Google and its April Fools’ Day Joke were showcased in our Spring 2010 Intellectual Property Update. Google, through its independent subsidiary YouTube, is back in this edition – not with a joke but a victory. On June 23, 2010 its motion for summary judgment was granted in Viacom Int’l Inc. v. YouTube, Inc.1, and Viacom’s lawsuit for direct and secondary copyright infringement was dismissed. Google’s vice president and general counsel called the decision “an important victory not just for [Google] but also for the billions of people around the world who use the web to communicate and share experiences with each other.” Viacom’s executive vice president, general counsel and secretary called the decision disappointing and stated: “Copyright protection is essential to the survival of creative industries. It is and should be illegal for companies to build their businesses with creative material they have stolen from others.” Viacom is confident it will prevail on appeal.

In its motion for summary judgment, YouTube argued that it was protected by the safe harbor provisions of the Digital Millennium Copyright Act (DMCA) against all of Viacom’s copyright infringement claims because it had insufficient notice of the specific infringements in the case. Viacom filed a cross-motion for partial summary judgment arguing that YouTube was not protected by the safe harbor provisions because: (1) YouTube had actual knowledge and was aware of the facts and circumstances from which the infringing activity was apparent and failed to act expeditiously to stop it; (2) YouTube received a financial benefit directly attributable to the infringing activity and had the right and ability to control the infringing activity; and (3) YouTube’s “infringement does not result solely from providing ‘storage at the direction of a user’ or any other Internet function specified by section 512.”

At the outset the court recognized that YouTube operates a website onto which users may upload video files. YouTube copies and formats those files and makes them available for viewing at the website. Therefore, under the definition of a service provider in 17 USC §512(k)(1)(B), “a provider of online services or network access, or facilities therefore,” YouTube was a service provider for the purposes of 17 USC §512(c), the safe harbor provisions of the DMCA.

To mandate simply a general knowledge would impose a burden and responsibility on the service provider which was not the purpose of the DMCA.

While the court acknowledged there was sufficient evidence to find that YouTube was generally aware of infringement and even welcomed infringing material being placed on its website, YouTube had designated an agent for notices of infringement and it acted swiftly to remove the material when it received specific notices of infringement. This was the case when it received the notice from Viacom. With the institution of these measures, namely, the agent designation and YouTube’s swift actions YouTube could shield itself from liability under the safe harbor provisions of section 512(c) of the DMCA. However, the crucial question the court faced here was whether those safe harbor provisions required that YouTube possess either a general awareness that there were infringements or “actual or constructive knowledge of specific and identifiable infringements of individual items” in order to act. In considering the applicable knowledge standard, the court undertook a detailed review of the legislative history of the DMCA including Senate and House Committee Reports. Based on the tenor of the reports and the instructive explanation of the need for specificity in the reports, the court held that mere knowledge of a prevalence of infringing activity in general was insufficient. Rather, based on the legislative history, actual knowledge of specific and identifiable infringements was required. To mandate simply a general knowledge would impose a burden and responsibility on the service provider which was not the purpose of the DMCA.

In addition to the legislative history, the court found support in the decisions of other courts. Specifically, in Perfect 10, Inc. v. CCBill LLC2 the appellate court stated that the burden of policing copyright infringement and of identifying and documenting such infringement was “squarely on the owners of the copyright” and the appellate court refused to shift that burden to the service provider or to impose investigative duties on the service provider. The appellate court found the language of Section 512(m) explicit: “it shall not be construed to condition ‘safe harbor’ protection on ‘a service provider monitoring its service or affirmatively seeking facts indicating infringing activity.’” The New York court agreed. Moreover, as demonstrated by YouTube’s prompt actions in response to the complaint from Viacom, the New York court recognized that the notice and take-down provisions of the DMCA work efficiently. YouTube had removed virtually all of the infringing material within one business day of receipt of Viacom’s notice. As additional support, the court borrowed from the decisions in Corbis Corp. v., Inc.3 and, by analogy, Tiffany (NJ) Inc. v. eBay Inc.4, a trademark case involving counterfeits, and found that the safe harbor provisions of the DMCA are “clear and practical.” It held that a service provider must promptly remove infringing material if it knows (from a notice of the copyright owner or a red flag) of specific instances of infringement. Otherwise, the burden is on the copyright owner to identify the infringement. The court emphasized that “[g]eneral knowledge that infringement is ‘ubiquitous’ does not impose a duty on the service provider to monitor or search its service for infringements.”

Turning to Viacom’s cross-motion, the court discounted many of Viacom’s arguments. While Viacom appeared to rely heavily on Metro-Goldwyn-Mayer Studios, Inc. v. Grokster, Ltd.5 which involved a peer-to-peer file sharing network, the court summarily rejected reliance on this case and other similar cases because Grokster’s peer-to-peer file sharing model is not even covered by the safe harbor provisions of the DMCA. The court also discounted Viacom’s other arguments and attempts to exclude YouTube from the refuge of the safe harbor provisions: (1) stating that Viacom read various language regarding the word “storage” in the safe harbor provisions too narrowly; (2) explaining that a financial benefit attributable to an infringing activity was conditioned on the right and ability to control that activity which also required the item-specific knowledge of that activity (absent in this case); (3) rejecting Viacom’s contention that YouTube’s policy of terminating a user after warning was not reasonably implemented; and (4) rejecting Viacom’s argument that it could provide a representative list of multiple copyrighted works which have been infringed as eviscerating the specificity required in a notice.

Not surprisingly, this decision has received mixed reviews. While Internet users, companies which provide goods and services similar to YouTube and virtual worlds alike would find this ruling to be good news and a confirmation that they are not required to undertake policing efforts on behalf of copyright owners others, including the Recording Industry Association of America and The Director’s Guild, view this as a clear misreading of the law resulting in an increased burden on copyright owners. With these mixed reviews, the decision seemingly strikes discord with copyright owners and their representatives and brings imbalance to the balance Congress intended to create with the DMCA. Not only does it appear to give Google and others a reason not to employ filtering technology but, equally important, some see this as a significant burden on copyright owners – a burden that undermines the rights of artists in every form and strips away the incentives they have to invest time, energy and thought into a copyrighted creation. Indeed, in the aftermath many believe this ruling will stifle the creation of new content, something Congress strived to avoid with the DMCA. Viacom appealed this decision on August 9, 2010. Therefore, there is surely more to come with respect to this copyright controversy and the safe harbor provisions of the DMCA.