Lenz v. Universal Music Corp. et al.

The U.S. Court of Appeals for the Ninth Circuit ruled that copyright holders must consider the fair-use doctrine prior to issuing a takedown notification under the Digital Millennium Copyright Act (DMCA). Lenz v. Universal Music Corp. et al., Case Nos. 13-16106, -16107 (9th Cir., Sept. 14, 2015) (Tallman, J.) (Smith, Jr., J., concurring-in-part and dissenting-in-part).

Plaintiff Stephanie Lenz uploaded to YouTube a 29-second home video featuring her children dancing to the Prince song Let’s Go Crazy. As Prince’s publishing administrator at the time, Universal Music (Universal) routinely policed user-generated content sites such as YouTube for copyright misuses. While Universal employed a process for determining whether particular content rose to the level of enforcement action, its guidelines did not explicitly include consideration of the fair-use doctrine. Universal included Lenz’s video among hundreds of others as part of a takedown notice to YouTube, on the grounds that the Prince composition was the focus of Lenz’s video and used without authorization. As required by the DMCA, the takedown notice included a statement that Universal had a good-faith belief that use of the composition was not authorized “by the copyright owner, its agent, or the law.” Lenz contested the removal of her video by sending to YouTube a counter-notification under § 512(g)(3) of the Copyright Act, and YouTube reinstated the video. Lenz filed suit against Universal alleging, in part, that Universal “knowingly materially misrepresent[ed]” that her video was infringing, in violation of § 512(f)(1) of the Copyright Act. Lenz and Universal each filed motions for summary judgment, which the district court denied.

On appeal, the 9th Circuit affirmed the district court’s denials of summary judgment and ruled that a copyright holder must consider fair use before issuing a DMCA takedown notification. Reasoning that the Copyright Act “unambiguously contemplates fair use as a useauthorized by the law” (emphasis added), as opposed to an affirmative defense that excuses unlawful conduct, the court concluded that fair use must be evaluated before a copyright holder can make a good faith representation in a DMCA takedown notification that use of the copyrighted material is not authorized “by … the law.”

Acknowledging the “pressing crush of voluminous infringing content that copyright holders face in a digital age” the 9th Circuit offered that a copyright holder’s consideration of fair use “need not be searching or intensive” and “does not require investigation of the allegedly infringing conduct.” The court, “without passing judgment,” offered that, “the implementation of computer algorithms appears to be a valid and good faith middle ground for processing a plethora of content while still meeting the DMCA’s requirements to somehow consider fair use.”

The panel continued that a copyright holder need only form a subjective good-faith belief that use of a copyrighted work is unlawful. Further, whether a copyright holder “knowingly materially misrepresented” that a use is unauthorized in violation of § 512(f) is a question for the jury and may be evaluated based on actual knowledge or willful blindness.

On the issue of damages, the court ruled that a plaintiff such as Lenz could recover nominal damages if a § 512(f) misrepresentation claim is successful. However, the panel left to the jury whether Lenz was entitled to damages.

Practice Note: The 9th Circuit ruling imposes a burden on copyright holders to understand the arguably complex fair-use doctrine well enough to consider whether it does or does not protect an unauthorized use of a copyrighted work. At the same time, the court’s “subjective good faith belief” threshold seems to recognize that application of the fair-use doctrine can lead to a wide variety of conclusions, stating that the court is “in no position to dispute the copyright holder’s [good-faith subjective] belief even if we would have reached the opposite conclusion.” Copyright holders should train personnel on the basics of the fair use doctrine and create policing guidelines that include a consideration of the fair use factors, so there is a legitimate basis to support the issuance of a DMCA takedown notification if challenged.