found that playing downloaded music is not a public performance because “’to perform’ a musical work entails contemporaneous perceptibility.” Therefore, under this definition of “performance,” the downloading of musical works from the internet is not a public performance because the end user cannot perceive the musical work while the work is being downloaded.

For further illustration, the court contrasted the downloading of a musical work with the streaming of a musical work via Internet, explaining that “a stream is an electronic transmission that renders the musical work audible as it is received by the client-computer’s temporary memory. This transmission, like a television or radio broadcast, is a performance because there is playing of the song that is perceived simultaneously with the transmission.”

Capitol Records v. MP3tunes, LLC, 821 F.Supp.2d 627 (S.D.N.Y. 2011)

In Capitol Records, the Second Circuit examined the DMCA safe harbor provision to determine whether a locker service that allowed users to store infringing content should be accorded protection. Copyright holders who owned the copyrights to the content stored using the locker service argued that the service could not be protected under the DMCA because it did not have a reasonable policy to deter repeat-infringers, failed to act quickly to remove infringing content, ignored obvious signs of infringement, and controlled and benefitted directly from the infringing activity.

The court first found that service providers had no affirmative duty to police users and must only reasonably implement a procedure to terminate users who repeatedly or blatantly infringe and respond properly to takedown notices without infringing with the copyright owners’ ability to issues such notices. The court further emphasized that, while a takedown notice that identifies copyrighted works or lists of works and supplies the web address where such infringing material located is sufficient, a vague notice requesting the takedown of “all the songs” by a particular artist is not enough. Finally, the court noted that the service provider would have to receive a direct benefit from any infringing activity on its service and that simply enabling a party to download infringing content is not sufficient to create liability.

Capitol v. Thomas, 692 F.3d 899 (8th Cir. 2012).

The Eighth Circuit upheld a jury award of $222,000 based on the willful infringement of Jammie Thomas-Rasset of copyrights of two dozen sound recordings. Kazaa user Thomas-Rasset had downloaded and made available for download over 1700 music files, many of which were copyrighted by the record labels. Copyright owners sued Thomas-Rasset based on two dozen sound recordings, alleging willful copyright infringement of their exclusive rights of distribution and reproduction under the Copyright Act and seeking statutory damages and injunctive relief.

The Eighth Circuit focused on its opinion on the issue of damages. Thomas-Rasset argued that the court should analyze the award of statutory damages under the framework used to determine whether an award of punitive damages is excessive and unconstitutional. In dismissing this argument, the court noted that the Supreme Court has never held that punitive damages guidelines should be applied to statutory damages, emphasizing that statutory damages provide a defendant with fair notice of potential damages for unlawful acts. The court also found that the Supreme Court has declared that Congress has a “wide latitude of discretion” in setting statutory damages and had exercised this discretion here with the public interest in mind in order to motivate the creative activity of authors and inventors by the provision of a special reward. The court noted that Congress was aware of the issue of online copyright infringement, including infringing activities not motivated by commercial profit, when it increased the maximum per-work award for willful infringement from $100,000 to $150,000 and the minimum per-work award from $500 to $750 in 1999.   Finally, the court found that the statutory damages were not meant to merely compensate but to discourage wrongful conduct and provide restitution of profit as well.





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