It is often said that hard cases make bad law. But what can be said of odd or even "crazy" cases? In one such case, Lenz v. Universal Music Corp., decided by the Ninth Circuit on September 14, 2015, a mother's 29-second home video of her two toddlers dancing to Prince's 1984 song "Let's Go Crazy" has made important new law with respect to "takedown notices" under the Digital Millennium Copyright Act ("DMCA"), holding that copyright holders must consider fair use before sending a takedown notification. 

This decision increases the potential liability for copyright holders seeking to enforce their rights through the DMCA and should serve as a warning to ensure fair use is considered before sending a takedown notice.

Background

Section 512(c) of the DMCA allows service providers, such as YouTube and Google, to avoid copyright infringement liability for storing users' content if, among other requirements, the service provider "expeditiously" removes or disables access to the content after receiving notification from a copyright holder that the content is infringing. In such "takedown notices," copyright holders are required to certify that: "We have a good faith belief that the above-described activity is not authorized by the copyright owner, its agent, or the law." 17 U.S.C. § 512(c)(3)(A).

In 2007, Stephanie Lenz ("Lenz") sued Universal Music Corp., Universal Music Publishing, Inc., and Universal Music Publishing Group (collectively, "Universal") under section 512(f) of the DMCA, which prohibits misrepresentation in takedown notices, after Universal sent a takedown notice to YouTube regarding a 29-second home video Lenz posted of her two young children dancing to Prince's song "Let's Go Crazy," which she titled "Let's Go Crazy #1." Universal claimed that the video constituted an infringing use of the Prince song. 

Lenz claimed that the video was fair use, and accordingly, Universal violated section 512(f) when it certified in its takedown notice that the video was "not authorized." Although Universal's video evaluation guidelines did not explicitly include consideration of fair use, the Universal employee who reviewed the video did consider whether the video made "significant use" of a Prince song, whether the song was recognizable, and whether the song was the focus of the video. 

After YouTube received the takedown notification, it removed the video and notified Lenz of the takedown. Lenz attempted to restore the video by sending a counter-notification to YouTube under section 515(g)(3) of the DMCA. Universal responded to the counter-notification by reiterating that the video constituted infringement because Lenz did not have a license to use the song. Lenz sent a second counter-notification to Universal, which resulted in YouTube's reinstatement of the video. Lenz then filed this suit, claiming misrepresentation under section 512(f). 

On February 25, 2010, the district court granted Lenz's partial motion for summary judgment on Universal's six affirmative defenses, and subsequently both parties moved for summary judgment on Lenz's misrepresentation claim. On January 24, 2013, the district court denied both motions and certified its summary judgment order for interlocutory appeal to the Ninth Circuit. 

The Ninth Circuit Decision

The Ninth Circuit first considered what it deemed "an issue of first impression" of whether a copyright owner's certification under section 512(c)(3)(A)(v) that material is "not authorized" requires copyright holders to consider whether the potentially infringing material is a fair use of a copyright under 17 U.S.C. § 107 before submitting a takedown notice. 

The Ninth Circuit held that the Copyright Act "unambiguously contemplates fair use as a use authorized by law," and accordingly, "a copyright holder must consider the existence of fair use before sending a takedown notification under § 512(c)." The Ninth Circuit based its holding on the language of section 107, which provides that "the fair use of a copyrighted work … is not an infringement of copyright," and on definitions of "authorize" (which is not defined in the Copyright Act) from Black's Law Dictionary, concluding that "because 17 U.S.C. § 107 both 'empowers' and 'formally approves' the use of copyrighted material if the use constitutes fair use, fair use is 'authorized by the law' within the meaning of § 512(c)." In so holding, the Ninth Circuit rejected Universal's argument that fair use is merely an affirmative defense to infringement.

The Ninth Circuit then considered if a genuine issue of material fact existed as to whether Universal knowingly misrepresented that it had formed a good faith belief that the video did not constitute fair use. According to the court:

if a copyright holder ignores or neglects our unequivocal holding that it must consider fair use before sending a takedown notification, it is liable for damages under § 512(f). If, however, a copyright holder forms a subjective good faith belief the allegedly infringing material does not constitute fair use, we are in no position to dispute the copyright holder's belief even if we would have reached the opposite conclusion. A copyright holder who pays lip service to the consideration of fair use by claiming it formed a good faith belief when there is evidence to the contrary is still subject to § 512(f) liability.

Here, the Ninth Circuit concluded that a genuine issue of material fact existed regarding Universal's subjective good faith belief, and that Lenz could proceed under an actual knowledge theory. The Ninth Circuit explained that the good faith belief requirement is subjective, not objective. Accordingly, it did not matter whether Universal "should have known" that the video was fair use, but only whether Universal had actual knowledge that the video was fair use and misrepresented that it did not. Given Universal's contention that its procedures were tantamount to fair use consideration, a jury must decide whether such procedures were sufficient for Universal to form a subjective good faith belief about fair use of the song in Lenz's video. 

The Ninth Circuit advised that consideration of fair use "need not be searching or intensive" and specifically noted that implementation of computer algorithms such as computer programs that can automatically identify content that matches the video or audio track of copyrighted material, or uses of nearly the entirety of a copyrighted work, "appears to be a valid and good faith middle ground" for reviewing a high volume of content while still considering fair use. However, this issue was not definitively decided because there was no evidence Universal used a computer program to identify infringing content when the takedown notification at issue was sent.

The Ninth Circuit also held that "the willful blindness doctrine may be used to determine whether a copyright holder 'knowingly materially misrepresented' that it held a 'good faith belief' that the offending activity was not a fair use." The Ninth Circuit found that the district court erred in denying Universal's summary judgment motion on this doctrine as Lenz failed to provide any evidence on the first required factor that Universal subjectively believed there was a high probability that the video constituted fair use.

Finally, the court held that a plaintiff may seek recovery of nominal damages for an injury incurred as a result of a section 512(f) misrepresentation, rejecting Universal's argument that Lenz was required to demonstrate "actual monetary loss." The court declined, however, to consider the scope of Lenz's recoverable damages, leaving it to the district court to determine whether Universal had in fact violated section 512(f), and if so, what damages Lenz should receive. 

Ramifications of the Decision

Given the location of many prominent service providers in the Ninth Circuit, copyright holders submitting takedown notices should ensure that fair use considerations are part of their takedown process. While fair use considerations may already generally be included in a takedown analysis, explicitly enumerating the fair use factors in any takedown guidelines would be helpful. Additionally, given the Ninth Circuit's guidance, copyright holders may consider making use of computer programs to help streamline the fair use review process while balancing the competing demands of a fast response to infringement and compliance with DMCA requirements. Given the issue of first impression and the increased burden to copyright holders, there is the prospect that Universal will seek en banc review in the Ninth Circuit or appeal to the United States Supreme Court.