A recent decision by the U.S. District Court for the Southern District of New York has confirmed that the Digital Millennium Copyright Act (DMCA) provides a “safe harbor” for service providers who expeditiously take down allegedly infringing content when they receive written notice from copyright owners.

In what may be the first round of a $1 billion dispute -- ongoing since 2007 -- Google subsidiary YouTube, Inc. won a summary judgment motion against Viacom, Inc., the owner of MTV, Comedy Central and other cable television channels, over copyright infringement liability for the posting of Viacom videos on YouTube.com (Viacom Int’l, Inc. v. YouTube, Inc., S.D.N.Y., No. 07 Civ. 2103, June 23, 2010). At issue was secondary liability for tens of thousands of Viacom videos broadcast on YouTube. The content was posted by YouTube account holders, viewed at no charge millions of times by other visitors to that website and accompanied by advertisements. Viacom alleged that Google willfully ignored the infringing activities of its account holders in order to reap advertising profits.

The “critical question” in this case, wrote Judge Louis Stanton, was whether YouTube should be liable for failing to act when it had a “general awareness” of copyright infringement on the site, as opposed to “knowledge of specific and identifiable infringements of individual items.” The court concluded that YouTube bore no liability because it had complied with the DMCA by quickly removing the offending content when Viacom specifically identified the offending uses. YouTube’s swift response, as well as its adherence to other requirements imposed by the DMCA, gave it immunity from Viacom’s claims despite any generalized knowledge it may have had of infringement on the site. In short, the court held that the “knowledge of specific and identifiable infringements of individual items,” rather than a “generalized awareness” of such uses, triggers a website operator’s duty to take down content claimed to be infringing.

Viacom promised to appeal immediately to the U.S. Court of Appeals for the Second Circuit. On appeal, Viacom no doubt will reiterate its arguments that an effective take-down system should not serve to shield massive and systematic copyright infringing activities.

For the present, however, this opinion – although not binding on other federal courts – is a forceful defense of the notion that copyright owners rather than website operators are responsible for monitoring online infringement. To copyright owners, this case should serve as a reminder of the need to be proactive in enforcing copyrights online. For providers of online services, it is confirmation from a district court particularly influential in copyright matters that a strong liability shield results from adherence to the requirements of the DMCA, such as the designation of an agent to receive notice of infringement claims through a filing with the U.S. Copyright Office, for example.

Case Background

Viacom v. YouTube tested the scope of the DMCA’s “safe harbor” provisions. The DMCA was enacted in 1998, prior to much of the rapid growth of user-generated content and mobile applications that characterize today’s Internet. Partly as a means of fostering these technologies, the DMCA included several “safe harbor” provisions through which Internet service providers could be immune to liability for secondary copyright infringement claims if they implemented “notice and takedown” procedures.

One of these “safe harbor” provisions, codified under 17 U.S.C. § 512(c), protects service providers against copyright liability for information residing on their systems or networks at the direction of users “by reason of the storage” of that material. Section 512(c) reads, in relevant part:

  1. IN GENERAL. — A service provider shall not be liable for monetary relief … for infringement of copyright 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, if the service provider -

(A)        (i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

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

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

(B) 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

(C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

A chief purpose of Section 512(c) was to shelter service providers from the infringing activities of their customers. To maintain this liability shield, service providers must respond “expeditiously” to remove or disable access to material claimed to be infringing. Under the subsequent provision (512(c)(2)), service providers must also designate an agent to receive notice of infringement claims by filing a form with the U.S. Copyright Office.

Viacom’s complaint asserted the unauthorized use of tens of thousands of television clips it had located on YouTube. When alerted to the specific locations of these videos – pursuant to the requirements for DMCA takedown requests in Section 512(c)(3) – You- Tube removed the content in less than 24 hours. From Viacom’s perspective, however, YouTube was “not only generally aware of, but welcomed, copyright infringing material being placed on their website. Such material was attractive to users, whose increased usage enhanced [YouTube’s] income from advertisements displayed on certain pages of the website, with no discrimination between infringing and non-infringing content.” Viacom at 6. The knowledge of widespread infringing activity on the site, Viacom alleged, imposed an obligation on YouTube to police its site, and YouTube’s failure to do so – while it profited from the unlawful acts of its users – rendered it liable for inducing infringement, as well as other offenses.

In response, YouTube contended that the meaning of “knowledge” in Section 512(c) required service providers to remove or disable access to infringing content only when notified of specific and identifiable infringements of particular individual items. Since it had fulfilled its duty to remove such content “expeditiously” when notified by Viacom, YouTube argued that it should bear no liability.

Judge Stanton looked to the legislative history and case law, noting that:

To let knowledge of a generalized practice of infringement in the industry, or of a proclivity of users to post infringing materials, impose responsibility on service providers to discover which of their users’ postings infringe a copyright would contravene the structure and operation of the DMCA.

Furthermore, it “makes sense” that copyright owners should bear the burden of enforcement, wrote the judge: “[T]he infringing works in suit may be a small fraction of millions of works posted by others on the service’s platform, whose provider cannot by inspection determine whether the use has been licensed by the owner, or whether its posting is a ‘fair use’ of the material, or even whether its copyright owner or licensee objections to its posting.” The court drew a parallel with the recent decision of the U.S. Court of Appeals for the Second Circuit in a case regarding eBay’s potential trademark infringement liability for failing to act in response to “ubiquitous” sales of counterfeit Tiffany jewelry on eBay. Tiffany v. eBay, 600 F.3d 93, 107 (2d Cir. April 1, 2010) (holding that “for Tiffany to establish eBay’s contributory liability, Tiffany would have to show that eBay ‘knew or had reason to know of specific instances of actual infringement’ beyond those that it addressed upon learning of them”). The DMCA, wrote the court, “by a different technique… applies the same principle.” A line of cases involving secondary copyright liability for peer-to-peer services, such as Napster and Grokster, was deemed inapplicable since YouTube – unlike those service providers – had complied with its DMCA obligations.

The court concluded that the DMCA requires service providers to remove or disable access to infringing content only when the copyright owner notifies them of “specific and identifiable infringements of particular individual items.” Viacom at 7. “[T]he burden is on the owner to identify the infringement. General knowledge that infringement is ‘ubiquitous’ does not impose a duty on the service provider to monitor or search its service for infringements.” Id. at 20.

Analysis

Although Viacom v. YouTube is not binding upon other federal courts, the District Court for the Southern District of New York is an influential forum for copyright disputes; this opinion will provide support for those who believe that the DMCA’s notice and takedown procedures are working effectively. In Judge Stanton’s view, “the present case shows that the DMCA notification regime works efficiently,” since YouTube was able to remove the offending content expeditiously when notified of it.

For website owners, Viacom v. YouTube presents a reminder of the importance of strict compliance with the DMCA. In this case, YouTube’s designation of a DMCA agent – effected by the filing of a simple form with the U.S. Copyright Office and payment of a $105 filing fee – along with its “expeditious” response to Viacom’s complaint following a notification sent to that designated agent, defeated a $1 billion claim at the summary judgment phase of trial. Provided that online service providers effectively follow DMCA notice and takedown procedures, the Viacom case holds that they are entitled to enjoy a safe harbor. This demonstrates how important it is for copyright owners to monitor and make complaints against unlawful uses of their works on the Internet.

This case is being interpreted, on the one hand, as good news for web start-up businesses, which could have been impeded with greater liability exposure by a ruling in favor of Viacom and, on the other hand, as a loss for individual artists who lack the means to conduct online investigations to protect their works. Some copyright owners likely will support a rehearing by the U.S. Court of Appeals for the Second Circuit. Although the district court focused on the meaning of “knowledge,” appellate review possibly could hinge on the interpretation of other terms in Section 512(c). For example, although the district appeared to accept that “storage” encompasses not only transmissions of stored material to and from a person storing it, but also transmission of that material to millions of third-party viewers for entertainment purposes, the circuit court might differentiate between “storage” uses protected by 512(c) and public performances. Similarly, the issue of whether YouTube reaped a “financial benefit directly attributable to the infringing activity” could be revisited. And finally, the legislative history cited by the District Court – which occupies a substantial portion of the ruling – might be re-examined to determine whether the DMCA was intended to provide broad immunity for user-generated content.