Friday’s Endnotes – 01/06/12

January 06, 2012 · · 30 comments

Happy 2012 everybody!

Joshua Johnson’s KQED Forum on Rogue Sites — KQED recently hosted a discussion of rogue sites legislation featuring EFF-attorney-turned-Google-lawyer Fred von Lohmann, indie filmmaker Ellen Seidler, Rep. Darrell Issa, and NBC Universal general counsel Rick Cotton. Chris Castle takes a good look at some points that didn’t come up or weren’t fully addressed.

Does the DMCA Work? — Interesting analysis from Dr. Christopher S. Harrison on the recent decision in UMG v. Veoh and Megaupload’s recent lawsuit against Universal. “These two cases exemplify the Bizarro World the DMCA has become, in which the business models of service providers require copyright infringement on a massive scale … but labels get sued over takedown notices.”

The Original and Traditional Meaning of “Freedom … of the Press” — Eugene Volokh announces his recent article arguing that “freedom of the press” as it was understood by the Constitutional Framers refers to the press-as-technology rather than, as some have argued, press-as-industry. A good read for those who have been following my own series on copyright and the freedom of the press.

Finding a Job in Film (for Prop Makers) — My brother Eric, recently transplanted to North Carolina from NYC, where he served as assistant props master at the Public Theater, provides some useful advice for theater professionals looking to transition into the film world.

Reddit has gone mad with power — After calling for a boycott on GoDaddy for its support of SOPA, (the number of GoDaddy subscribers actually increased during that time, according to the article) users of the web site turned their attention to defeating political supporters of the bill in the upcoming election. They eventually chose Rep. Paul Ryan (who hasn’t stated a position on the bill). As Gawker notes, “The thinking of the internet hive mind is shallow and frantic, scrambling from one outrage to the next.”

France Animation v Robinson – a case comment — Barry Sookman examines a recent decision from the Quebec Court of Appeals that he calls a “gold mine for copyright lawyers.” Among the many interesting portions is the Court’s discussion that punitive damages are available under Quebec law because copyright infringement violates fundamental rights and freedoms.

Removing the legal eye patch — The Boston Globe came out in support of SOPA this week. “While opponents of the bill cry censorship, their fears seem to based on the belief that it somehow creates a slippery slope – that blocking an illegal download of an Adele album will be logically followed by blocking a search for information about the Arab Spring. The government already has cracked down on online child pornography without a corresponding attack on civil liberties. There’s no reason that the First Amendment would be endangered if the Justice Department beefed up its enforcement of copyright law as well.”

In a Big Year for New Soul, a Small But Influential Label Turns 10 — I’ve long been a fan of Daptone Records, the pioneers of the retro-soul sound that was most famously featured on Amy Winehouse’s Back in Black. The Atlantic takes a look at the label as it celebrates its first decade.

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Ninth Circuit Rules on UMG v. Veoh

December 21, 2011 · · 21 comments

Yesterday, the Ninth Circuit held that video sharing site Veoh is immune from copyright liability under the DMCA in what will likely become a seminal ruling for copyright and the internet.

Plaintiff Universal Music Group had asked the Circuit Court to reverse the lower court’s holding that Veoh qualified for the DMCA safe harbor on several grounds:

  • “[T]he alleged infringing activities do not fall within the plain meaning of ‘infringement of copyright by reason of the storage [of material] at the direction of a user’”
  • “Veoh had actual knowledge of infringement, or was ‘aware of facts or circumstances from which infringing activity [wa]s apparent’”
  • “Veoh ‘receive[d] a financial benefit directly attributable to . . . infringing activity’ that it had the right and ability to control.”

The Circuit Court rejected all of these arguments. The full opinion is available here. Some preliminary thoughts follow.

Infringement by Reason of Storage

The court’s conclusion that Veoh’s operations fall within the scope of § 512(c) is not a surprise. It interpreted the statute’s “by reason of” language broadly — protecting service providers from any infringing activity that occurs on their site stemming from a user’s upload.

But while this interpretation may be reasonable in light of how the internet has developed, it is no doubt an expansion on the original intent of the language. The court says “if Congress wanted to confine § 512(c) exclusively to web hosts rather than reach a wider range of service providers, we very much doubt it would have done so with the oblique ‘by reason of storage’ language.” But of course, this reasoning begs the question. When Congress passed the DMCA, “user-generated content” had yet to even enter the lexicon — Congress couldn’t have factored a type of service provider that didn’t exist yet into the law.

I’ve talked previously about how sites like Veoh, YouTube, and other Web 2.0/UGC sites are arguably beyond the scope of protection of 512(c). The provision was drafted at a time when storing content at the direction of a user was primarily a collateral or passive function of service providers. For UGC sites, this “storage” is the sine qua non of their business model.

I’m certainly not saying such sites should be strictly liable for infringement by their users, or even required to monitor or prescreen uploads. But I also don’t think the only thing they need do to qualify for the DMCA safe harbor is respond to takedown notices. Unauthorized content unquestionably subsidizes many UGC sites — it’s perfectly reasonable that such sites subsidize copyright enforcement. As unavoidable as the expansion of the scope of this safe harbor might be, it may be the case that the language may need to be revisited at some point down the road.

Actual and Apparent Knowledge

The court’s holding that “general knowledge that [a service provider's] services could be used to post infringing material” is insufficient to eliminate DMCA safe harbor protection is consistent with what other courts have held.1

The court does, however, engage in a bit of curious reasoning to come to this conclusion. It notes:

Further, Congress’ express intention that the DMCA “facilitate making available quickly and conveniently via the Internet . . . movies, music, software, and literary works” — precisely the service Veoh provides — makes us skeptical that UMG’s narrow interpretation of § 512(c) is plausible. S. Rep. No. 105-190, at 8.

This is curious because the quote used by the 9th Circuit used is not referring to the purpose behind the DMCA safe harbors, it is referring to the purpose behind the anti-circumvention and copyright management information provisions of the DMCA.2

By conflating the purpose of stronger digital protections for copyright owners with the purpose for limiting the liability of service providers, it essentially creates a logical absurdity within the Copyright Act: promoting the progress of the arts and sciences through exclusive rights is accomplished when ignoring those exclusive rights is made easier.

The Ninth Circuit leaves us still with little meaningful distinction between actual knowledge and apparent — so-called “red flag” — knowledge. It says “that the burden” for bringing red flags to service provider’s attention “remains with the copyright holder rather than the service provider.” The summary conclusion is that “Veoh’s general knowledge that it hosted copyrightable material and that its services could be used for infringement is insufficient to constitute a red flag.”

But it does mention one way a service provider can have apparent knowledge, at least in theory. The Ninth Circuit notes that if “notification had come from a third party, such as a Veoh user, rather than from a copyright holder, it might meet the red flag test because it specified particular infringing material.”

Right and Ability to Control

The clear discussion of the interplay between safe harbor and common law vicarious liability is to be commended. As court explains, the two are independent: Congress intended the safe harbor to protect against vicarious liability if the statute’s conditions are met, even though the requirement that a service provider doesn’t have the “right and ability to control” infringing activity seems synonymous with the common law articulation of vicarious liability. Yet some courts still get tripped up by this concept.

However, I am a bit troubled by court’s interpretation of “right and ability to control” as being dependent on scope of service:

Where, as here, it is a practical impossibility for Veoh to ensure that no infringing material is ever uploaded to its site, or to remove unauthorized material that has not yet been identified to Veoh as infringing, we do not believe that Veoh can properly be said to possess the “needed powers . . . or needed resources” to be “competen[t] in” exercising the sort of “restraining domination” that § 512(c)(1)(B) requires for denying safe harbor eligibility.

You hear this often from DMCA maximalists: it’s just too hard to control infringement on the internet. But this seems similar to a “too big to fail” argument — eventually, a service provider becomes “too big to be liable for infringement.”

Viewed this way, the interpretation doesn’t seem to comport with real world views on liability. Imagine a factory owner who says he dumps a lot of stuff into the river, and it’s not possible as a practical matter to ensure that none of that stuff is toxic. Or imagine a government that says it arrests a lot of people, and it doesn’t have the needed resources to exercise the type of restraining domination to ensure that none of them were wrongfully arrested.

Yes, there are differences between offline services and online services. But I don’t know if that should mean a complete departure from liability principles — especially since sites like Veoh and YouTube did not sprout online, organically and fully-formed. The fact remains that sites like these were purposely designed to provide content acquired through user uploads, just as services like Hulu and Netflix were purposely designed to provide content acquired through licensing.

As I said earlier, I’m not suggesting in the least that sites like Veoh should be responsible for every upload. Just that “the right and ability to control” shouldn’t necessarily hinge on popularity.

Finally, it is good to see the Ninth Circuit reaffirm the fact that ”willful blindness” can constitute knowledge under this section:

Accordingly, we hold that the ‘right and ability to control’ under § 512(c) requires control over specific infringing activity the provider knows about. A service provider’s general right and ability to remove materials from its services is, alone, insufficient. Of course, a service provider cannot willfully bury its head in the sand to avoid obtaining such specific knowledge.

What’s Next?

The Ninth Circuit affirmed summary judgment on the DMCA safe harbor and dismissal of the claims against the Investor defendants, who had been sued along with Veoh. It remanded to the lower court only for determination of whether Veoh can collect certain costs, excluding attorney’s fees, under FRCP 68.

That means the lawsuit is essentially over, barring an appeal by UMG to the Supreme Court.

The Second Circuit, of course, is currently considering similar issues in Viacom’s lawsuit against YouTube. It isn’t bound to follow the ruling here, but it will most likely have a look at the opinion. That opinion, of course, is still months away.

Footnotes

  1. See, for example, A & M Records v. Napster, 239 F.3d 1004 (9th Cir. 2001); Viacom v. YouTube, 718 F.Supp.2d 514, 523 (SDNY 2010); Corbis Corp. v. Amazon, 351 F.Supp.2d 1090, 1109 (WD Wash 2004). [↩]
  2. The HRCC has a copy of S. Rep. No. 105-190 available on its site. The relevant portion in full reads:

    Due to the ease with which digital works can be copied and distributed worldwide virtually instantaneously, copyright owners will hesitate to make their works readily available on the Internet without reasonable assurance that they will be protected against massive piracy. Legislation implementing the treaties provides this protection and creates the legal platform for launching the global digital on-line marketplace for copyrighted works. It will facilitate making available quickly and conveniently via the Internet the movies, music, software, and literary works that are the fruit of American creative genius. It will also encourage the continued growth of the existing off-line global marketplace for copyrighted works in digital format by setting strong international copyright standards.

    At the same time, without clarification of their liability, service providers may hesitate to make the necessary investment in the expansion of the speed and capacity of the Internet. In the ordinary course of their operations service providers must engage in all kinds of acts that expose them to potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting information over the Internet. Certain electronic copies are made to speed up the delivery of information to users. Other electronic copies are made in order to host World Wide Web sites. Many service providers engage in directing users to sites in response to inquiries by users or they volunteer sites that users may find attractive. Some of these sites might contain infringing material. In short, 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. [↩]

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UMG Recordings v. Veoh Networks

May 12, 2011 · · Comments Off

In the world of current lawsuits dealing with the future of the DMCA, the Viacom and YouTube appeal in the 2nd Circuit may win a popularity contest, but the UMG and Veoh appeal in the 9th will cross the finish line first.

The similarities between the two cases are striking. Like YouTube, Veoh had operated a site allowing users to upload and share videos. Like Viacom, UMG sued the site for failing to do enough to prevent infringing content from appearing in its system. And like the Southern District Court of New York, the Central District Court of California granted summary judgment in favor of the defendant after determining that the safe harbor provisions of the DMCA immunized the site from liability for its users’ actions.

Because of these similarities, the 9th Circuit’s eventual decision may serve as a precursor to the ultimate outcome of Viacom v. YouTube.

Background and Oral Argument

The original court ruling was released September 11, 2009 and can be found at UMG Recordings v. Veoh Networks, 665 F. Supp. 2d 1099 (CD Cali 2009).)) Ben Sheffner offers his thoughts on the District Court’s holding.

The appellate briefs of both parties are available online: Brief of Appellee Veoh Networks, Brief of Appellant UMG Recordings.

Last Friday, May 6th, oral arguments for the appeal were heard by the 9th Circuit. You can listen to audio of the hearing here. Attorney Michael Barclay attended the hearings in person and offers his observations at IPDuck.

The appeal actually consolidates three separate actions. Besides the DMCA ruling, Veoh is appealing the court’s denial of attorneys’ fees, and UMG is appealing the court’s dismissal of infringement claims against Veoh’s investors. If you’re interested in those aspects of the case, Eric Goldman has analysis of the court’s attorney fees decision, and Ray Dowd offers his response to Goldman’s analysis. Check out “Capital” Punishment: Evaluating an Investor’s Secondary Copyright Infringement Liability After Veoh, by James L. Proctor, Jr.,1 for discussion on the latter.

Barclay estimates that the court’s opinion will likely take 2-6 months to issue; the 9th Circuit’s own website pegs the time frame at 3-12 months.

Scope of the Storage Safe Harbor

In Is YouTube a Service Provider or Content Provider?, I looked at one of the periphery issues raised on appeal by Viacom — whether, as a threshold matter, YouTube’s actions take it outside the scope of the §512(c) safe harbor, which immunizes online service providers from liability for “infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” That issue plays a much larger role in UMG’s arguments, however, and took center stage at Friday’s hearing.

Because of this, it is likely that the 9th Circuit will be the first appellate court to consider the scope of what service providers can do with material stored on their systems at the direction of a user and still remain protected by the DMCA’s safe harbor.2

The key statutory language here is the phrase “by reason of.” Does it imply a broad “but for” causal relationship between a user’s act of storing material on a service and the infringing activities that are shielded from liability? Or does it imply a narrow proximate causation?

The former standard means that once a user has uploaded content, it becomes fair game for a service provider to transform and distribute as it pleases, and it is the standard the district court adopted in an earlier ruling. “Common sense and widespread usage establish that ‘by reason of’ means ‘as a result of’ or ‘something that can be attributed to ….’”3 Combine this with the broad readings of the other requirements for safe harbor protection made by the court, and the law is left to state that a service provider can operate a full-fledged, unlicensed content providing service so long as it essentially “launders” the content through its users — and experience shows that users need little encouragement to upload massive amounts of unlicensed and infringing content.

The latter standard is the one UMG argues the 9th Circuit should adopt. It provides legislative history that supports such an interpretation of the language. In addition, it calls upon the notion that when Congress uses specific language in a statute that is similar to language in other statutes, courts should presume that Congress intended for that specific language to be interpreted in the same way that courts have interpreted the similar language in the past.4 In this instance, the Supreme Court has, in the past, interpreted “by reason of” language in other statutes as incorporating a proximate causation standard.5

Judge Berzon prodded Veoh’s attorney on whether its, and the district court’s, interpretation of “by reason of” stood up to scrutiny. At one point, she asked directly, “What’s the stopping point?” While all parties agreed generally that the safe harbor contemplates some form of “access” to the stored material, she wondered if, based on the language and legislative history, there was a distinction between access through normal means — a third-party viewing the stored material through a web browser — and providing access and distribution through a service provider’s own system. If the DMCA was intended primarily to shield passive services that provide infrastructure and “backbone” services, like web hosts, BBS’s, and message boards, that would mean only the first falls within the scope of the §512(c) safe harbor. A broader reading of the statute makes such a distinction irrelevant.

Too Little, Too Late?

UMG admittedly faces an uphill battle with this argument. The district court’s interpretation of the scope of the §512(c) safe harbor is consistent with the interpretation of a number of other district courts, including the court in Viacom v. YouTube. Considering the rapid development of the internet since the DMCA was passed over a decade ago, the 9th Circuit may be hesitant to upend how the law has been interpreted in practice.

I think Wikipedia presents a good example of what I mean by how the law has been interpreted in practice. I think it would be difficult to make a case that Wikipedia is protected by the §512(c) safe harbor — users are only “storing” their contributions to articles in the strictest technical sense.

Yet, most operate under the assumption that Wikipedia is protected under the statute. The Wikimedia Foundation has a registered DMCA agent to respond to takedown notices for infringing material uploaded by users. And, though rare, Wikipedia has received and responded to takedown notices.6 I do want to point out that whether or not Wikipedia actually qualifies under the safe harbor makes much difference — the DMCA only removes liability for certain activities but otherwise plays no role in the ultimate question of whether a specific service provider is liable for copyright infringement directly or indirectly. Wikipedia receives so few notices in part because it has a strong copyright policy that is actively enforced by its users. I find it highly unlikely that any court would hold the site liable even absent safe harbor protection.

Wikipedia is just one example of many that shows how common practice seems to have stretched the meaning of §512(c) beyond what Congress may have initially intended for it. It will be interesting to see how the 9th Circuit approaches the question of the scope of the storage safe harbor.

Footnotes

  1. 6 Washington Journal of Law, Technology & Arts 217 (2011). [↩]
  2. The closest is CoStar Group v. LoopNet, a 2004 case from the 4th Circuit. [↩]
  3. UMG Recordings v. Veoh Networks, 620 F. Supp. 2d 1081, 1089 (CD Cali 2008). [↩]
  4. See Cannon v. Univ. of Chicago, 441 US 677, 696-98 (1979). [↩]
  5. Holmes v. Securities Investor Protection Corp, 503 US 258, 267-68 (1992). [↩]
  6. See here, for example. According to Shun-Ling Chen’s article, Self-Governing Online Communities in Web 2.0: Privacy, Anonymity and Accountability in Wikipedia, the Wikimedia Foundation receives two takedown notices a year. [↩]
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Is YouTube a Service Provider or Content Provider?

April 07, 2011 · · 9 comments

The briefs for Viacom’s appeal against the District Court’s decision in its lawsuit against YouTube have been filed. Last June, the Southern District of New York granted the video hosting site’s motion for summary judgment, saying the DMCA’s safe harbor immunizes YouTube from liability for copyright infringement by its users.

The crux of the case involves the interpretation of 17 USC § 512(c)(1)(A) and §512(c)(1)(B) — whether YouTube had actual knowledge of infringing works that were uploaded and whether it had the right and ability to control the uploading of infringing videos.

Today, however, I wanted to look at one of the other, and (to me, at least) more interesting issues raised on appeal. Does YouTube even qualify as a “service provider” under the DMCA in the first place?

Title II of the DMCA, the Online Copyright Infringement Liability Limitation Act, provides “safe harbors” for online service providers that limit their liability for copyright infringement arising out of specific situations. The one YouTube and most user-generated content sites claim protection under regards “information residing on systems or networks at direction of users” and is found in §512(c). Specifically, 17 USC § 512(c)(1) provides that “A service provider shall not be liable for monetary relief, or, except as provided in subsection (j), for injunctive or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider”.

Viacom argues that YouTube’s activities go beyond the collateral scope of the storage functions described in §512(c). If the 2nd Circuit agrees, this means YouTube wouldn’t receive the DMCA’s harbor no matter what “knowledge” or “right and ability to control” mean — its liability would be analyzed under traditional secondary liability doctrines. And some have suggested that, absent this safe harbor, there is a likelihood that YouTube could end up liable for copyright infringement of its users — at least as far as its operation during the time that is at issue in this lawsuit.1

Under Construction

The internet looked a lot different in 1998 when Congress passed the DMCA. The amicus brief filed by the Washington Legal Foundation provides a good look at the differences:

At that time ‘service providers’ were generally thought of as the ‘doorways’ to the Internet — the means by which individual users accessed the Internet to exchange electronic mail, view websites, and download files.  Common service providers in the 1990’s were America Online, Compuserve, and individual educational and work institutions.

User content was typically located on that user’s individual web page, which was ‘hosted’ on the service provider’s computer systems.  In this manner, a user’s individual web page was made available to other Internet users around the world.  These individual web pages often contained copyrighted material belonging to others — at that time mainly photographs and music recordings.

Content owners, to protect their intellectual property, brought lawsuits against both the website owner (often an individual) for placing the content on the web page and the service provider for ‘hosting’ the web page.  Service providers were thus faced with exposure to copyright liability solely by virtue of their desire to provide to individuals the ‘doorway’ to the Internet.

The problem confronted by Congress in the 1990′s with respect to the Internet and intellectual property rights was how to strike the balance between protecting a content owner’s rights, on one hand, and encouraging service providers to continue to offer Internet access on the other.  Congress thus sought, through the DMCA, to address this problem.

As stated in the floor debates: ‘One of the things we do here is to say:  ’If you are on-line service provider, if you are responsible for the production of all of this out to the public, you will not be held automatically responsible if someone misuses the electronic airway you provide to steal other people’s property. There is a balance here.  We want to protect property, but we do not want to deter people from making this [the Internet] widely available.  We have a problem here of making sure that intellectual property is protected, but we do not want freedom of expression impinged upon’” …

The DMCA was enacted with that balance in mind:  encouraging access to the Internet while at the same time protecting intellectual property.

It’s easy to forget how much has changed since then. According to an article on Buzzle.com, the top 10 websites in 1997 were:

  1. Geocities
  2. Yahoo and Yahooligans, Yahoo Sports and My Yahoo
  3. Starwave Corporation – Where More People Click
  4. Excite, Magellan and City.Net
  5. PathFinder, and Time/Warner and CNN sites: Warner Bros., HBO, DC Comics, Extra TV, Babylon5, CNN , CNN Financial Network and AllPolitics
  6. AltaVista Search Engine
  7. AOL Member Home Pages
  8. CNET, Search.Com, News.Com and Download.com
  9. The New York Times on the Web
  10. Ziff Davis and HotFiles

Many of the things we take for granted on the internet today had yet to arrive back then. Wikipedia launched in 2001. Social networking sites didn’t take off until after the new millennium — Friendster launched in 2002, Myspace in 2003, Facebook in 2004. Terms like “blog” and “Web 2.0″ were years away from becoming over-used. And, of course, YouTube itself didn’t launch until 2005.

But perhaps nothing illustrates the evolution of the internet from the time of the DMCA to now better than this note from the Working Group on Intellectual Property Rights White Paper. Established as part of the Information Infrastructure Task Force (IITF), the Working Group was charged with examining the adequacy of IP law in the online world and recommending any changes needed. It released a preliminary draft of its report (the “Green Paper”) in 1994, and the final draft (the “White Paper”) in ’95; the DMCA was largely the end result of the IITF’s work.

The note in the White Paper explains to readers how to access copies of the Green Paper and other IITF documents online:

“The IITF Bulletin Board can be accessed through the Internet by pointing the Gopher Client to iitf.doc.gov or by telnet to iitf.doc.gov (log in as gopher).  The Bulletin Board is also accessible at 202-501-1920 using a personal computer and a telephone modem.”2

This comparison of the internet at the time the DMCA was passed and now illustrates the challenges courts face in interpreting its provisions. Despite being little more than a decade old, the law is called upon to deal with circumstances largely unforeseen when it was written.

Service Provider or Content Provider?

Viacom argues in its brief that “YouTube’s performance and licensing of user-uploaded copyrighted content are not the type of storage activities that the DMCA immunizes from liability.”3 The “storage” services protected by the safe harbor of § 512(c) were meant to cover things like “server space for a user’s web site, for a chatroom, or other forum in which material may be posted at the direction of users” — the safe harbor doesn’t “suspend liability for other [non-storage] acts in which the service provider might engage with respect to the user-posted content.”

Viacom points to several YouTube functions that it considers “non-storage acts.” (1) “YouTube transcodes user uploaded material into a standard format for display, distribution, and performance of the content on its website and third-party platforms”; (2) YouTube’s playback function, where a visitor can view a video stored by another user on a “watch” page containing an embedded video player; (3) the automatic recommendation of additional videos that YouTube displays after playback of a video has finished; and (4) YouTube’s licensing of uploaded videos to third parties, such as Verizon Wireless.

“Congress did not intend to give content-based entertainment enterprises an unfair advantage over traditional media merely because they operate on the Internet,” says Viacom, casting the safe harbor as one intended to apply to “passive providers of storage” that provide “server space for a user’s web site, for a chatroom, or other forum in which material may be posted at the direction of users.”

But YouTube, as Viacom argues, “is an integrated media business that ‘compare[es] [it]sel[f] to, say, abc/fox/whatever.’” The functions YouTube engages in are done “not to facilitate storage, but to facilitate activities that are necessary for wide public dissemination of the works” and “performed ‘as a course of its normal operation … uninstructed by the user.’”

Bruce Lehman, who chaired the previously-mentioned Working Group on Intellectual Property Rights and helped develop the DMCA, adopts a similar argument in the amicus brief filed by the International Intellectual Property Institute:

Companies who receive their value from hosting or otherwise enabling the spread of infringing content are not service providers — and they certainly are not proving a service that contributes to the ‘speed and capacity of the internet.’ … These companies provide content.

The defendant’s stated goal was to create a media business ‘just like TV.’ … It succeeded: users who upload media provided programming which the defendant licensed, controlled, and broadcasted in order to receive ad revenue. This business model is not new, unique, or worthy of a special status under the law simply because it disseminates its media over the Internet.

Lehman relies on the Working Paper to support a distinction between companies providing internet infrastructure — which are protected by the DMCA safe harbors — and “content providers.” YouTube, the brief argues, is a content provider. It calls itself a “consumer media company.” It provides “user access to its servers to upload video files” and “reformats the videos and broadcasts them over its website for its customers” in order to” create a business model which was ‘just like TV.’”

Such a model depends on advertising revenue, which depends on “attracting the greatest possible viewership”; high-value, infringing content draws a lot of traffic, giving YouTube an incentive to do as little as possible to prevent users from uploading this type of content. In short, a “content-based business model” like YouTube forecloses protection under the DMCA.

Interpreting the Statute

Viacom’s interpretation of the storage activity safe harbor was rejected by the District Court. The court relied largely on how the provision was interpreted by other courts dealing with similar situations to come to its conclusion.

In Io Group v. Veoh Networks, the plaintiff argued that a video-hosting site very similar to YouTube was engaged in acts beyond the storage activities protected by the DMCA. But the court disagreed based on the “structure and language” of the safe harbor provisions:

The statute itself is structured in a way that distinguishes between so-called “conduit only” functions under Section 512(a) and those functions addressed by Section 512(c) (and other subsections as well). Perhaps most notably, OCILLA contains two definitions of “service provider.” 17 U.S.C. § 512(k). The narrower definition, which pertains only to service providers falling under Section 512(a), “means an entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the materials as sent or received.”

By contrast, no such limitation as to the modification of material is included in the broader definition of “service provider,” which the parties agree applies to Veoh. Instead, “the term ‘service provider’ means a provider of online services or network access, or the operator of facilities therefor, and includes an entity described in subparagraph (A).” Had Congress intended to include a limitation as to a service provider’s modification of user-submitted information, it would have said so expressly and unambiguously. (Citations removed.)4

A different court came to the same conclusion in UMG Recordings’ lawsuit against Veoh:

Under UMG’s interpretation, § 512(c) would apply only to operational features that provide or constitute storage—and nothing more. But there is no language in § 512(c) that so limits its applicability. Congress did not provide merely that “a service provider shall not be liable for storing material at the direction of the user” or that “a service provider’s liability shall be limited only for conduct that is storage.” Instead, as the language makes clear, the statute extends to functions other than mere storage; it applies to “infringement of copyright by reason of the storage at the direction of a user ….” In short, the narrow construction of the statute that UMG advocates is not the one Congress enacted. (Citation removed.)5

The court in UMG Recordings also accepted Veoh’s argument that the “by reason of the storage” language in § 512(c) is “broad causal language that is clearly meant to cover more than mere electronic storage lockers.” Its reasoning was adopted wholesale by the Viacom court to reach its conclusion. Said UMG Recordings:

Common sense and widespread usage establish that “by reason of” means “as a result of” or “something that can be attributed to ….” So understood, when copyrighted content is displayed or distributed on Veoh it is “as a result of” or “attributable to” the fact that users uploaded the content to Veoh’s servers to be accessed by other means. If providing access could trigger liability without the possibility of DMCA immunity, service providers would be greatly deterred from performing their basic, vital and salutary function—namely, providing access to information and material for the public.

The Viacom court described those acts “attributable” to a user uploading content as within the “collateral scope of ‘storage’ and allied functions.” Anything outside that collateral scope would fall outside the protection of the safe harbor and have to be analyzed under traditional doctrines of secondary liability, but in this case, YouTube’s “replication, transmittal, and display of videos” are within the provision’s scope.

The Issue on Appeal

The case law doesn’t seem to give Viacom much room to argue on this point, but keep in mind that the above-cited cases are only district court cases. Viacom argues that the lower court’s broad interpretation of the “by reason of” language goes against Supreme Court precedent that interprets the same language in other contexts as implying some form of proximate causation rather than the mere “but for” causation embraced by the lower court.

Moreover, YouTube notably doesn’t address the fact that it actually licensed user content to third parties in its reply brief; if anything would fall outside the collateral scope of storage functioning, I would think this type of act would.

We may get a preview of how successful Viacom ultimately is on this issue before the 2nd Circuit issues its ruling. The 9th Circuit is currently hearing UMG Recordings appeal in the case discussed in the previous section. UMG advances the same argument in its brief. Considering the similarities between the two cases, and the fact that the UMG appeal began months before Viacom’s appeal, the 9th Circuit’s eventual holding could forecast the willingness of appellate courts in narrowing the currently accepted scope of § 512(c) at the district court level.

Left unsaid at the district court level is any sense of the “outer bounds” of what service providers can do with material stored at the direction of users and remain within the DMCA’s safe harbor. Each part of the statutory language has been given its broadest meaning. A service provider obviously has to meet the other requirements of the DMCA to be immune from liability — but considering how broadly the Viacom court read the “knowledge” and “right and ability to control” requirements, the DMCA seems to be stretched far beyond what Congress had intended in 1998.

Is YouTube a service provider or a content provider? Should this distinction play a role in whether it qualifies for safe harbor? And, in the broader sense, is the DMCA as a whole, considering the evolution of online communications since it passed, still capable of striking the balance between innovation and protecting that content that gives value to that innovation?

 

Footnotes

  1. Trevor Cloak, The Digital Titanic: The Sinking of YouTube.com in the DMCA’s Safe Harbor, Note, 60 Vanderbilt Law Review 1559, 1573-78 (2007). [↩]
  2. White Paper, pg. 4, n.11. [↩]
  3. The entire argument is found at pp. 49-55 of the Opening Brief for Plaintiffs-Appellants. [↩]
  4. 586 F.Supp.2d 1132 (ND Cali 2008). [↩]
  5. UMG Recordings v Veoh Networks, 620 F.Supp.2d 1081, 1089 (CD Cali 2008). [↩]
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