Friday’s Endnotes – 07/20/12

July 20, 2012 · · 1 comment

Thousands of YouTube partners now make six figures a year — Google has reported that thousands of Youtube creators are now making over six figures a year. Though many of these are established content producers, like major label artists, there are a lot of new, YouTube-native producers, who have found success thanks to significant investment from Google in promoting creators.

The DMCA is Broken… — The Trichordist presents a post from an indie label that has reported over 50,000 DMCA takedown notices in the past year. “If site operators want to hide behind ‘how do we know what’s infringing’… Well, here’s how, we’ll let you know! If we issue you a notice, you now know… do you think the title will suddenly not be infringing the next day, when re-uploaded by the same offending person? Seriously? Does Billy in Pittsburgh suddenly own the rights to a Radiohead album (for example)?”

Music piracy – who’s on the moral high ground? — Interesting piece from the BBC. Notable quote: “Google’s Theo Bertram strongly disputes that: ‘I’m happy to say Google doesn’t support piracy and does support freedom of expression,’ he told me. ‘Those are not in conflict.’”

Vincent Misiano on the Golden Age of Television — TV director of tons of shows, including West Wing, Law and Order, Medium, Warehouse 13, and White Collar, Vincent Misiano shares his thoughts on filmmaking and technology. I share his thoughts that we are currently living in a “golden age” of television. I think you’d be hard-pressed to find a vehicle of storytelling throughout history that is so highly developed and fulfilling. As Misiano notes, we may be moving to a world that doesn’t support such storytelling, but that’s not a world I want to live in.

Kim Dotcom Extradition Judge Steps Down After Joking US Is ‘Enemy’ — The New Zealand judge who recently ruled that warrants executed in the Megaupload case were illegal has recused himself after making comments that his country’s long-term ally was an “enemy” at a copyright conference.

Viacom Top Lawyer Michael Fricklas on Piracy, YouTube and His Toughest Decisions (Q&A) — Congrats to Fricklas for receiving The Hollywood Reporter’s “Raising the Bar” award this year. THR has an interesting interview with the general counsel of Viacom.

Guest post: Dear Kim Ditcom — Independent filmmaker Ellen Seidler has a rebuttal to the Megaupload CEO’s “Letter to Hollywood” that is well worth a read. “For the record, the Internet does not belong to you and your ilk (no matter how many times you change your name).  The Internet belongs to us all–and that includes the millions of artists and creators who deserve a fair marketplace and an Internet that works for everyone.”

Memo to DOJ: Drop the Apple E-Books Suit — Senator Charles Schumer writes an insightful editorial on the DOJ’s anti-trust lawsuit involving e-books. “If publishers, authors and consumers are at the mercy of a single retailer that controls 90% of the market and can set rock-bottom prices, we will all suffer. Choice is critical in any market, but that is particularly true in cultural markets like books. The prospect that a single firm would control access to books should give any reader pause.”

Two Inane Suggestions for Compensating Artists Online — The Cynical Musician’s Faza explains why free culture guru’s Richard Stallman’s proposals for compensating artists online won’t work.

Google Exec: If You Want to Control the Pirates, Go After Their Money… — That was the response from Google in a “heated debate” between an exec from BPI. The response: “Once we’ve told Google 100,000 times that a particular site is illegal, we don’t think that site should be coming above iTunes and Spotify in the results.”

ICE-led IPR Center seizes 70 websites duping consumers into buying counterfeit merchandise — Kudos to ICE for launching the second phase of Operation in Our Sites, which targets the domain names of websites engaged in infringing activities. This latest round resulted in the seizure of 70 domain names engaged in selling a wide range of counterfeit goods. Many of the sites also displayed SSL Certificates, “further duping the consumer into thinking they were shopping on a legitimate website” and ”potentially putting customers’ financial information at risk,” according to the federal agency.

Weighing the costs of crowdfunding — The Future of Music Coalition provides some balance to the hype over crowdfunding, noting “that big pronouncements about how crowd-funding is ‘the future of music’ might be more than a bit inflated. Services like Kickstarter and Indiegogo are an important new tool in musicians’ arsenals. But they work best for artists who already have a particularly tech-savvy, deep-pocketed audience — and who have a long history of putting in the kind of work necessary to build a strong social media following — which … can leave music itself on the back burner.”

How Free is Ruining Everything — Epic, must-read post from Eamonn Forde.

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Friday’s Endnotes – 05/04/12

May 04, 2012 · · 2 comments

Why Musicians Need More Than Viral Videos to Succeed — Excellent interview with Billy Corgan on music, success, and value in today’s world.

You Can’t Have A Healthy Market Economy Without Property Rights.  Why Do So Many In Tech Blogosphere Want To Abolish Cyber Property Rights And Cripple The Cyber-Economy? — David Lowery returns to the Trichordist: “I realize that what I am saying about robust property rights and healthy economies is nothing new. It’s a rather elementary and banal critique of the Copyleft’s proposed cyber-economy. What is more interesting is why there are so few other voices out there challenging these wackjobs? Why is it left to the singer of a moderately successful cult rock band to challenge this nonsense? That’s the real story here. Where are the grown-ups?” Part 2 here.

If it looks like a bubble and it feels like a bubble… — Is Silicon Valley partying like it’s 1999? Or is a 2 year old company with 13 employees and no revenue or business plan really worth $1 billion?

Silicon Valley’s Hottest New Start-Up Idea: Nothing — This Forbes article suggests answers to the above questions. “Do you have a can’t-miss idea for a start-up that could be the next Facebook, Pinterest or Draw Something? Great. Write it down on a piece of paper. Now burn that piece of paper. Congratulations. You’re halfway to your first billion.”

Is the Midnight Screening the New Rock Concert? — Interesting article on Viacom’s new blog. Midnight screenings of films have gone from niche to mainstream and are filled with hardcore fans, making the experience more like a rock concert than just another day at the movies. Check out the rest of the Viacom blog, it’s a cut above your run-of-the-mill corporate blog/press release archive.

Jimmy Wales’s Latest Speech Is ‘Nonsense on Stilts’ — Speaking of films, Andrew Keen takes on Wikipedia founder Jimmy Wale’s recent comments that “Collaborative storytelling and filmmaking will do to Hollywood what Wikipedia did to Encyclopaedia Britannica.” “Like so many other digital utopians,” says Keen, ”Wales has been deluded by the leveling power of the Internet.”

Best Practices Make Best Partners — Good news: “Today the Association of National Advertisers (ANA) and the Association of Advertising Agencies (4A’s) announced a Statement of Best Practices encouraging their members to adopt proactive measures to combat rogue websites dealing in counterfeit and infringing goods.  The Best Practices also have the support of the Interactive Advertising Bureau (IAB).”

Rojadirecta — Both the US and Puerto 80 have filed their briefs concerning Puerto 80′s motion to dismiss the government’s civil forfeiture proceeding against the Rojadirecta domain name. US Memorandum of Law in Opposition to Motion (PDF). Puerto 80 Reply Memorandum of Law in Support of Motion (PDF). A hearing on the motion is scheduled for the beginning of next month.

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Friday’s Endnotes – 04/13/12

April 13, 2012 · · 2 comments

My apologies to readers of this site this week. On Tuesday, my webhost began experiencing hardware issues that took Copyhype (and many other sites) offline. The site was up again by Wednesday, but since then, there have been lingering issues that have resulted in the site loading slow or timing out. Hopefully things will be back to normal soon!

In the meantime, don’t forget that you can Subscribe to Copyhype by Email or through RSS to make sure you never miss a post.

Meet The New Boss, Worse Than The Old Boss? — David Lowery (Cracker, Camper van Beethoven) expands on a talk he gave at this winter’s SF Music Tech Summit. A fascinating and illuminating discussion; be sure to also check out part 2, part 3, part 4, and part 5.

Grooveshark: Trolling The Sea Of Artists To Make A Buck? — Jeff Price of Tunecore has some strong words about the music streaming site that brags about not being licensed. “Grooveshark is a fish rotting from the head down. The people running it are immoral and could care less about who and/or what they hurt as long as they make money.”

Canard du Jour: Do you still have your personality after Google makes a copy? — Copyright and privacy are more closely linked than appearance suggests. The trouble is that arguments advanced to weaken copyright can also be used to weaken privacy rights — and, as Chris Castle explains, that’s fine by Google.

The Nimble Empire: In Defense of Cable (via John August) — On why the evolution of cable will be amazing and what critics get wrong. “Really, what the pro-piracy arguments come down to — at least in the United States, where most content is pretty ready available (a few exceptions aside) — is ‘this is legally available, but not at a price I am willing to pay,’ and/or ‘this is legally available, but not for a time that I am willing to wait.’ Or rather — ‘I insist that you immediately provide your content at a price and on a device or devices of my choosing.’ This is a newly emerging and oddly curious expectation towards media.”

The film tax credit works, and Western Pennsylvania is a winner (via The Mentally InFirm)— The Pittsburgh Post-Gazette reports on the positive effect that film and television production has on the Pennsylvania economy and how PA’s film tax credit has helped spur that production. The Post-Gazette notes, “Since the program’s inception, nearly $242.5 million in state tax credits have been approved and/or awarded to film production companies, which has resulted in estimated total economic activity of $1.8 billion and the creation and sustaining of almost 14,500 jobs statewide.”

Other Ways to Think About the Copyright Debate — At the Music Think Tank, Simon Tam asks, “Do we, as a society, value our artists and the arts as a whole? Do we appreciate them enough to support them so that the arts can continue to grow and that artistic expressions of ideas can be protected? Or do we believe that all artistic works should be free, no matter the cost, even if that cost includes the actual content creators themselves?”

The CCI and the Copyright Conspiracy — “What gets my attention is the rhetoric that consumers are owed better representation in the CCI than they’re currently receiving.  Of course consumers should advocate and argue for their interests, but why would they be owed representation in a private coalition, regulating a privately operated network?  Advocates like the Electronic Frontier Foundation argue that under-representation leads to the real problem of a lack of due process to consumers when the CCI cuts off their Internet access in the face of a copyright infringement allegation.  If your ISP restricts or cuts off your Internet access, how has it violated your ‘due process?’  How does it owe you “due process” in the first place?”

Q&A: Attorney Paul Smith of Jenner & Block Deciphers YouTube Appeal Decision — Paul Smith, the attorney from Jenner & Block who represented Viacom in its appeal against YouTube, discusses last week’s decision by the Second Circuit.

The 3 Types of Copyright Conversations — Jonathan Bailey labels these the ethical, legal, and practical arguments, and notes how quickly and easily they become conflated. “Copyright, piracy, Web freedom, privacy, etc. are all emotionally-charged topics but they are also absolutely critical to the future of the Web and our culture as a whole. It’s worth taking the time to get these conversations right.”

Art and Democracy: The NEA, Kickstarter, and Creativity in America — A fascinating comparison of arts funding by the National Endowment of the Arts and Kickstarter. “Right now, it’s not clear that Kickstarter is doing much more than offering a streamlined process for donations that would probably have happened anyway.”

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Viacom v. YouTube: The Second Circuit’s Decision

April 09, 2012 · · 7 comments

On Thursday, the Second Circuit Court of Appeals decided Viacom v. YouTube (PDF of decision).

The decision has spurred a range of reactions, with both sides publicly claiming a sort of victory; others have stated the decision “is a bummer for Google and the UGC community“, is “mostly good (for the internet and innovation)“, is a win for Viacom, or is a mixed victory.

Regardless, the opinion is sure to be an important decision in the DMCA pantheon for years to come. The influential Second Circuit has interpreted many DMCA safe harbor provisions that affect both online service providers and copyright holders.

In 2007, Viacom sued YouTube for copyright infringement because of unauthorized public performance, display, and reproduction of their works on the video site. A couple of months later, a number of other plaintiffs, including various film studios, television networks, music publishers, and sports leagues filed suit against YouTube with similar claims. These plaintiffs also sought class action certification.

The District Court combined the two suits as related, and in 2010 ruled entirely in favor of YouTube on combined motions for summary judgment.1 The Second Circuit’s decision is a result of both groups of plaintiffs appealing that decision.

Under the Digital Millennium Copyright Act of 1998 (the DMCA), online service providers are immune from monetary liability for copyright infringment as a result of certain activities — the most notable, and the one at issue in Viacom, is the safe harbor for “Information Residing on Systems or Networks At Direction of Users.”2

The DMCA lays out requirements for service providers to qualify for this safe harbor, several of which are germane here. I’ll look at each of them in turn and how they were affected by Thursday’s decision.

Knowledge

First, to be protected by the DMCA, a service provider must not have “actual knowledge that the material or an activity using the material on the system or network is infringing” or “is not aware of facts or circumstances from which infringing activity is apparent.” On this point, the parties disputed over whether this means “a general awareness that there are infringements” on a service — likely indisputable in this case — or rather “actual or constructive knowledge of specific and identifiable infringements of individual items.” On this point, the District Court adopted the latter interpretation, in favor of YouTube.

On appeal, the Second Circuit agreed with the District Court’s interpretation of the DMCA’s knowledge provision but vacated the summary judgment since there was evidence that YouTube may have had knowledge of specific infringing clips. It also held that the District Court failed to examine whether YouTube had been willfully blind to specific infringing clips.

This is perhaps the key issue in the case, especially since the second knowledge prong — awareness of facts or circumstances from which infringing activity is apparent (commonly referred to as “red flag” knowledge) — has largely been written out by courts.3 I don’t believe, in fact, that any court has yet to find that a service provider isn’t protected by the DMCA because of “red flag” knowledge.4

The Second Circuit was mindful of this but focused on the language of the statute to render the first knowledge prong as incorporating an “subjective” standard while the red flag prong reflects an “objective” standard. “Both provisions do independent work, and both apply only to specific instances of infringement.”5

Though the “red flag” prong seems all but superflous in practice, on remand, Viacom and the putative class plaintiffs should argue that it triggers a duty to investigate further. That is, when a service provider becomes aware of facts or circumstances that make infringing activity apparent, it must take affirmative steps to determine the legality of the activity. The Second Circuit didn’t address this issue, but the Ninth Circuit has held the opposite:

Perfect 10 alleges that CCBill and CWIE were aware of a number of “red flags” that signaled apparent infringement. Because CWIE and CCBill provided services to “illegal.net” and “stolencelebritypics.com,” Perfect 10 argues that they must have been aware of apparent infringing activity. We disagree. When a website traffics in pictures that are titillating by nature, describing photographs as “illegal” or “stolen” may be an attempt to increase their salacious appeal, rather than an admission that the photographs are actually illegal or stolen. We do not place the burden of determining whether photographs are actually illegal on a service provider.

This can’t be correct. In many other situations, the law places a burden on a party to inquire into the actual nature of something when the facts and circumstances make it apparent.6 And this burden-shifting doesn’t contradict the DMCA’s “no monitoring” provision, which only states that safe harbor protection doesn’t require “affirmatively seeking facts indicating infringing activity” (emphasis added) — this duty to investigate would only arise after those facts were known by the service provider.

Willful Blindness

The Second Circuit held that knowledge under the storage safe harbor includes “willful blindness.” Under the common law, consciously avoiding the confirmation of a fact that one is aware is highly probable is a type of knowledge.7 As the court notes, this doctrine is well-established in copyright law in general, but this is the first time the Second Circuit has faced the issue of whether willful blindness is applicable to the DMCA.

It is, though the court limits its application because safe harbor protection in the DMCA cannot be conditioned on affirmative monitoring by a service provider. So on remand, the District Court will need to determine whether YouTube “made a deliberate effort to avoid guilty knowledge”, in addition to the factual questions of whether YouTube has actual or apparent knowledge of infringing clips on its site.

Right and Ability to Control

Second, a service provider is only immune from liability when it “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.” The Court rejected Viacom’s argument that YouTube doesn’t meet this requirement, stating that this “control” provision, like the knowledge provision above, requires “item-specific” knowledge of any infringing activity because “the provider must know of the particular case before he can control it.”

The Circuit reversed the District Court on its interpretation that the “control” provision of the DMCA requires item-specific knowledge — suggesting only vaguely that this question must be determined on a case-by-case basis — and remanded for further fact-finding on YouTube’s right and ability to control and financial benefit.8

But here’s where the court makes what could become a very important statement about the DMCA in the future, and one that hasn’t gotten a lot of attention in much of the initial analyses of the case I’ve read so far. While explaining what sorts of things could lead to a finding that a service provider has a right and ability to control that negates safe harbor protection, the Second Circuit said that inducement of copyright liability might rise to the level of control the DMCA speaks of.

Since the Supreme Court articulated the inducement theory of copyright liability in MGM v. Grokster, many have wondered whether the DMCA safe harbor shields service providers who induce users to infringe on copyright. Some cases have held that the DMCA safe harbors and inducement liability are “inherently contradictory”. In UMG, the Ninth Circuit, without any discussion about the interplay between the two, held the defendant protected by the DMCA against all liability, including a claim of inducement. Similarly, the District Court here granted summary judgment in favor of YouTube for inducement without any explanation.

As far as I know, this marks the first time a Circuit Court has incorporated inducement of copyright as a bar to DMCA safe harbor protection. Its placement in the “control” prong seems to make logical sense, too.

The Scope of ‘By Reason of Storage’

Finally, and this is more of a definitional requirement, immunity only extends to “infringement of copyright by reason of the storage at the direction of a user.” Viacom had argued that several of YouTube’s activities concerning uploaded videos do not fall within the scope of this definition, but again, the District Court rejected this argument.

While the Circuit affirmed that YouTube’s replication, playback, and related video functions were protected by the user storage safe harbor, it recognized that YouTube’s syndication of videos to third parties might fall outside the scope of the safe harbor but hesitated to make a definitive ruling on the point since the record didn’t reveal whether any of the clips involved in the lawsuit had actually been syndicated.

About a year ago, I wrote on this point, noting that chances were slim that Viacom would succeed on this argument, so it is somewhat notable that the Second Circuit recognized at least the existence of an outer boundary to what service providers can do with material uploaded by users while remaining protected by the DMCA safe harbor. It’s still concerning that the Circuit so easily found the other YouTube functions remained within the scope of the safe harbor, in large part because their functionality is “fully automated” — you can program just about anything to be “fully automated.” This interpretation seems to give service providers a “heads I win, tails you lose” position over content creators: one can make a fully-fledged content platform that relies on user-uploaded content that places no liability for copyright infringement since the only responsibility a provider has is to respond to individual takedown notices (pulling in enormous ad revenues), and then seek mercy because it’s too difficult to effectively address infringement due to the sheer amount of data being uploaded.

What’s Next?

For the parties involved, the Second Circuit’s decision is a mixed result on the law. YouTube won on some of its arguments, Viacom and the putative class plaintiffs one on some of theirs. But if the case continues back at the lower court, YouTube will likely ultimately be the loser.

The cardinal sin of Judge Stanton’s original decision wasn’t that he interpreted the DMCA so much in favor of YouTube, but that even under such a narrow interpretation, there was evidence that YouTube could be held liable.

It’s premature to say whether this case could be appealed to the Supreme Court, though that’s always a possibility — and the timing of this decision with the Ninth Circuit’s UMG decision on many of the same points can only add to the speculation.

On a broader note, as attorney Jacqueline Charlesworth points out in a relevant article, “A basic tenet of our law is that one should not encourage others to break it.”

In the adolescence of the Internet, we are seeing complex business models that may combine Grokster-like purpose with other, ostensibly benign functionalities. Services seeking to capitalize on the draw of infringing goods may exhibit superficial respect for copyright concerns—by implementing a takedown program, for instance—yet rest secure in the knowledge that their users will continue to supply the content on which they depend in limitless quantities.

… Courts must resist the invitation to oversimplify reality by arbitrarily dividing the Internet world into “true pirates” and everyone else. Not every pirate is holed up in a garage, has a name ending in “-ster” or spells “wares” with a “z.” Some dress in expensive clothing and have MBAs. Courts need to sort through the facts without prejudging them, and beware pirates in disguise.

There is plenty of evidence that the DMCA has faltered in its 14 year tenure at discouraging bad behavior — witness Megaupload and Grooveshark as recent examples. It remains to be seen whether the Second Circuit’s decision will alleviate building business models around infringement that are shielded by the DMCA safe harbors — which benefit only the service providers— or reach the balance originally intended by the DMCA — benefitting innovative tech companies, content creators, and the general public.

 

Footnotes

  1. The motion for class action certification was subsequently dismissed as moot. [↩]
  2. 17 USC § 512(c). [↩]
  3. See Perfect 10 v. CCBill, “Because CWIE and CCBill provided services to ‘illegal.net’ and ‘stolencelebritypics.com,’ Perfect 10 argues that they must have been aware of apparent infringing activity. We disagree.” [↩]
  4. Greg Jansen, Whose Burden is it Anyway? Addressing the Needs of Content Owners in DMCA Safe Harbors, 62 Federal Communications Law Journal 153, 163 (2010), “To date, no OSP has failed the stringent red-flag test”. [↩]
  5. I’ll note that Congress wasn’t thinking in these terms. In fact, the House Commerce Committe Report on the DMCA said, “The ‘red flag’ test has both a subjective and an objective element. In determining whether the service provider was aware of a ‘red flag,’ the subjective awareness of the service provider of the facts or circumstances in question must be determined. However, in deciding whether those facts or circumstances constitute a ‘red flag’—in other words, whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances— an objective standard should be used.” [↩]
  6. For example, in federal securities law: Dodds v. Cigna Securities, “when the circumstances would suggest to an investor of ordinary intelligence the probability that she has been defrauded, a duty of inquiry arises, and knowledge will be imputed to the investor who does not make such an inquiry”; fraud: Higgins v. Crouse, “[W]here the circumstances are such as to suggest to a person of ordinary intelligence the probability that he has been defrauded, a duty of inquiry arises, and if he omits that inquiry when it would have developed the truth, and shuts his eyes to the facts which call for investigation, knowledge of the fraud will be imputed to him”; apparent agency: Whitney v. Citibank, “[A]bsent awareness of facts indicating that a partner is acting beyond his real or apparent authority, a third party is not obligated to investigate the matter further or search for some limitation on that partner’s authority”; statute of limitations: Kronisch v. US, “[E]ven if plaintiff’s awareness of his injury and its cause … could only be characterized as a mere “hunch” or “suspicion,” plaintiff would still have been under a duty to diligently investigate his claim.” [↩]
  7. Global-Tech Appliances v. SEB, 131 S.Ct. 2060, 68-69 (2011). [↩]
  8. This presents one of the places the Second Circuit diverges from the Ninth Circuit’s holding in the highly similar UMG Recordings v. Shelter Capital Partners. There the court held that the right and ability to control does require “control over specific infringing activity the provider knows about.” [↩]
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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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Friday’s Endnotes – 11/18/11

November 18, 2011 · · Comments Off

Should we move from copyright to workright? — John Degen picks up on Abraham Drassinower’s paper Copyright Infringement as Compelled Speech (which I highlighted last week). Degen looks at some of the big sticking points in copyright debates and wonders if it’s time to start conceptualizing the law as a workright rather than a copyright. Interesting stuff.

Starz CEO: Netflix Became an ‘Albatross’ — The entertainment company’s boss explains the reasoning behind the decision not to renew its licensing agreement with Netflix. Part of it was the reluctance of Netflix to incorporate tiered pricing for premium streaming like Starz provides, and part of it was Starz’s ongoing reemphasis on original programming over licensed feature films.

Post-Booker Judicial Discretion and Sentencing Trends in Criminal Intellectual Property Cases: Empirical Analysis and Societal Implications — A scholarly article from Aaron B. Rabinowitz that finds, among other things, ”prosecutors seek and judges reduce sentences for intellectual property crimes more frequently than for other comparable crimes.”

Appeals court rejects request by serial downloader — The First Circuit denied Joel Tenenbaum’s request for a rehearing en banc after it had previously reinstated the original jury award of $675,000 and remanded to the District Court for further proceedings.

YouTube, NMPA reach ‘unprecedented’ deal to pay independent music publishers — The terms of the settlement reached between Google and the National Music Publishers Association stemming from litigation related to the current lawsuit involving Viacom are now available. YouTube will pay a percentage of ad revenue derived from videos that incorporate songs to indie music publishers that opt in.

Following a Supreme Court deadlock, Costco beats Omega on remand by invoking the equitable doctrine of “copyright misuse” — You can’t slap a copyrighted logo on the back of a watch to limit its importation under Copyright Act provisions. Costco should’ve thought of this seven years ago when it was first sued.

Universal Music sees recorded music near turnaround — Billboard reports positive news: execs at major label Universal believe the record industry may reach its inflection point toward “the end of 2013.” The growth of digital sales and new online services are helping to bring the decade long decline that halved the recording industry to an end.

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Friday’s Endnotes – 07/08/11

July 08, 2011 · · Comments Off

Creative America — Creative America is a new grassroots organization “uniting the entertainment community and others against content theft.” Along with their website, you can find the group on Facebook and Twitter. Chris Dodd of the MPAA remarks:

Most of the over 2 million Americans whose jobs are supported by the motion picture industry aren’t marquee stars or studio executives. They’re the people whose names you see in the closing credits, with titles like makeup artist, set dresser, prop maker, sound effects editor, visual effects artist, rigging electrician, costumer, and driver. They’re the teenagers working their first job taking tickets at the local movie theatre or theme park. And they’re the people who work for local retailers, caterers, dry cleaners, florists, hardware and lumber suppliers, transportation companies, and thousands of other small businesses that support our industry.

When someone steals a movie and profits from that theft, these are the people they’re robbing from. These are the people who will have less to feed their families, to care for their parents, to save for retirement, to put their kids through school. And now, these are the people whose voices you’re about to hear.

Creative America, a new and unprecedented partnership among studios, networks, unions, and guilds, will give the men and women of our community a new way to speak out in the fight against content theft. This grassroots campaign will help everyone across this country understand that content theft isn’t a victimless crime – it hurts all of us.

Major ISPs agree to “six strikes” copyright enforcement plan — Ars Technica reports on the voluntary agreement announced this week signed by major ISPs. The RIAA released a statement in support of the new Copyright Alert System, quoting statements of support from many other trade associations. Also in support: the White House. James Gannon offers his take, noting that recent studies show this type of system is the most effective way of addressing online infringement to date.

Blindsided! Will U.S. Supreme Court Patent Ruling on Willful Blindness Determine Standard for Red-Flag Knowledge Under DMCA? — Naomi Jane Gray reports on a breaking development in the Viacom v. YouTube appeal currently awaiting oral argument in the Second Circuit. Great analysis of the issues, but as Gray concludes, it’s anyone’s guess how the Second Circuit will ultimately respond to Viacom’s argument.

Fighting the Good Fight — Leslie Burns reminds artists, creators, and those who recognize the importance of copyright in society not to stoop to the level of opponents, who often hide behind anonymity, resort to name-calling, and engage in even more deplorable tactics when facts, reason, and good policy don’t support their position.

Cherish the Book Publishers – You’ll Miss Them When They’re Gone (H/T Lee Goldberg) — Eric Felten reports on the e-book gold rush currently underway. The lack of gatekeepers for self-publishing writers seems attractive, but what is the public losing out on?

A friend, years ago, worked at a major New York publishing house tending the slush pile. It was her job to peruse the unsolicited manuscripts for anything that might be a hidden gem, and to send the dreaded form letters to the rest. She took no pleasure in sending rejections and was eager to find something, anything, worthy in the pile. She dreamed of discovering the great undiscovered talent—oh, what a story (and a career) it would make! Alas, in two years of sifting she found only one marginally plausible submission she could recommend to her bosses.

The e-book era promises us all the pleasure of wading through the slush pile ourselves, even as the pile grows exponentially.

Extradition For Pirates? Seized Domain Admins Call It Quits — TorrentFreak reports on pirate site operators voluntarily shutting down in the wake of ICE’s Operation in Our Sites. “The risks outweigh the pros of running a site like Re1ease now, then when we heard about TVShack, we thought enough is enough, ” said one.

On full content RSS (not excerpt only), spam blogs and content thieves — Bloggers, do you offer full posts or excerpts in your RSS feed? Hillary DePiano would like to hear your thoughts on the subject.

How to Fix Horror (H/T Alex Epstein) — If you’re a fan of horror movies like I am, you might be interested in author Jason Zinoman’s ongoing series of provocative essays on the subject at Slate. Up so far: “Stop trying to be so respectable”, “Kill the back story”, and “Embrace the remake”.

Finally, the distinction between copyright and plagiarism has recently been a (somewhat) hot topic online. Here’s a couple of stories from the past week on the subject:

The Unoriginal Sin: Differences Between Plagiarism and Copyright Infringement — Attorney and writer Mark Fowler takes a comprehensive look at both the legal and descriptive differences between the two, touching also on newer developments likeMurphy v. Millennium Radio Group.

The Role of Copyright in Fighting Plagiarism — PlagiarismToday’s Jonathan Bailey takes a different approach to this issue: he looks at the overlap between copyright infringement and plagiarism rather than the differences and discusses how the legal tools of copyright are used to police the largely ethical issue of plagiarism.

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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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Friday’s Endnotes – 04/01/11

April 01, 2011 · · 48 comments

I suspect that by the time this post appears, there will be many April Fool’s jokes fluttering around the Internet, but rest assured, all the following links are to actual stories.

Game on! Viacom, YouTube briefs on file in 2nd Circuit — The popular video site submitted its appellate brief yesterday. Shades of Gray has links to the document, as well as Viacom’s opening brief and the numerous amici briefs filed in the case.

There is no two without three: Bill C-32 is Dead — Late last week, the Canadian government dissolved, along with the latest attempt at reforming the country’s copyright law. IP Osgoode takes a look at the decade-plus effort to modernize the Copyright Act and implement changes needed under WIPO treaties, as well as what the future will hold after elections.

The Value of the Village — The Copyright Alliance blog discusses self-publishing superstar Amanda Hocking’s recent move to traditional publishing. “Having a variety of options as an emerging artist is great. But just as Ms. Hocking discovered, there is more to being a successful novelist than just the writing.”

Music Recommendation Engines Not Satisfying Fans — A new survey shows that music recommendation still has a long way to go before it’s ready for prime time. That much hasn’t changed since 2009, when researcher Paul Lamere gave his excellent talk on why music recommendation systems aren’t working, Help! My iPod thinks I’m emo. Meanwhile, MIT’s Technology Review reports on Myna, the music recommendation engine currently in development by the commissioners of the survey. I thought this part was particularly funny: “Music discovery, after all, is littered with media that aggregate the opinions of insufferable young people.”

The P2P Rebellion: Are Copyrights the Vietnam of Today’s Youth — The always entertaining Moses Avalon compares the P2P crusade against “Big Content” to the 60′s youth opposition to the Vietnam War. One notable difference between the two: “At the heart of the anti-war movement was the hope to stop bloodshed. Hippies rebelled against something serious– the draft. What is today’s P2P “sharing” movement about? Free tunes? Cheaper flicks?”

$100k appraisal for single page of original art from Frank Miller’s Dark Knight comic book — Heritage Auctions estimates the iconic image from one of comicdom’s most esteemed series will bring over six figures at auction. The full image of the page is quite amazing to see if, like me, you consider yourself a fan of comics. I especially like the inkwork of Klaus Janson and found this interesting interview of him for Comic Foundry magazine from 2005, in which he expounds on art, storytelling, and the comics industry over the past several decades.

Billboard’s Twitter 140 — Finally, for all of you on Twitter, Billboard.biz shares its list of some of the most influential and informative Tweeters in the music industry.

If you have any stories, articles, blog posts, upcoming events, or anything else you think would interest Copyhype readers, drop me a line on the contact page. Hope everyone enjoys their weekend!

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