Online service providers and operators of such sites should take careful note of the Second Circuit Court of Appeals’ recent decision in Viacom Int’l, Inc. v. YouTube, Inc., Case No. 10-3342-cv (“Viacom”), where the court held that service providers and operators will not be protected from the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512(c), if they have “actual knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement.”

For background, “[t]he DMCA was enacted in 1998 to implement the World Intellectual Property Organization Copyright Treaty,” Universal City Studios, Inc. v. Corley, 273 F.3d 429, 440 (2d Cir. 2001), and to update domestic copyright law for the digital age. Ellison v. Robertson, 357 F.3d 1072, 1076 (9th Cir. 2004). In particular, the DMCA established a series of four “safe harbors” that allow qualifying service providers to limit their liability for claims of copyright infringement based on (a) “transitory digital network communications,” (b) “system caching,” (c) “information residing on systems or networks at [the] direction of users,” and (d) “information location tools.” 17 U.S.C. §§ 512(a)-(d). The safe harbor at issue in Viacom was § 512(c), which covers infringement claims that arise “by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” 17 U.S.C. § 512(c)(1). To qualify for protection under any of the safe harbors, a party must: (1) be a “service provider,” which is defined as “a provider of online services or network access, or the operator of facilities therefor,” Id. § 512(k)(1)(B); (2) satisfy certain “conditions of eligibility,” including the adoption and reasonable implementation of a “repeat infringer” policy that “provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network,” Id. § 512(i)(1)(A), and (3) accommodate “standard technical measures” that are “used by copyright owners to identify or protect copyrighted works.” Id. §§ 512(i)(1)(B), (i)(2). The § 512(c) safe harbor will apply only if the service provider:

<!--[if !supportLists]-->(A)                   <!--[endif]-->(i)         does not have actual knowledge that the material or an activity using the material on the system or network is infringing (“actual knowledge” provision);

            (ii)         in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent (“red flag knowledge” provision); or

            (iii)        upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

<!--[if !supportLists]-->(B)                   <!--[endif]-->            Does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and

<!--[if !supportLists]-->(C)                   <!--[endif]-->            Upon notification of claimed infringement, responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

17 U.S.C. § 512(c)(1)(A)-(C). Section 512(c) also requires services providers to designate an agent to receive notification of claimed infringement, and specifies the components of a proper notification, commonly known as a “takedown notice,” to that agent. Id. §§ 512(c)(2), (c)(3). In summary, actual knowledge of infringing material, awareness of facts or circumstances that make infringing activity apparent, or receipt of a takedown notice will each trigger an obligation to expeditiously remove the infringing material.

In Viacom, the plaintiffs—which included Viacom International, Inc., The Football Association Premier League Ltd., and various film studios, television networks, music publishers, and sports leagues (collectively, the “Plaintiffs”)—alleged that defendants YouTube, Inc., YouTube, LLC, and Google Inc. (collectively, “YouTube”) engaged in direct and secondary copyright infringement based on the public performance, display, and reproduction of approximately 79,000 audiovisual clips that appeared on the YouTube website between 2005 and 2008.  The United States District Court for the Southern District of New York (the “District Court”) had previously granted YouTube’s summary judgment motion, holding that YouTube was entitled to § 512(c) safe harbor protection primarily because they had insufficient notice of the particular infringements set forth in the suit.

On appeal, the Second Circuit interpreted § 512(c) and held that although the District Court correctly concluded that the § 512(c) safe harbor requires knowledge or awareness of specific infringing activity, summary judgment for YouTube was nonetheless premature because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website. The Court concluded that the statutory phrases “actual knowledge that the material . . . is infringing” (i.e., the “actual knowledge” provision contained in § 512(c)(1)(A)) and “facts or circumstances from which infringing activity is apparent” (i.e., the “red flag knowledge” provision contained in § 512(c)(1)(B)) both refer to “knowledge of specific and identifiable infringements.” The Court explained that the difference between actual and red flag knowledge was not between specific and generalized knowledge, but instead was between a subjective and an objective standard. The Court analyzed that the actual knowledge provision turned on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turned on whether the provider was subjectively aware of facts that would have made the specific infringement “objectively” obvious to a reasonable person. After noting that the Ninth Circuit in UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022 (9th Cir. 2011) and other district courts had interpreted § 512(c) in a similar manner, the Court held that “actual knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement will disqualify a service provider from the safe harbor.” The Court reviewed the record and found, among other things (1) an email by the director of video partnerships for Google and YouTube, requesting that his colleagues take down any “clearly infringing, official broadcast footage” from a list of certain premier league clubs in advance of a meeting with the heads of several major sports teams and leagues, (2) a 2006 report by one of YouTube’s co-founders stating that episodes and clips of certain well-known shows could still be found on the website and that YouTube would benefit from preemptively removing content that was “blatantly illegal”, and (3) emails by another co-founder that suggested that a CNN clip of the space shuttle should be left on the website until CNN’s legal department requests that it be taken down.  In the Court’s view, in light of the foregoing facts in the record, Plaintiffs had raised a material issue of fact regarding YouTube’s knowledge or awareness of specific instances of infringement in part. The Court further determined that 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.  Separately, on an issue of first impression, the court also held that the “willful blindness” doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA, and instructed the District Court to consider in the first instance on remand. The Court noted that while section 512(m) does not require affirmative monitoring, online providers and operators shall not make a “deliberate effort to avoid guilty knowledge.”

In light of this decision, online service providers and operators of such sites should make sure that they remove infringing content when they have actual knowledge of specific infringing activity, or are at least aware of facts or circumstances from which specific infringing activity is apparent.