This week, the Chairman of the US House of Representatives Judiciary Committee issued a press release stating that he intends that the Committee do a thorough reexamination of the Copyright Act, noting that new technologies stemming from digital media have upset many settled expectations in Copyright Law, and confused many issues. That this release was issued in the same week as a decision of New York’s Supreme Court, Appellate Division, First Department, on the obscure issue of pre-1972 sound recordings is perhaps appropriate, as this decision demonstrates how an obscure provision of the copyright act can have a fundamental effect on the functioning of many online media outlets – including essentially any outlet that allows user-generated content with audio. The Court’s ruling, which conflicts with a Federal Court’s decision on the same question, would essentially remove the safe harbor protection for sites that allow for the posting of user generated content – where that content contains any pre-1972 sound recordings which don’t fall within the protections of the Copyright Act. Let’s explore this decision and its ramifications in a little more depth.

As we have written before, an Internet service that allows users to post content to that service is exempt from any liability for that content under two statutes. The Digital Millennium Copyright Act insulates the service from any claims of copyright infringement contained in any of the user generated content, if the service has met several standards. These standards include the obligations for the service to take down the infringing material if given proper notice from the copyright holder. The Service cannot encourage the infringement or profit directly from the infringement itself, and it must register a contact person with the Copyright Office so that the copyright owner knows who to contact to provide the notice of the takedown. While the exact meaning of some of these provisions is subject to some debate (including debate in recent cases, including one that Viacom has been prosecuting against YouTube that we may address in a subsequent post), the general concept is well-established.

A second statute, Section 230 of the Communications Decency Act, essentially insulates the service from most other types of liability for the contents of user-generated content – including from liability for defamation and for liability under most other laws where civil liability can arise. However, the statute exempts intellectual property claims, which most services believed were covered by the DMCA safe harbor.

So what is the big deal with pre-1972 sound recordings that brought about this decision? In essence, the plaintiff in the case, Universal Music, successfully argued that infringement of pre-1972 sound recordings by user generated content was not excused by the DMCA, as pre-1972 sound recordings are not protected by Federal law, but instead by state laws. As we have written before, pre-1972 sound recordings first licensed in the United States are not protected by Federal Copyright Law, as those laws were not extended to cover sound recordings at all until 1972, and the revision in the law at that time specifically did not federalize prior sound recordings. The Copyright Office recently held a series of hearings and issued a report (which we summarized here) suggesting that pre-1972 sound recordings should be federalized, but Congress has not acted on that request.

So this New York Court looked at the Copyright Office’s report on pre-1972 sound recordings, and the report’s criticism of a Federal Court case involving a company called MP3tunes which determined that the DMCA did cover such recordings in its safe harbor. The NY Court determined that the defendant in the case, music service Grooveshark and its parent company Escape Media Group, were not insulated from liability for infringing pre-1972 sound recordings posted by users of its site. The MP3tunes court had ruled to the contrary – finding that the copyright infringement covered by the DMCA safe harbor was not just Federal infringement, but infringement of any sort of copyright, including common law copyrights like those those governing pre-1972 sound recordings. To hold otherwise, said the Court in MP3tunes, would undermine the entire system established by the DMCA, as service providers would have to review each and every piece of user generated content to insure that it did not contain an unlicensed pre-1972 sound recording.

The NY Court concluded that the MP3tunes decision was wrong, reading the DMCA to reference other sections of Federal copyright law in connection with its definition of a copyright violation and a copyright infringement that came within the safe harbor. These references were enough, said the NY Court, to find that the clear language of the DMCA statute, and its statements that it did not undercut any other rights of copyright holders, meant that pre-1972 sound recordings were not covered by the safe harbor provisions, and that the MP3tunes decision was wrong. The NY court felt that the including pre-1972 sound recordings in the safe harbor would undercut the rights of copyright holders to sue anyone for infringement which, if it was the intent of Congress to do so, should have been made explicitly clear. The NY decision did not mention that, in fact, the copyright holders do still have a right to sue even if the safe harbor applied - though that right would be to sue the user who posted the infringing material, not the service who provided the technological means by which the posting could be done.

The NY Court only briefly discussed the disruption that such a decision would bring to the online universe and all those services relying on the DMCA safe harbor. Essentially, the Court said that, if indeed Congress didn’t mean this result, it should clean up the language of the DMCA safe harbor, as the Copyright Office had suggested.

The NY Court did not discuss why the Section 230 exemption did not apply to the case (other cases have suggested that the “intellectual property” exemption of Section 230 is broader than the “copyright” definition of the DMCA, so that there may be a hole in the safety net otherwise provided to Internet service providers). In essence, the decision, if upheld and spread to other jurisdictions, could create a loophole in the safe harbor otherwise enjoyed by media sites that allow users to post content that the users create – threatening not only the major players, but many smaller media companies, including many broadcasters, who allow users to post audio and video productions that they create on the media outlet's website.

This is, of course, but one decision of one court – an intermediate state appellate court in New York. So this decision can be appealed to the New York Court of Appeals, and it will no doubt be debated in Federal Courts where most DMCA cases, and other cases of copyright infringement, arise. But the dispute between the courts on this fundamental issue for sites that feature user-generated content demonstrates just one of the many issues under Copyright laws that Congress may well have to review in its review of the Copyright Act.