In one of the first applications of the Second Circuit’s Viacom International Inc. v. YouTube, Inc., 718 F. Supp. 2d 514 (S.D.N.Y. 2010) ruling, Obodai v. Demand Media Inc, 2012 WL 2189740 (S.D.N.Y. June 13, 2012) vindicates the user-generated content (UGC) community, although this victory may not be much to celebrate. Obodai follows, and is consistent with, Viacom, but may not be a big win due to Obodai’s relatively-weak case.

In Obodai, Austin Obodai (Obodai) alleged that a Cracked.com user published 32 items to his profile that infringed on Obodai’s copyrights. He alleged that Demand Media, Inc. (Demand) allowed, and even participated in, the infringement by willfully turning a blind eye to the infringing postings despite “notice.” What we learn as we continue through the facts is that Obodai never sent a Digital Millennium Copyright Act (DMCA) §512(c)(3) takedown notice. In fact, after Obodai filed the complaint, but before the service provider was served, the infringing items were removed. As a result, this proceeding commenced with Obodai in an unsound position that he did not send proper takedown notices, but Demand removed the files anyway. It ended far worse than it began.

Demand filed a motion for summary judgment claiming that it was immune from liability and entitled to ‘safe harbor’ protection as outlined in 17 U.S.C. §512(c)(1). Ultimately, finding that Demand met every requirement to qualify for the safe harbor, the court granted summary judgment in favor of Demand. Here are several highlighted arguments and resulting points of analysis of note.

Safe Harbor Requirements as Listed by §512(c) and Viacom

First, it is worth noting one of the Second Circuit’s most important holdings in Viacom:

“The District Court correctly determined that a finding of safe harbor application necessarily protects a defendant from all affirmative claims for monetary relief.”

The Viacom court clarified that the protection afforded by safe harbor applies to both direct and secondary infringement. In Obodai, Obodai also raised claims of both types of infringement.

The court proceeded through the typical DMCA §512 “safe harbor” analysis, noting first the section’s threshold requirements for all safe harbors: (1) the defendant must be a “service provider”; (2) the defendant must establish a repeat infringer policy and (3) the defendant must not obstruct “standard technical measures.” Once a defendant establishes that it can satisfy these threshold requirements, “a service provider must satisfy the requirements of a particular safe harbor.” Here, Demand sought safe harbor under §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.” In other words, Demand sought protection as a service provider that provides storage of user-generated content at the user’s direction.

The requirements set forth to meet this more specific standard are absence of knowledge of the infringement (either actual or “red flag”), expeditious removal of the infringing material upon notice, and “storage” of user content as it is used in §512(c)(1). In addition, to enjoy the DMCA’s safe harbor protection from infringement liability, the §512(c) requires that a defendant (1) not receive direct financial benefit if it has the right and ability to control the infringing activity; (2) list contact information for its copyright agent and (3) set forth information that a copyright holder should forward if it notes infringing content on the website. §§512(c)(1)(B), (C), and (c)(2).

Arguments of Interest

The first argument of interest in Obodai is Obodai’s contention that Demand’s service to its users was not included within the meaning of the term “storage” as provided by §512(c)(1). Obodai argued that Demand provided “unprotected syndication or distribution and display” of content, which is not “tantamount to the protected storage of §512(c)(1).” However, in Viacom, the Second Circuit clearly explained that “storage” is “not limited to merely storing material” and is meant to cover more than mere electronic storage lockers. Citing Viacom, the Obodai court explained that, “the relevant case law makes clear that the §512(c) safe harbor extends to software functions performed for the purpose of facilitating access to user-stored material.” Likening Demand’s service to that examined in the Viacom and other cases, the Court concluded that Demand provides “storage” of user content.

Obodai also tried to argue that Demand failed to satisfy the “right and ability to control” provision of the DMCA. To fall within its safe harbor, the DMCA requires that a defendant “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.” 17 U.S.C. §512(c)(1)(B). Viacom explained that the “right to control” means more than the ability to block or remove access to user content, and noted that only one court had found a content-control policy that precluded safe harbor protection. In that case, the policy exhibiting sufficient control to preclude safe harbor protection regulated nuances of the user interface including layout, design and appearance of content. The policy also refused access to the service to those who ran afoul of the policy. The close scrutiny and heavy influence exhibited by such a policy “must take the form of prescreening content, rendering extensive advice to users regarding content and editing user content.” The Obodai court found that Demand’s policy was not comparable in its level of control of user content, and found no evidence to support a claim that Demand executed such extensive control on the material posted on Cracked.com.

Of practical interest is Obodai’s reference to the use of a software program, Tynt®, which monitors and reports onsite website traffic. Obodai asserted that its use by Demand is evidence of both knowledge of infringement and the ability to control user posts. The court disagreed, stating that “such a tool does not support an inference that defendant was aware of infringement, and instead goes only toward defendant’s knowledge as to visitors’ page views.” The court relays the Viacom holding that “financial benefit alone is not sufficient to remove a defendant from safe harbor.”

Finally, possibly providing one of this case’s most interesting arguments, Obodai claims Demand violated his copyrights through vicarious infringement, among other forms. In response, the court notes that “Viacom stated that the DMCA ‘control’ prong of 17 U.S.C. §512(c)(1)(B) dictates a departure from the common law vicarious liability standard and instead premises liability on a service provider ‘exerting substantial influence on the activities of users.’” The court concluded that the argument was insufficient to defeat Demand’s summary judgment motion.

What Does The Obodai Decision Mean for the UGC Community?

The Obodai decision demonstrates that most providers who operate user-controlled websites like YouTube may continue to enjoy safe harbor protection. In some respects, the Obodai decision is anti-climatic, exhibiting very little departure from pre-Viacom analysis. However, as the first post-Viacom decision, it provides a few useful tidbits of information:

  • The actual knowledge standard is now understood to be a subjective standard that requires awareness of specific instances of infringement. The court clarified that “keyword ad generation” is not sufficient to prove notice, neither is the use of the software Tynt® that monitors search engine traffic to certain pages.
  • Obodai also alerts the UGC community that conforming to the DMCA’s safe harbor provision protects a service provider from liability for contributory and vicarious copyright infringement.
  • Finally, this opinion reaffirms the general rule that accountable plaintiffs send proper 512(c)(3) takedown notices; accountable service providers respond expeditiously.

This post was written with assistance from Summer Associate Courtney Scrubbs.