This September, in Lenz v. Universal Music Corp. et. al, the Court of Appeals for the Ninth Circuit held that before a copyright holder notifies an Internet Service Provider (“ISP”) to remove claimed infringing web content pursuant to Section 512 of the Digital Millennium Copyright Act (“DMCA”), it must first consider whether the accused content is in fact authorized by the fair use doctrine.1Failure to do so raises a question as to whether the rights-holder formed the requisite good faith belief that the material was infringing, and a rights-holder who bypasses or merely gives lip service to fair use analysis may be liable to the party who posted the content for nominal damages.

While the ruling might be considered at least a partial victory for plaintiff Stephanie Lenz, whose 29-second home video of her children dancing to Prince’s “Let’s Go Crazy” had been temporarily removed from YouTube at the defendants’ request, both sides have now petitioned for rehearing. The so-called “Dancing Baby” case continues to raise questions about the nature and efficacy of the DMCA’s safeguards for Internet users, and about the role of the fair use doctrine in copyright law. This article provides an overview of the ongoing dispute and some of the central issues.

The DMCA’s Notice and Takedown Procedures

Section 512 of the DMCA provides the backdrop for the dispute in Lenz. The DMCA was enacted in 1998 to address a host of concerns stemming from the rapid growth of digital media and the Internet. Section 512(c) establishes a safe harbor to insulate ISPs from liability for materials stored at the direction of others, provided that the ISPs satisfy certain requirements. One requirement is that the ISP must implement a notice and takedown procedure whereby a copyright owner can alert the ISP to infringing content following procedures prescribed by the Act, and the ISP will expeditiously remove the content. A copyright holder filing a notice under the Act must include a written statement attesting to its “good faith belief” that the “use of the material in the manner complained of is not authorized by the copyright owner, its agent, or the law.”2Section 512(g) provides that the individual who posted the content must be promptly notified of its removal, and sets forth a counter-notice procedure by which the accused party can have the material reinstated.

The notice and takedown procedures offer rights-holders potent, quick relief to online infringement issues. Lenz characterizes Section 512 as being “unique in American law, in that it provides copyright owners with a streamlined, extra-judicial means of silencing speech.”3 To “ensure that material is not disabled without proper justification,”4 Section 512(f) of the DMCA creates a cause of action for the Internet user who posted the accused content. If a copyright owner knowingly misrepresents that material or activity is infringing, the alleged infringer can sue for any damages incurred, including costs and attorneys’ fees.

The Fair Use Doctrine

“[T]he most troublesome doctrine in the whole law of copyright,”5 fair use, is also central to the dispute in Lenz. This codified common law doctrine limits the monopoly that copyright confers on authors of original, creative works by sanctioning certain “fair” uses of those works. Section 107 of the Copyright Act sets forth a multi-factor balancing test for evaluating whether a given use is fair and therefore non-infringing. Specifically, it provides that:

Notwithstanding [certain provisions of the Copyright Act], the fair use of a copyrighted work . . . for purposes such as criticism, comment, news reporting, teaching (including multiple copies for classroom use), scholarship, or research, is not an infringement of copyright. In determining whether the use made of a work in any particular case is a fair use the factors to be considered shall include— (1) the purpose and character of the use, including whether such use is of a commercial nature or is for nonprofit educational purposes; (2) the nature of the copyrighted work; (3) the amount and substantiality of the portion used in relation to the copyrighted work as a whole; and (4) the effect of the use upon the potential market for or value of the copyrighted work.6

The enumerated factors are notably broad and open-ended, and courts considering the issue are free to consider additional facts that they deem relevant.7

The Dance Begins

The controversy in Lenz arose in 2007, when Universal Music Group (“UMG”), the entity responsible for enforcing Prince’s copyrights, filed a DMCA takedown notice with YouTube requesting removal of Stephanie Lenz’s 29 second home video. The video, which was shot in Lenz’s kitchen, featured her children running around as Prince’s “Let’s Go Crazy” played in the background. From off-screen, Lenz asked her toddler what he thought of the music; he “danced.”

UMG tasked one employee with scouring YouTube for infringing material. He did this by searching the site for the names of popular Prince songs, and reviewing the hits. If a video contained a Prince song, he considered whether the song “was recognizable, was in a significant portion of the video or was the focus of the video.”8 If the song was deemed to be the focus of a video, the employee added it to a list, and UMG would send a takedown notice to YouTube.9

YouTube complied with UMG’s request to remove Lenz’s video from its site; Lenz objected. While her first counter-notice was incomplete, her second, which alleged that the video made fair use of Prince’s music, was successful and the video was reinstated six weeks after it had been removed. It remains live on YouTube today10 and, to date, has received just over 1.8 million views.

Lenz then sued UMG. Her sole claim to survive UMG’s motions to dismiss was her 512(f) claim: that UMG knowingly made a misrepresentation in its DMCA takedown notice. Specifically, Lenz alleged that UMG likely knew that her use of Prince’s music constituted fair use, and therefore misrepresented that Lenz’s use of the music was not authorized by law when it asked YouTube to remove the video.

In 2012, Lenz and UMG moved for summary judgment on Lenz’s 512(f) claim. The District Court for the Northern District of California denied both motions; Lenz and UMG appealed, and oral argument was held on July 7, 2015.

The Ninth Circuit Ruling

In affirming the District Court’s decision, the Court of Appeals held that in order to assert a “good faith belief” that particular web content is not authorized by law, a copyright holder must have considered whether the content is authorized by the fair use doctrine, and formed a subjective good faith belief that the use was not a fair use.

Lenz had advocated for an objective standard for evaluating whether a rights-holder possessed a good faith belief. The Court of Appeals rejected that argument as contrary to precedent, citing Rossi v. Motion Picture Association of America, Inc., and held that a subjective standard applies.11

The Court in Lenz further stated that while the party filing the takedown must pay more than “lip service to the consideration of fair use” and cannot be willfully blind to avoid learning of fair use, the fair use analysis need not be “searching or intensive” – and it need not be explicit.12 In fact, the Court left open the possibility that UMG’s analysis was “sufficient to form a subjective good faith belief about the video’s fair use or lack thereof,” and directed that a jury must now decide that very question.13

UMG argued that rights-holders need not consider fair use before filing DMCA takedown notices because fair use is an affirmative defense to copyright infringement.14 According to UMG, as an affirmative defense, the fair use doctrine functions to excuse conduct that would otherwise be considered infringing; because fair use is merely excused by law and not authorized by it, the DCMA does not require right-holders to consider the doctrine.15

The Court of Appeals emphatically rejected this argument, holding that while fair use may function procedurally as an affirmative defense, it is qualitatively different than other affirmative defenses. Fair uses are not simply authorized infringing uses; rather, per the Copyright Act, such uses do not infringe. Based on this, the Court concludes that fair uses are uses “authorized by the law.”16Thus, while a rights-holder would not necessarily need to consider other affirmative defenses—for example, laches—prior to issuing a takedown notice, the same cannot be said of fair use. In support of this argument, the Court looked to Bateman v. Mnemonics.17

Judge Smith concurred in the judgment in Lenz, but dissented in part. He noted that Section 512 prohibits misrepresentations that a work is infringing, not misrepresentations about “the party’s diligence in forming its belief that a work is infringing.”18 In his view, the issue is not whether UMG falsely implied that it had considered fair use when it had not. Rather, “[UMG] may be held liable for knowingly misrepresenting that the video was infringing if, knowing it had not considered whether the video was a fair use, it erroneously asserted that it was infringing.”19 As he sees it, it is clear that UMG did not consider fair use, so the key inquiry becomes whether or not the video makes fair use of the song at issue.

The Dance Continues

As noted above, neither Lenz nor UMG appears to be entirely happy with the Court of Appeals’ decision.

In its Petition for Panel Rehearing, UMG argues that the Court lacks jurisdiction under Article III because Lenz suffered no injury and therefor lacks standing; her video was reinstated within six weeks. UMG points out that while the rulings in this case will not “redress any distinct and palpable injury to [Lenz]”, the implications for copyright holders are significant.20 UMG warns that “[b]y reading ‘any damages . . . incurred by the alleged infringer’ to include ‘nominal damages’—which . . . are not damages actually incurred at all—the Court’s opinion has the potential to authorize any person subject to a takedown notice to bring suit, and potentially to be part of a class action, without regard to whether that individual suffered any harm.”21 UMG also takes issue with the characterization of its arguments in the opinion, and requests that the Ninth Circuit clarify its opinion to make it clear that Judge Birch was not speaking for the judicial panel as a whole when he addressed the issue of fair use inBateman and stated that fair use is “better viewed as a right.”22

Lenz in her petition asks the Court to address “[w]hether Congress, in drafting the safe harbor provisions of the [DMCA], intended to grant private parties the practical power to censor speech based on an unreasonable belief that a copyright has been infringed, as long as that belief is (like all beliefs) subjectively held.”23 She argues that Rossi should be overturned or limited to the facts of that case. In her view, the subjective good faith belief standard embraced by the Court would allow copyright holders to hide behind unreasonable beliefs to attack lawful uses of copyrighted material. Furthermore, unlike in Rossi, which concerned a factual determination (whether the site offered downloads of movies), the belief at issue here concerns a legal determination (whether Lenz’s video makes fair use of a Prince composition). Lenz argues that “requiring reasonable legal determinations encourages those who wish to use the law as a sword to muster a basic understanding of the weapon.”24 She further notes that a subjective good faith standard places the burden on parties in her situation to prove to a jury the “subjective belief of the censor—a standard and process that will be all but impossible for most.”25 Lenz contends that construing the statute as the Ninth Circuit has done effectively deprives Internet users of the safeguards that Section 512(f) was intended to create.

Alternatively, Lenz challenges the Court’s directive that a jury should now review UMG’s analysis of her video to determine whether that analysis was “tantamount” to a fair use analysis. She argues that this is a legal determination – not a factual one – and points out that the district court already concluded that UMG did not consider fair use when it reviewed her video.

Looking Ahead

Time alone will tell how this dance will end for Lenz and UMG. In the wake of the Ninth Circuit’s September ruling, however, rights-holders seeking to invoke the DMCA’s takedown procedures should proceed with caution as the law seems unsettled at this juncture. Copyright holders should consider fair use when reviewing online material, document that analysis, and confer with counsel prior to moving forward with DMCA takedown notices.