IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks - April 11, 2012

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Viacom International, Inc. v. Google, Inc., USCA Second Circuit, April 5, 2012
 Click here for a copy of the full decision.

  • Second Circuit reverses summary judgment in favor of Google on Viacom’s copyright infringement claims, holding that DMCA requires online service providers to have actual knowledge or awareness of specific infringing activity before losing safe harbor protection, and that evidence existed from which a reasonable jury could conclude that YouTube had actual knowledge or awareness of specific infringing activity.

In a copyright suit by plaintiffs, Viacom International, Inc., as well as various film studios, television networks, music publishers, and sports leagues, against Google Inc., and its YouTube platform, Court of Appeals for the Second Circuit vacated the district court’s grant of summary judgment in favor of Google in which it held that Google was entitled to protection from liability from all of Viacom’s claims under the safe harbor protection of the Digital Millennium Copyright Act (DMCA). The Second Circuit found that while the district court correctly held that §512(c), the safe harbor provision applicable to online service providers, requires knowledge or awareness of specific infringing activity before an online service provider is disqualified from protection, summary judgment on the issue was premature, because evidence existed from which a reasonable jury could conclude that YouTube had actual knowledge or awareness of specific infringing activity on its website.

The plaintiffs alleged direct and secondary copyright infringement related to the public performance, display, and reproduction of approximately 79,000 video clips that appeared on the YouTube website between 2005 and 2008, and sought damage under the Copyright Act, as well as well as declaratory and injunctive relief. The district court had ruled that, under the DMCA, mere knowledge of the prevalence of a general practice of posting infringing material was not enough to impose liability on YouTube. The appeals court agreed, but found that, based on the evidence, including a 2006 internal YouTube report advising that clips of popular television shows (including Viacom shows) were available on YouTube at the time, that this content was "blatantly illegal" and that YouTube should consider preemptively removing it, “a reasonable juror could conclude that YouTube had actual knowledge of specific infringing activity, or was at least aware of facts or circumstances from which specific infringing activity was apparent.” What was needed, according to the court, was a determination as to whether YouTube had actual knowledge of specific infringing activity related to the copyrighted clips at issue in the litigation needed. The second circuit remanded the case for further fact finding on this issue.

On an issue of first impression, the Second Circuit also held that the common-law concept of “willful blindness” may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA, and directed the district court on remand to consider whether the defendants made a “deliberate effort to avoid guilty knowledge[.]”

Turning to the “control and benefit” provision of the DMCA’s safe harbor, the Second Circuit held that the district court erred by “importing a specific knowledge requirement.” In granting summary judgment, the district court also found that item-specific knowledge of infringing activity is required for a service provider to have the “right and ability to control” infringing activity, and therefore to be disqualified from the safe harbor protections. The court of appeals disagreed. Noting that only one court has found that a service provider had the right and ability to control infringing activity – Perfect 10, Inc. v. Cybernet Ventures, Inc., 213 F.Supp.2d 1146 (C.D. Cal. 2002) – a district court case involving a service provider exerting substantial influence on the activities of users without acquiring knowledge of specific activity – the Second Circuit concluded that the “control and benefit” provision does not include a specific knowledge requirement. Rather, the court reasoned that while the provision requires more than just the ability to remove or block access to materials posted on the service provider’s website, exerting substantial influence on the activities of users, without necessarily—or even frequently—acquiring knowledge of specific infringing activity – would be sufficient, and remanded to the district court to consider whether Viacom adduced sufficient evidence to allow a reasonable jury to conclude that YouTube had the right and ability to control the infringing activity and received a financial benefit directly attributable to that activity.

Finally, the Second Circuit affirmed the district court’s holding that the replication, transmittal, and display of videos on YouTube constituted activity “by reason of the storage at the direction of a user” within the meaning of the safe harbor provision as to three software functions, but remanded the case on a fourth back to the lower court for further fact-finding. The safe harbor extends to software functions performed “for the purpose of facilitating access to user-stored material.” The district court concluded that four functions –the conversion or “transcoding” of videos into a standard display format, the playback of videos on “watch” pages, the “related videos” function, and syndication by third parties – fell within the safe harbor. The Second Circuit agreed as to the transcoding, playback, related videos functions, citing precedent from the Ninth Circuit for the conclusion that these functions were related to facilitating access to user material. The court of appeals disagreed as to the fourth function, syndication, however, finding the issue a closer call. Reasoning that it did not want to render an advisory opinion on the issue, the court remanded for further fact-finding on the issue of whether any of the clips at issue in the suit had ever been syndicated to a third party.

 

Clay v. Cameron, USDC S.D. Florida, April 6, 2012
 Click here for a copy of the full decision.

  • District court grants defendant James Cameron’s motion to dismiss copyright action alleging that the motion picture Avatar copied elements of plaintiff’s book, Zollocco, holding that plaintiff’s allegations that her work was in wide circulation on the Internet and in the entertainment industry failed to establish that Cameron had access to it.

Plaintiff Cynthia Clay brought suit for copyright infringement, vicarious copyright infringement, contributory infringement, and unjust enrichment, claiming that, in creating the motion picture Avatar, defendants James Cameron, Twentieth Century Fox Film Corp., and Dune Entertainment III, LLC, copied elements of her book, Zollocco: A Story of Another University. Plaintiff alleged that she created Zollocco, an unpublished book, in the mid-1980s and that it was in wide circulation in the entertainment industry prior to defendant Cameron’s claimed date of creation for Avatar in the mid-1990s. In moving the court to dismiss plaintiff’s claims, defendants argued that (1) plaintiff failed to adequately allege that defendant Cameron had access to her work; (2) the two works are not substantially similar in their protectable expression; and (3) plaintiff’s unjust enrichment claim fails as a matter of law. The court held that plaintiff failed to allege adequately that defendant Cameron had access to plaintiff’s work. Accordingly, the court granted defendants’ motion to dismiss.

The court initially addressed plaintiff’s copyright infringement claims. To state a claim for copyright infringement, a plaintiff must allege ownership of a valid copyright and defendants’ copying of the copyrighted work. To establish copying in this case, plaintiff needed to allege that defendant Cameron had access to plaintiff’s work and that the alleged infringing work is substantially similar to plaintiff’s work. With respect to access, the court concluded that plaintiff did not adequately allege a nexus between the alleged circulation of Zollocco and defendant Cameron.

Attempting to create an inference that defendants had access to her work, plaintiff alleged that Zollocco was available on various websites such as bookbooters.com and that plaintiff’s literary agent, among others, circulated the work within the motion picture industry. Even accepting plaintiff’s allegations as true and drawing all reasonable inferences in her favor, the court found that allegations that Zollocco was widely circulated were insufficient to support an inference of a “reasonable possibility” that defendant Cameron had access to plaintiff’s work. To support such an inference, the court concluded that plaintiff needed to allege a nexus between the circulation of her work and defendant Cameron. In finding that plaintiff’s complaint had not alleged the requisite nexus, the court noted that several courts have rejected the contention that the availability of a work on the Internet, generally, warrants an inference that a defendant has had access to the copyrighted work. The court also found that plaintiff’s second amended complaint, which alleged that Zollocco was circulated in the entertainment industry, was devoid of any allegations that defendant Cameron knew or did business with the third parties who allegedly circulated plaintiff’s work.

The court distinguished Green Bullion Financial Services LLC v. Money4Gold Holdings, Inc., 639 F.Supp. 2d 1356 (S.D. Fla. 2009), the sole decision on which plaintiff relied. In Green Bullion, the district court noted that anyone with access to the internet had access to plaintiff’s website, and went on to focus on the element of similarity. In that case, however, the defendant was a web-based competitor of the plaintiff who allegedly copied elements from the plaintiff’s website. In contrast, Clay’s complaint contained no allegations to suggest that defendant Cameron conducted business via the Internet or would have had reason to access Zollocco on the various websites cited by plaintiff.

Finally, the court dismissed plaintiff’s claim for unjust enrichment. The court concluded that plaintiff failed to allege that defendants infringed upon her work and therefore had not alleged that she conferred any benefit upon the defendant or that defendants knowingly accepted any benefit.





For more information, please contact Jonathan Zavin at jzavin@loeb.com or at 212.407.4161.

Westlaw decisions are reprinted with permission of Thomson/West. If you wish to check the currency of these cases, you may do so using KeyCite on Westlaw by visiting http://www.westlaw.com/.

Circular 230 Disclosure: To assure compliance with Treasury Department rules governing tax practice, we inform you that any advice (including in any attachment) (1) was not written and is not intended to be used, and cannot be used, for the purpose of avoiding any federal tax penalty that may be imposed on the taxpayer, and (2) may not be used in connection with promoting, marketing or recommending to another person any transaction or matter addressed herein

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