YouTube Case Heard By Second Circuit

Last month, the Second Circuit heard arguments in the Viacom v. YouTube appeal.

Summary of the district court decision: Part I, Part II, Part III

While Viacom claimed that YouTube was well aware of infringing materials being posted and that the Court should not allow rampant infringement, YouTube countered that there were no instances where the infringing works were not taken down following notice from the owner. During the arguments,
YouTube touted its ability to remove the infringing works within hours of the notice of infringement and have developed software to detect copyrighted works.

One of the problems expressed by the panel was how to calculate damages. One judge expressed that he believed that Viacom could be looking for some type of license arrangement. However, by taking the case this far, it would seem that Viacom is interested in more than a licensing arrangement. YouTube has arrangements with other companies. Viacom included several references and comparisons to Grokster.

Ultimately, the question about who should bear the burdens regarding copyright infringement will need to be answered. YouTube claims they need notice to determine whether something that is posted on YouTube is infringing the work of another.

It will likely be several months before a decision is reached.

Music Publishers Settle with YouTube...

In a similar lawsuit to the Viacom v. YouTube dispute, music publishers had sued YouTube for copyright infringement.

However, the court found that YouTube was not an infringer because it responded to notices. The decision was appealed but now the National Music Publishers Association has settled its claim. Apparently, the settlement will allow for a collection of royalties to Harry Fox where ads from YouTube appear with user generated videos featuring a songwriters and publisher’s music.

YouTube will use information provided by the NMPA to identify the copyrighted works. No word on whether or what type of license has been arranged between the parties regarding the information provided by the NMPA. (Viacom has accused YouTube of requiring licensing which allows YouTube to use the submissions for far more than just the mere purpose of identifying infringement and infringing works. See previous blog entry.)

Does this mean that a settlement is in the near future for Viacom and YouTube? Highly doubtful given the acrimony between the parties.

Shoot First, Apologize Never, Then Offer a Pop Quiz With a Get Out of Jail Free Card

YouTube seems to be in a position similar to Baidu. Facing a potential appeal and negative campaign in terms of its copyright policy, YouTube is now turning its policy to making violators go back to school. (Yes, back to school.)

YouTube has a three strikes and you’re out policy regarding DMCA notices. Following the third strike, a user is suspended. (Circumventing this suspension can be as simple as opening a new account.) However, YouTube is now offering a new method to remove strikes – take a copyright class and pass a test. (YouTube insists that these users must then maintain a clean record.)



YouTube is also trying to self-regulate, pledging to build on its copyright policy including a 24 hour takedown policy, improving responses and system for DMCA takedown requests and improve its anti-piracy review.

A campaign by YouTube to show its improvements in assisting and taking seriously copyright complaints….is YouTube hedging its bets about its chances of reversal in the Viacom case? (Previous coverage of YouTube v. Viacom can be found here.)

Maybe the decision involving parent company Google in the book settlement case has YouTube a little more concerned. (That is a blog post for another day.)

There is an irony here. Clearly, YouTube knew that its site attracts copyright infringement. Viacom would argue that YouTube encouraged and profited from copyright infringement. Now, YouTube will be providing a course on copyright.
Now that YouTube is clearly the market leader in video content posting on the web and the website that most people would quickly go to first if looking for a video, YouTube seems to now want to not only clean up its image. A new startup for video web content would likely have to follow the YouTube model to allow significant amounts of infringing material to be posted to direct traffic to its site. Now YouTube can try the corporate responsibility routine and keep competitors at bay with all things – copyright.

YouTube, like Baidu maintains that the content that appears on its website is the uploader’s responsibility.

What effect do you think the school will have?

Is YouTube similar to Baidu trying to self-regulate fearing government intervention? Is it too late? Will the government step in? What happens (either way) in the Viacom case may determine if (or when) the government takes action?

UFC Grapples with Justin.tv over Live-Streaming of Events

Zuffa, Inc., the parent company of Ultimate Fighting Championship has filed a lawsuit in the District Court of Nevada for copyright infringement against Justin.tv. Justin.tv is a website that allows for the streaming of live video through its web portal.

UFC alleges that its pay-per view events are being broadcast on Justin.tv. UFC hired third party vendors to send petitions to take down over 200 video feeds of the October 23, 2010 pay-per view event UFC 121. According to news reports, UFC claims that over 50,000 watched illegal streaming video of UFC 121.

Justin.tv has a terms of use which includes DMCA takedown notices. UFC alleges that Justin.tv’s response has been inadequate. According to a press relase on the UFC website, Zuffa contacted Justin.tv several times over almost a two-year span in attempts to prevent illegal uploading.

It seems likely that Justin.tv is likely to rely on the DMCA safe-harbor provision similar to the arguments made by YouTube in the Viacom lawsuit.

Viacom Appeals

As widely expected, Viacom has appealed the June 2010 district court ruling in Viacom v. YouTube to the Second Circuit. (I previously discussed the district court's decision granting summary judgment to YouTube in a 3 part post: Part I, Part II, Part III.) Viacom has a full text of the appeal as filed on their website.

Interestingly, Viacom has primarily focused on the factual findings of the district court in granting summary judgment for YouTube as an internet service provider under Section 512(c). Section 512(c) provides a defense to copyright infringement for certain activities carried out by internet service providers. (Further explanation available here.)

Viacom has stated three reasons why Section 512(c) should not apply to YouTube:

1. YouTube had knowledge that the content on YouTube was infringing or were aware of facts and circumstances that the content was infringing and did nothing to stop infringement. Viacom claims that YouTube’s general knowledge of infringing activity on its website should be sufficient to prevent YouTube’s service provider defense under Section 512(c).
   
   Viacom alleges that YouTube selectively enforced against copyright infringement when YouTube had programs available to weed out infringing works and ignoring community flagging systems that would have pointed out infringing works. Viacom also claims that YouTube was aware of the predominant amount of infringing works that were available on its site and encouraged these videos because YouTube received more “hits” from these videos.
   
   The court found that YouTube took appropriate action when advised of the alleged infringing web posts by Viacom. The court found specific knowledge was needed in order for the Section 512 defense to not apply.
2. YouTube had the ability and control over the infringing content and received a direct financial benefit. Viacom claims that YouTube gained financial benefits from advertising revenue due to the increased audience at its website. Viacom points to certain facts that YouTube realized that a major part of its success were videos that infringed on copyrights.
   
   Viacom also reiterates that YouTube could have taken action against infringing activities but did not. The district court found that YouTube must have specific knowledge of the infringing content in order to be able to control the infringing activity.
3. YouTube’s activities went beyond the storage function of a service provider under Section 512(c). Viacom claims that YouTube’s actions in posting user content includes more than just storage – including display, reproduction, performance and licensing content to others.
   
   The district court found that YouTube’s activities in placing the user’s content on its website was incidental to the acts of storage and thus was within the parameters of the Section 512(c) defense.

Viacom also seeks that summary judgment be reversed and granted in its favor. A number of amici have filed briefs on Viacom’s behalf including Business Software Alliance, Motion Picture Association of America, Microsoft, and members of the publishing and music industries.

For the first 2 reasons set forth by Viacom, it would seem heavily reliant on Grokster and general principles from the case. Based on the district court decision, Viacom would argue a couple of small changes and Grokster would not have been guilty of infringement. (This may be true.)

It will be interesting to see how the Second Circuit handles the issue of the district court’s finding regarding specific knowledge of infringement is necessary, not general knowledge.

I think the best that Viacom may be able to hope for from the Second Circuit is that there are triable issues of fact and summary judgment for YouTube was unwarranted. (Based on the number of facts presented by Viacom, this seems to be its strategy.)

The third reason set forth by Viacom is by far the more interesting legal argument. While Viacom is surely unhappy with the result of district court under Reasons 1 and 2 above and would like a ruling in its favor based on the facts it presents, it seems that Reason 3 would be the best argument to obtain summary judgment in Viacom’s favor. The more interesting questions facing the Second Circuit are not argued fully until nearly 50 pages into the Opening Brief.

Viacom v. YouTube, Part III - Limitations of Liability

The final part of the Viacom v. YouTube trilogy focuses on the DMCA limitations of liability in Section 512.

A copyright includes a certain bundle of exclusive rights such as distribution, reproduction, public display, and the right to make derivative works. See 17 U.S.C. § 106. Under the DMCA, Section 512 provides the limitations for liability for online materials specifically for online service providers.

Under the statutory scheme of Section 512, there are several subsections for different liabilities. For example, 512(a) is a safe harbor for “infringement of copyright by reason of the provider’s transmitting, routing, or providing connections for, material through a system or network controlled or operated by or for the service provider, or by reason of the intermediate and transient storage of that material in the course of such transmitting, routing, or providing connections…” This is followed by specific conditions:

1. the transmission of the material was initiated by or at the direction of a person other than the service provider;
2. the transmission, routing, provision of connections, or storage is carried out through an automatic technical process without selection of the material by the service provider;
3. the service provider does not select the recipients of the material except as an automatic response to the request of another person;
4. no copy of the material made by the service provider in the course of such intermediate or transient storage is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients, and no such copy is maintained on the system or network in a manner ordinarily accessible to such anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, or provision of connections; and
5. the material is transmitted through the system or network without modification its content.

Section 512 (b) is for storage for system caching with specific conditions and 512 (d) is for infringement by reason of reference or linking to an online location with infringing materials or activity.

Viacom v. YouTube, Part II

Last week Part I of the Copyright Chronicle's discussion of the Viacom v. YouTube opinion covered YouTube's protection under the "safe harbor" provision of §512(c) the Copyright Act and the red flag test to determine when facts or circumstances of infringing activity is apparent.

Part II discusses the Court's analogies to Tiffany v.Ebay and Grokster in its opinion.

The district court's opinion makes 2 analogies which are troubling. The first is the correlation to the Tiffany v. Ebay decision in the Second Circuit and the second is the correlation between Grokster (and related cases) and YouTube.

The Ebay Analogy

Starting on page 18 of the Viacom decision, the Court discusses the recent Second Circuit decision in Tiffany v. Ebay. Ebay was found not liable for contributory infringement when a significant number of the TIFFANY goods sold on its website were found to be counterfeit. The Court compares Ebay’s generalized notice that some of the Tiffany products sold on Ebay are counterfeit with YouTube and similarly decides that YouTube is not liable for infringement. However, there are distinguishing facts and circumstances.

First, unlike eBay, YouTube has control over the infringing material. eBay may sell goods through its website; however, eBay itself never had possession, custody or control over the goods themselves. eBay has no way of inspecting or reviewing the goods to determine whether the goods are fake or real. (Although, eBay’s level of promotion and general knowledge regarding counterfeits of Tiffany products on its website may raise a question regarding false advertising versus fair use.)

YouTube does have possession, custody and control over the submissions of users. (YouTube requires that videos posted to its website be uploaded to its servers.) Viacom had evidence that YouTube monitors the content of its website. See Page 39 and footnote 20 of Viacom’s Opposition to YouTube’s Motion for Summary Judgment and YouTube’s Answer to the First Amended Complaint at ¶ 39:

“Defendants admit that the Terms of Use contain certain content-based restrictions on the types of videos users may upload and store on the service, and that YouTube reserves the right to remove from the service material uploaded in violation of YouTube’s Terms of Use.”

The Court quickly brushes aside YouTube’s “monitoring” as defensible as part of providing online service citing 17 U.S.C. § 512(m)(1) and monitoring for cataloging or editor review to provide information location tools under 17 U.S.C. § 512(d). See Pages 14 and 16.

However, YouTube’s affirmative step of reviewing video posts for content should present not only a question of fact (the case was decided on summary judgment), but also a different analysis than eBay. The standard must be raised for an internet service provider who monitors and reviews the content. YouTube chooses the content it wants to make available on its website.

Unlike eBay, YouTube knows what goes up on its website. While there is apparently less monitoring now, it does not change the fact that YouTube specifically monitored the content being posted for more than mere categorization. See Footnote 20 of Viacom’s Opposition to YouTube’s Motion for Summary Judgment.

As alleged in the Complaint, YouTube was actively looking for and removing pornography from its website. If such content based decisions were being made by YouTube, YouTube is more than an online service provider and merely adhering to the safe harbor provisions is a cop out.

A higher standard must be applied when content is being reviewed in the first instance and more than for references to “pirating,” as proposed by the Court’s decision as a red flag for copyright infringement. It could not be Viacom’s burden under these circumstances to know which specific videos were monitored. YouTube is in complete control of the videos and the decisions after reviewing the content of its posts – both general and specific. (If YouTube does not keep records or tracking of the specific videos reviewed for content, how could YouTube prove that their knowledge was only general? Again this is another instance of a factual inquiry which should not have been resolved at summary judgment.)

While the Court takes some solace in the success of the notice and takedown provisions under the DMCA by claiming that the problem is fixed after notification to YouTube, it is of little solace to the copyright content owners whose exclusive rights and work value is already diminished.

Perhaps fittingly and unwittingly, in quoting the eBay decision, there is an indication that there is a solution for Viacom and other content providers: “Some contemporary knowledge of which particular listings are infringing or will infringe in the future is necessary.” See Page 20.

Perhaps, the proposal in the previous posting that Viacom could put everyone on general notice (and perhaps YouTube on specific notice) that none of its content is permitted on the Internet to be streamed and provided an indicator (such as the CBS eye or Comedy Central logo in the corner) may appropriately satisfy the Second Circuit’s requirement for liability.

The Grokster Analogy

The Court’s analogy between Grokster, Fung, Lime Group, and the infamous Napster cases seems to make a better case that Napster and other peer file-sharing website may have been simply before their time and as the law catches up, there may be different results. The Court relies heavily on the statement of Viacom’s General Counsel that the behaviors of Grokster and YouTube are not the same. But I am not sure how this matters or of the complete context of this statement.

In distinguishing YouTube from Grokster, the Court finds that Grokster’s conduct did “not comport with that of a service provider who furnishes a platform on which its users post and access all sorts of materials as they wish, while the provider is unaware of its content, but identifies an agent to receive complaints of infringement, and removes identified material when he learns it infringes.” See Page 23.

Given the broad definition applied to service providers (which would include YouTube), it is difficult to say that Grokster (and for that matter Napster) was not a service provider. Grokster and Napster provided a platform for the exchange of information online. Napster, at its height, was unlikely to be aware of (or even capable of ascertaining) all of the content posted on its website. There is also a clear argument to be made that Grokster had generalized knowledge similar to YouTube. The difference then is really that Grokster and Napster did not have complaint departments and did not or could not remove specifically identified information.

I think that analogizing YouTube to Napster and Grokster and their progeny may have unintended ramifications. It would seem all you need is a DMCA notice and takedown policy and Napster, in its previous form, would still be around today.

Viacom v. YouTube, Part I

Last week, the Southern District of New York ruled in favor of YouTube in the Viacom case. In deciding Cross-Motions for Summary Judgment, the Court held that YouTube is protected under the “safe harbor” provision of section 512(c) of the Copyright Act.

See Opinion here.

While a lot of credit is given to YouTube for having removed the specific videos requested following the DMCA notice, there are some troubling aspects to this decision.

First, the critical question for the Court was whether the service provider has actual knowledge or “in the absence of such knowledge, is not aware of facts or circumstances from which infringing activity is apparent” is meant to be a general awareness of infringements or a specific infringement of individual items. (The quote is not from the opinion but from the actual statute 512(c)(1)(A)(ii).)

The Court then goes on to discuss the “red flag” test in the legislative history of the Senate and House Reports – “whether infringing activity would have been apparent to a reasonable person operating under the same or similar circumstances – an objective standard should be used.” (See Opinion at page 10.)

Later in the legislative history, an example of a red flag would be a directory that typically uses the terms “pirate” “bootleg” or other slang terms in their URL and header information to make their illegal purpose obvious to other Internet users. (See Opinion at page 12.) This avoids “discriminating judgments about potential copyright infringement from online editors and catalogers creating search information. (See Opinion at Page 13.)

The legislative history concludes that awareness “should typically be imputed to a directory provider only with respect to pirate sites or in similarly obvious and conspicuous circumstances, and not simply because the provider viewed an infringing site during the course of assembling the directory.” (See Opinion at Page 15.)

This leads the Court to the decision that there must be more than mere knowledge of infringement in general but specific and identifiable infringement for individual items. The Court relies on the Perfect 10 case regarding DMCA notification where the Court will refuse to shift the burden from copyright owner to provider. This gives the impression that the burden will never shift. This may produce a much more chilling effect than, I think, the Court may have intended. This gives copyright owners no incentive to provide their content online. I do believe that it is possible some people may label materials “pirated” but most people are smart enough to avoid such a keyword that would raise a “red flag.”

However, would the circumstances be different if Viacom and/or others did not allow their content to be reproduced on the Internet. Could the red flag and general and specific awareness be implied from the well-known fact that the content provider does not permit the reproduction of its material for media online?

Could the simple solution be a campaign informing the public and/or a specific letter to YouTube claiming that all episodes of Show X are not available on the Internet or streaming media? Any copies in said form are unauthorized infringing copies for which no user has permission. Would this be the criteria necessary for specific knowledge for any individual posting?

Weekly Wednesday Wrapup - April 21, 2010

This past week has been very eventful in terms of copyright law news. Below is a listing with links of some of the headlines from the past week.

• Supreme Court to decide copyright first sale doctrine case – Costco v. Omega
  
  
• More documents made public in Viacom v. YouTube copyright infringement lawsuit.
  
  Individual documents here:
  Exhibit 52, Exhibit 59, Exhibit 60, Exhibit 63, Exhibit 81, Exhibit 242, Exhibit 314 , Exhibit 321, Exhibit 340
  
  
• Frankie Valli files copyright infringement lawsuit against former Jersey Boys.
  
  
• Library of Congress will retain public tweets.
  
  
• Also, the coincidence of the week, the approval process has started for a futures investment market for box office sales in the first week of release.
  
  This has not received a warm welcome from the motion picture studios. For the past 2 weeks, the results of the box office have been too close to call with later revisions determining the projected winner in fact was in second place.
  
  
• And finally, just when you thought it was safe to send out cease and desist and offers to settle letters to copyright infringers…..apparently computer hackers are threatening copyright infringement lawsuits to scam those who download from BitTorrent.