The interplay between copyright protection and those advocating the unfettered expression and distribution of content continues. In the latest, much-anticipated round, online service providers and advocates of wide distribution and expression of content prevailed. The US District Court for the Southern District of New York held that generalized knowledge of copyright infringement is insufficient to deny safe harbor protection to online service providers (such as YouTube) under the Digital Millennium Copyright Act (the DMCA), with respect to those providers’ storage of user-provided content.1 (See 17 U.S.C. § 512(c)). This safe harbor is critical, because it generally shields service providers from monetary liability for hosting infringing content.2

On June 23, 2010, Judge Louis Stanton, of the Southern District of New York, granted summary judgment in favor of YouTube and its parent Google on copyright infringement claims brought by Viacom and other plaintiffs.3 Viacom had alleged that YouTube was liable for contributory copyright infringement, based on its generalized knowledge of — or at least its willful blindness to — pervasive copyright infringement by users of the YouTube website.4 According to Viacom, YouTube allowed and even encouraged that conduct, and therefore was liable under the Copyright Act and not entitled to the DMCA’s safe harbor provisions.5 Viacom pointed to numerous instances in which YouTube, Google and their employees flatly stated an awareness that YouTube was a haven for copyright infringers.6

Judge Stanton rejected Viacom’s arguments. After assessing the legislative history and cases decided under the DMCA, the court concluded that generalized knowledge was not enough to deprive a service provider of the safe harbor. Instead, Judge Stanton concluded that the Section 512(c) safe harbor for a service provider was available, unless the service provider had actual knowledge of specific and identifiable infringement, and did not then expeditiously act to remove or disable access to the infringing content.7 Such knowledge would arise from a “red flag,” which most commonly takes the form of an explicit take-down notice sent by a copyright owner.8 If a service provider was aware of specific, “obviously” infringing content, that also would signal actual knowledge and create the take-down obligation under Section 512(c).9

Safe Harbor Protection Under the Digital Millennium Copyright Act

Under Section 512(c), online service providers are protected from liability for copyright infringement under certain circumstances. The Act provides such protection when the online 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 . . . responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of
  • infringing activity.10

The Viacom court dealt with the interpretation of terms such as “actual knowledge,” “right and ability to control such activity” and “notification of claimed infringement.” The court’s main analysis, however, was on the extent of knowledge required of an online service provider to bar that provider from the DMCA’s safe harbor protections.

Generalized Knowledge of Infringement Does Not Preclude Safe Harbor Protections

The Viacom court concluded that, in order to render Section 512(c)’s safe harbor protections inapplicable, an online service provider must have “knowledge of specific and identifiable infringements of particular individual items.”11 According to the court, “[m]ere knowledge of prevalence of such activity in general is not enough.”12

The court’s analysis of the policy and legislative history underpinning the DMCA played a strong role in its decision. The opinion emphasized Congress’s rationale that, “by limiting the liability of service providers, the DMCA ensures that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will continue to expand.”13 The highlighted legislative history also extensively discusses the so-called “red flag test” under Section 512, which imposes requirements on service providers only to respond to “red flags” demonstrating likely infringement of uploaded content.14 A detailed monitoring process is not required.15

The court also relied upon recent decisions, in which other courts have required a substantial degree of knowledge of infringing activity prior to loss of safe harbor protection. For example:

  • Perfect 10, Inc. v. CCBill LLC, 488 F.3d 1102 (9th Cir. 2007): When addressing copyright claims against online service provider CCBill, the Ninth Circuit emphasized that “[t]he DMCA notification procedures place the burden of policing copyright infringement — identifying the potentially infringing material and adequately documenting infringement — squarely on the owners of the copyright.”16 Despite the fact that certain websites hosted by CCBill had names such as “illegal.net” and “stolencelebritypics.com,” the court concluded that CCBill and other service providers did not have “investigative duties” to confirminfringement.17

  • UMG Recordings, Inc. v. Veoh Networks, Inc., 665 F. Supp. 2d 1099, 1108 (C.D. Cal. 2009): The Veoh Networks decision applied the CCBill holding, and found that a service provider offering video-sharing did not have specific knowledge of copyright infringement, and concluded that the Section 512(c) safe harbor protection therefore applied.18 In Viacom, Judge Stanton subsequently took that application and concluded that “pervasive copyright-infringing, however flagrant and blatant, does not impose liability on the service provider.”19

  • Corbis Corp. v. Amazon.com, Inc., 351 F. Supp. 2d 1090 (W.D. Wash. 2004): Specific knowledge also was emphasized in Corbis, in which the image-licensing plaintiff alleged that Amazon had infringed copyrights on certain photos, by uploading those photos on its website, and by operating the site from which certain Amazon vendors sold other photos.20 The district court found that the Section 512(c) safe harbor provision applied. “The issue is not whether Amazon had a general awareness that a particular type of item may be easily infringed. The issue is whether Amazon actually knew” of specific instances of infringement.21

  • Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93 (2d Cir. 2010): Lastly, the Viacom court relied upon the Second Circuit’s Tiffany decision. Although the case involved trademark claims, and therefore did not involve the DMCA, Judge Stanton saw similarities between contributory infringement under trademark law, and safe harbor protection against copyright claims under the DMCA.22 The Second Circuit found that “[f]or contributory trademark infringement liability to lie, a service provider must have more than a general knowledge or reason to know that its service is being used to sell counterfeit goods. Some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary.”23

Ultimately, the Viacom court concluded that if a service provider is provided with formal notice from a copyright owner of specific infringement, the provider “must promptly remove the infringing material,” or else lose Section 512(c)’s safe harbor protection.24 There is no monitoring or removal requirement, however, if the provider simply has “[g]eneral knowledge that infringement is ‘ubiquitous.’”25 The Court reasoned that the text and underlying policy of the DMCA repeatedly and emphatically emphasizes that copyright owners — and not service providers — bear the obligation of policing for infringement. “[To] impose responsibility on service providers to discover which of their users’ postings infringe a copyright would contravene the structure and operation of the DMCA.”26

Differentiation from Grokster

In prosecuting its claims, Viacom analogized YouTube’s uploading and maintenance of infringing content to peer-to-peer (P2P) filing-sharing networks.27 The US Supreme Court notably addressed such networks in MGM Studios Inc. v. Grokster, a landmark decision in which the Court held that “one who distributes a device with the object of promoting its use to infringe copyright, as shown by clear expression or other affirmative steps taken to foster infringement, is liable for the resulting acts of infringement by third parties.”28

The Viacom court found that the Grokster line of cases has “little application” to online service providers such as YouTube.29 Those cases “involved peer-to-peer file-sharing networks which are not covered by the safe harbor provisions of DMCA § 512(c).”30 Judge Stanton differentiated between YouTube and P2P networks such as Grokster or Napster. Whereas the P2P networks existed for the near-exclusive purpose of violating copyrights, service providers such as YouTube have numerous other purposes and uses.31 Under the Viacom decision, that distinction provides added justification for YouTube’s ability to utilize the Section 512(c) safe harbor.32

It is worth noting that the Grokster line of cases would appear to have direct applicability if an online service provider is otherwise ineligible for the DMCA’s safe harbor protections. For example, if Judge Stanton had concluded that YouTube failed to expeditiously take down content after receiving notices of infringement, claims against YouTube would presumably have been subject to Grokster’s scienter threshold. Under such circumstances, liability for contributory infringement could well have been imposed on YouTube if Viacom had demonstrated that YouTube operated its online system “with the object of promoting its use to infringe copyright.”33

Other Issues Regarding Section 512(c) Protection

The Viacom court focused on the “knowledge” requirement under Section 512(c), but also briefly addressed other requirements. For example:

  •  “Storage” of Material. Section 512(c)(1), which is the applicable safe harbor provision in the Viacom action, provides protection to service providers for “infringement of copyright by reason of the storage [of content] at the direction of a user of material” on a service provider’s system or network.34 Viacom argued that YouTube’s actions with respect to copyrighted content extended far beyond “storage,” thereby nullifying the safe harbor.35 Judge Stanton rejected that argument, emphasizing the broad array of activities in which service providers must engage. Judge Stanton also expansively interpreted the term “storage,” and underscored the importance of encouraging Internet efficiency.36

  • “Financial Benefits,” and the “Right and Ability to Control” Infringing Activity. Under Section 512(c)(1)(B), the safe harbor for service providers is lost if the provider “receive[d] 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.”37 The Viacom court read this requirement in tandem with the “knowledge” requirement, concluding that “the ‘right and ability to control’ the activity requires knowledge of it, which must be itemspecific.” 38

  • The “Reasonable Implementation” of a Policy for Repeat Infringers. Section 512(i)(1) requires service providers to adopt, “reasonably implement,” and inform subscribers and accounts holders of a policy to terminate services for “repeat infringers.”39 Otherwise, the safe harbor protection is lost. The Viacom court concluded that YouTube had sufficiently crafted and implemented such a system.40 For example, YouTube terminates a user after “three strikes” of acts indicating infringement, and assigns strikes only when copyright holders manually request video removal.41

  • Removal of Video Clips. Although the DMCA allows copyright holders to provide a “representative list” of infringing content to service providers, the Viacom court found that the list must nevertheless contain specific information. Citing a subsection of Section 512(c), Judge Stanton emphasized that take-down notices must include “information reasonably sufficient to permit the service provider to locate the [infringing] material.”42 Unspecified clips of video recordings by certain artists would not be enough. Instead, specific information such as URL addresses is needed.43

Implications for Copyright Owners and Online Service Providers

The Viacom decision, and the expected appeal to the Second Circuit, raise significant implications for both copyright owners and online service providers.

  • The Importance of Take-Down Notices. Under Viacom, only knowledge of specific instances of infringement will impose a duty on service providers such as YouTube to remove infringing content from its site.44 If copyright owners provide explicit notification to service providers that specific content is infringing, the service provider has an unambiguous obligation to promptly take that content down or risk monetary exposure.45

  • Compliance With Other Safe Harbor Prerequisites. Although the Viacom court focused on concepts of knowledge and take-down of content, online service providers must be mindful of meeting the other requirements under Section 512 in order to invoke the DMCA’s safe harbor protections. Service providers must (i) designate an agent to receive notifications of claimed infringement [Section 512(c)(2)]; (ii) adopt, reasonably implement and inform subscribers and accounts holders of a policy to terminate services for those who are repeat copyright infringers [Section 512(i)(1)(A)]; and (iii) accommodate and not interfere with “standard technical measures” used by copyright owners to identify or protect copyrighted works [Section 512(i)(1)(B)].

  • A Diminished Need for Monitoring Systems. In early 2006, YouTube introduced a system through which copyright owners could search for videos, mark those that allegedly infringe and request their removal.46 In 2007, YouTube began using audio “fingerprinting” technology licensed from the technology company Audible Magic.47 While an outlet for copyright owners to submit takedown demands is likely required under the DMCA, Section 512(m)(1) states that safe harbor protection for service providers is not conditioned on a provider “monitoring its service or affirmatively seeking facts indicating infringing activity,” except to the extent such monitoring is necessary to meet the provider’s obligations to adopt and reasonably implement a policy for terminating the accounts of repeat infringers.48 Viacom limited its claims strictly to the period prior to YouTube’s full implementation of the Audible Magic monitoring program.49 Therefore, Judge Stanton’s dismissal of those claims on summary judgment shows that a highly proactive monitoring system is not a prerequisite for the invocation of safe harbor protection under Section 512(c).

Next Developments

Viacom has announced that it intends to appeal the district court’s ruling to the Second Circuit Court of Appeal.50 Because of the complexity and importance of the issues raised in the Viacom/YouTube dispute, the appeal will be closely watched, and should offer further guidance on the scope and limitations of DMCA safe harbors in this context.