USCA Second Circuit, April 5, 2012

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  • Second Circuit reverses summary judgment in favor of Google on Viacom’s copyright infringement claims, holding that DMCA requires online service providers to have actual knowledge or awareness of specific infringing activity before losing safe harbor protection, and that evidence existed from which a reasonable jury could conclude that YouTube had actual knowledge or awareness of specific infringing activity.

In a copyright suit by plaintiffs, Viacom International, Inc., as well as various film studios, television networks, music publishers, and sports leagues, against Google Inc., and its YouTube platform, Court of Appeals for the Second Circuit vacated the district court’s grant of summary judgment in favor of Google in which it held that Google was entitled to protection from liability from all of Viacom’s claims under the safe harbor protection of the Digital Millennium Copyright Act (DMCA). The Second Circuit found that while the district court correctly held that §512(c), the safe harbor provision applicable to online service providers, requires knowledge or awareness of specific infringing activity before an online service provider is disqualified from protection, summary judgment on the issue was premature, because evidence existed from which a reasonable jury could conclude that YouTube had actual knowledge or awareness of specific infringing activity on its website.

The plaintiffs alleged direct and secondary copyright infringement related to the public performance, display, and reproduction of approximately 79,000 video clips that appeared on the YouTube website between 2005 and 2008, and sought damages under the Copyright Act, as well as well as declaratory and injunctive relief. The district court had ruled that, under the DMCA, mere knowledge of the prevalence of a general practice of posting infringing material was not enough to impose liability on YouTube. The appeals court agreed, but found that, based on the evidence, including a 2006 internal YouTube report advising that clips of popular television shows (including Viacom shows) were available on YouTube at the time, that this content was "blatantly illegal" and that YouTube should consider preemptively removing it, “a reasonable juror could conclude that YouTube had actual knowledge of specific infringing activity, or was at least aware of facts or circumstances from which specific infringing activity was apparent.” What was needed, according to the court, was a determination as to whether YouTube had actual knowledge of specific infringing activity related to the copyrighted clips at issue in the litigation needed. The second circuit remanded the case for further fact finding on this issue.

On an issue of first impression, the Second Circuit also held that the common-law concept of “willful blindness” may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA, and directed the district court on remand to consider whether the defendants made a “deliberate effort to avoid guilty knowledge[.]”

Turning to the “control and benefit” provision of the DMCA’s safe harbor, the Second Circuit held that the district court erred by “importing a specific knowledge requirement.” In granting summary judgment, the district court also found that item-specific knowledge of infringing activity is required for a service provider to have the “right and ability to control” infringing activity, and therefore to be disqualified from the safe harbor protections. The court of appeals disagreed. Noting that only one court has found that a service provider had the right and ability to control infringing activity – Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146 (C.D. Cal. 2002) - a district court case involving a service provider exerting substantial influence on the activities of users without acquiring knowledge of specific activity - the Second Circuit concluded that the “control and benefit” provision does not include a specific knowledge requirement. Rather, the court reasoned that while the provision requires more than just the ability to remove or block access to materials posted on the service provider’s website, exerting substantial influence on the activities of users, without necessarily - or even frequently - acquiring knowledge of specific infringing activity, would be sufficient, and remanded to the district court to consider whether Viacom adduced sufficient evidence to allow a reasonable jury to conclude that YouTube had the right and ability to control the infringing activity and received a financial benefit directly attributable to that activity.

Finally, the Second Circuit affirmed the district court’s holding that the replication, transmittal, and display of videos on YouTube constituted activity “by reason of the storage at the direction of a user” within the meaning of the safe harbor provision as to three software functions, but remanded the case on a fourth back to the lower court for further fact-finding. The safe harbor extends to software functions performed “for the purpose of facilitating access to user-stored material.” The district court concluded that four functions – the conversion or “transcoding” of videos into a standard display format, the playback of videos on “watch” pages, the “related videos” function, and syndication by third parties – fell within the safe harbor. The Second Circuit agreed as to the transcoding, playback, related videos functions, citing precedent from the Ninth Circuit for the conclusion that these functions were related to facilitating access to user material. The court of appeals disagreed as to the fourth function, syndication, however, finding the issue a closer call. Reasoning that it did not want to render an advisory opinion on the issue, the court remanded for further fact-finding on the issue of whether any of the clips at issue in the suit had ever been syndicated to a third party.