After successfully winning summary judgment on its claim of safe harbor immunity from liability for copyright infringement by its users before the District Court for the Southern District of New York, YouTube now faces remand of the $1 billion copyright infringement suit initiated in 2007 by Viacom International Inc. and others who own copyrights in movies and television shows that were uploaded to the YouTube website. While affirming the "actual knowledge" and "red flag" knowledge principles underlying safe harbor immunity for online services providers, the Second Circuit found enough evidence in the record for further consideration of the copyright holders' effort to disqualify YouTube from the safe harbor, including damaging e-mail correspondence and possible evidence of willful blindness.

Under the Digital Millennium Copyright Act ("DMCA"), online service providers are provided safe harbor immunity from monetary relief arising from claims of direct, contributory, vicarious infringement. After being sued for copyright infringement in 2007, YouTube countered by asserting the safe harbor provisions of Section 512(c) of the DMCA. In June 2010, the District Court granted summary judgment in favor of YouTube, finding that the defendants' "general awareness" of infringing activity was not sufficient to confer liability for infringement by its users. 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 under Section 512(c)(1)(B) and 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 Section 512(c)(1)."

On appeal, the Second Circuit Court of Appeals largely vacated the District Court's determination that YouTube LLC is entitled to safe harbor immunity from copyright infringement claims, finding a reasonable jury could conclude that the video-sharing site had "actual knowledge or awareness of specific infringing activity." Viacom International Inc., et al. v. YouTube Inc., et al., No. 10-3270 (2d Cir. April 5, 2012). The Appellate Court further rejected the District Court's interpretation of DMCA Section 512(c)(1)(B) that the "right and ability to control" infringing activity requires "item-specific" knowledge. "The trouble with this construction is that importing a specific knowledge requirement into § 512(c)(1)(B) renders the control provision duplicative of § 512(c)(1)(A)," the court noted.

As an initial matter, the Second Circuit found the District Court properly interpreted the safe harbor provision as requiring knowledge or awareness of specific infringing activity. Under Section 512(c)(1)(A), knowledge or awareness alone does not disqualify the service provider from immunity; rather, a provider's failure to "act expeditiously to remove, or disable access to, the material" is grounds for disqualification. Nevertheless, the Second Circuit vacated the District Court's grant of summary judgment, finding sufficient evidence might exist -- including internal e-mails and reports acknowledging the availability and desirability of copyright-protected content -- for a jury to find that YouTube was aware of specific infringing material on its site.

The Second Circuit then addressed application of the common-law "willful blindness" doctrine in the context of the DMCA. In general, a person is "willfully blind" when "aware of a high probability of the fact in dispute and consciously avoided confirming that fact." Although the DMCA does not expressly mention willful blindness, the Appellate Court found that the willful blindness doctrine may be applied, "in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA."

The Second Circuit remanded the case to the District Court to fully consider the evidence concerning YouTube's knowledge or awareness, willful blindness, and right and ability to control, with much at stake in the interpretation of these safe harbor principles.