IP/Entertainment Law Weekly Case Update for Motion Picture Studios and Television Networks -- April 26, 2013

Table of Contents

Viacom International v. Google Inc., USDC S.D. New York, April 18, 2013
 Click here for a copy of the full decision.

  • On remand from the Second Circuit, district court grants summary judgment in favor of Google and its YouTube platform on all copyright infringement claims under DMCA safe harbor, finding that plaintiffs failed to meet burden of proving either that defendants had knowledge or awareness of specific infringing activity related to video clips in suit or had willfully blinded themselves to specific infringing activity related to those clips, and that defendants did not have “right and ability to control” alleged infringing activity to disqualify them from safe harbor protection.

In this 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, the district court, on remand from the Second Circuit, once again granted summary judgment, finding that Google is entitled to protection from liability from all of plaintiffs’ claims under the safe harbor protection of the Digital Millennium Copyright Act (DMCA). In so holding, the district court found that plaintiffs had failed to adduce evidence either that YouTube had actual knowledge or awareness of specific infringing activity on its website related to the allegedly infringing video clips at issue in the suit, or that YouTube had willfully blinded itself to specific infringements related to those clips. The court also found that YouTube did not have “the right and ability to control” the alleged infringing activity within the meaning of the DMCA, and therefore did not lose the safe harbor protections under that statute, and that its syndication agreements with third parties were for the purpose of providing access to videos on the site “by reason of the storage at the direction of the user” within the meaning of the safe harbor provision.

In their copyright suit, 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. The district court previously had granted summary judgment, holding 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. On plaintiffs’ appeal, the Second Circuit reversed, finding 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 might exist from which a reasonable jury could conclude that YouTube had actual knowledge or awareness of specific infringing activity on its website. 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 to consider whether the defendants made a “deliberate effort to avoid guilty knowledge” of specific infringements. The court also reversed the district court’s grant of summary judgment based on its finding that YouTube did not have “the right and ability to control” the infringing activity on its site, holding that while the DMCA provision requires more than just the operator’s ability to remove or block access to materials posted on its website, actual knowledge or awareness of specific infringing activity was not required. According to the Second Circuit, exerting substantial influence on the activities of users without acquiring knowledge of specific infringing activity would be sufficient. (Read our summary of the Second Circuit’s decision here.)

The Second Circuit remanded the case to the district court with instructions to allow the parties to brief specific issues, including:

  • Whether YouTube had actual knowledge or awareness of specific infringing activity related to the copyrighted clips at issue in the litigation;
  • Whether the defendants made a “deliberate effort to avoid guilty knowledge” of specific infringements; and
  • Whether Viacom adduced sufficient evidence to allow a reasonable jury to conclude that YouTube had the right and ability to control the infringing activity.

On defendants’ renewed motion for summary judgment, the district court considered each of the remanded questions in turn. To determine whether YouTube had knowledge or awareness of the specific infringing activity related to the video clips at issue in the litigation, the court requested that the parties report, for each of the clips, “what precise information was given to or [was] reasonably apparent to YouTube identifying the location or site of the infringing matter?” In response, YouTube submitted a list of more than 63,000 clips at issue, asserting that it never received notice of any of those alleged infringements and challenging plaintiffs to prove how notice was given to YouTube. Acknowledging that they lacked evidence that would allow “a clip-by-clip assessment of actual knowledge,” plaintiffs argued that, despite their inability to provide evidence that YouTube has actual knowledge of the clips at issue, defendants were not entitled to the safe harbor protection because defendants had the burden of establishing all the elements of their defense, including their lack of knowledge or awareness. Given the volume of material on the site and the lack of evidence allowing a jury to separate the clips-in-suit that defendants were aware of from those that they were not, argued plaintiffs, defendants were not entitled to the safe harbor protections. The court rejected this argument, finding that the DMCA places on the copyright holder the burden of notifying service providers such as YouTube of infringing material on its site, and “the burden of showing that YouTube knew or was aware of the specific infringements of the works in suit cannot be shifted to YouTube to disprove.” Given that plaintiffs acknowledged that they did not have evidence of actual knowledge on a clip-by-clip basis, the district court concluded “plaintiffs lack proof that YouTube had knowledge or awareness of any specific infringements of clips-in-suit.”

The district court likewise concluded that plaintiffs lacked evidence that YouTube willfully blinded itself to specific infringing activity. Interpreting the Second Circuit’s reasoning that the DMCA safe harbor protection does not impose on service providers an affirmative duty to monitor and seek out infringing activity based on a general awareness that infringing activity may be occurring, the district court found that in order to be disqualified from the DMCA’s safe harbor protection, YouTube must have willfully blinded itself to “specific and identifiable instances of infringement.” The district court rejected plaintiffs’ examples as insufficient evidence that defendants’ willfully blinded themselves to specific infringements related to the video clips at issue in the litigation. “Here, the examples proffered by plaintiffs (to which they claim YouTube was willfully blind) give at most information that infringements were occurring with particular works, and occasional indications of promising areas to locate and remove them. The specific locations of infringements are not supplied: at most an area of search is identified, and YouTube is left to find the infringing clip.” Noting that the DMCA excuses YouTube from any duty to search for and locate the allegedly infringing clips, the district court concluded that application of the doctrine of willful blindness to the examples provided by plaintiffs “does not produce knowledge or awareness of infringement of specific clips-in-suit[.]”

Turning to the issue of whether YouTube had the right and ability to control infringing activity on its site and therefore loses the protection of the DMCA safe harbor, the district court reiterated the Second Circuit’s holding that the ability to control infringing activity – even without knowledge of the specifics of that activity – requires something more than the ordinary power over what appears on the site, such as the ability to remove or block access to material on the site, including removing infringing content in response to takedown notices under the DMCA. The provider must exert substantial influence on the activities of its users, either through high levels of control over the activities of users or through purposeful participation in the infringing activity. “The concept is that a service provider, even without knowledge of specific infringing activity, may so influence or participate in that activity, while gaining a financial benefit from it, as to lose the safe harbor.” According to the court, a provider’s knowledge of the prevalence of infringing activity, and even welcoming it, does not, alone, result in the loss of the safe harbor. To forfeit this protection, “the provider must influence or participate in the infringement.”

Plaintiffs asserted that the “something more” required to establish the right and ability to control is YouTube’s alleged willingness to allow the site to be used to infringe (including a policy of leaving potentially infringing video on its site until it received specific takedown notices from copyright holders) as well as its exercise of editorial judgment and control over content on the site, including deciding to remove some but not all infringing materials (whole movies, entire episodes of television shows, etc.) and enforcing rules prohibiting certain content (nudity and pornography, for example). Plaintiffs also asserted that YouTube’s implemented software to identify and block submissions containing copyrighted works only for those content owners that entered into licensing and revenue-sharing agreements with it, in effect refusing to prevent illegal uploading of copyrighted content for others, and leaving the burden to those entities to identify infringing clips and notify YouTube. The district court rejected plaintiffs’ arguments, finding no evidence from which a jury could conclude that YouTube induced or participated in its users’ infringing conduct. “There is no evidence that YouTube induced its users to submit infringing videos, provided users with detailed instructions about what content to upload or edited their content, prescreened submissions for quality, steered users to infringing videos, or otherwise interacted with infringing users to a point where it might be said to have participated in their infringing activity.”

In its decision reversing and remanding the case to the district court, 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 for three of four software functions the YouTube service performs, but remanded the case on the fourth – syndication of videos to third parties such as Apple, Sony, Panasonic and AT&T for viewing using their technology – 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,” and the district court had previously 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 to third parties – all fell within the safe harbor. The Second Circuit agreed as to all but the syndication function, concluding that these functions were related to facilitating access to user material. The court of appeals disagreed as to the syndication function, however, finding the issue a closer call and noting that the issue of whether any of the clips at issue in the litigation had ever been syndicated to a third party remained unresolved. On remand, the district court concluded that the syndication to these third parties occurred “by reason of the storage at the direction of the user” within the meaning of the safe harbor. The court noted that YouTube’s syndication agreements with these third parties were for the purpose of providing access to all the material stored on its system using alternative technology provided by the third parties and involved no manual selection or delivery of specific videos, and therefore are “steps by a service provider taken to make user-stored videos more readily accessible (without manual intervention) from its system using contemporary hardware.”

 

Larson v. Warner Bros. Entertainment Inc., SDC C.D. California, April 18, 2013
 Click here for a copy of the full decision.

  • District court grants summary judgment in favor of defendants in litigation by heirs of Superman co-creator to terminate grant of rights for Superboy and Superman advertisement works, finding that 2001 settlement agreement included those works and was not voidable under the Sonny Bono Copyright Term Extension Act.

This latest decision in the long-running litigation over the rights to the Superman properties involved the parties’ respective rights to Superboy and early Superman advertisements, and specifically whether a 2001 settlement agreement between the plaintiffs, the heirs of co-creator Jerome Siegel, and defendant DC Comics covered these works and whether it was voidable by the plaintiffs pursuant to the 1998 Sonny Bono Copyright Term Extension Act (CTEA). The district court granted defendants’ motion for summary judgment, finding that the settlement agreement did cover the works in question and that the CTEA did not render it voidable.

The court’s decision has its origins in a 1997 copyright termination notice served on defendant DC Comics by Siegel’s heirs, essentially purporting to terminate all of Siegel’s Superman-related creations, including the Superboy works and early Superman advertisements. The dispute that followed the 1997 termination notice culminated in a 2001 settlement agreement in which the plaintiffs agreed to receive (among other things) a $2 million advance, a $1 million non-recoverable signing bonus, and a guaranteed minimum payment of $500,000 per year for 10 years in return for the rights to the Superman properties. The parties subsequently were unable to reduce the settlement to a long-form agreement, however, and Siegel’s heirs attempted to repudiate the agreement, served additional termination (and all-encompassing) notices on DC Comics in 2002 and 2012, and commenced this litigation in which they disputed, among other issues, that the 2001 agreement was a valid and binding settlement agreement. On remand from the Ninth Circuit, the district court granted in part defendants’ motion for summary judgment, finding that the 2001 settlement was binding and enforceable. (Read our summary of the district court’s decision here.) The court then requested that the parties brief the issue of the scope of the agreement as it related to the Superboy works and the early Superman advertisements.

Defendants argued that the 2001 agreement constituted a revocation and re-grant of the Siegels’ copyright interests in the Superboy and Superman advertising works that precluded the Siegels’ later attempts, in 2002 and 2012, to serve termination notices for those works. In concluding that the 2001 agreement did encompass those works, the district court first noted that, by the 1976 Copyright Act, Congress gave new termination rights to creators and their heirs, and in the CTEA, Congress granted additional termination rights, but for pre-1978 copyright grants. The district court, following the Ninth Circuit’s holding in Milne ex rel. Coyne v. Stephen Slesinger, Inc. (2005) and noting the Second Circuit’s similar holding in Penguin Group (USA) Inc. v. Steinbeck (2008), found that the plaintiffs, by serving the termination notice in 1997 and then negotiating with defendants, achieved a much more favorable royalty rate for the Superman works. Noting that the 2001 settlement agreement followed the vesting, in 1999, of plaintiffs’ additional termination rights under the CTEA, the court concluded that, since plaintiffs used their termination rights to bargain for and achieve a more favorable agreement – the very result that the CTEA was intended to allow creators and their heirs to accomplish – the 2001 settlement did not constitute a voidable “agreement to the contrary” under the CTEA.

The court also found that the 2001 settlement agreement encompassed the Superboy works and Superman advertisements, particularly since these works were among those that were purportedly the subject of the 1997 termination notice. The court found it immaterial that courts later determined that the 1997 termination did not properly terminate the grants of rights over the Superboy works and Superman advertisements, since the 2001 settlement agreement was negotiated based on the parties’ presumption that the notice was effective as to those works, and this belief helped the plaintiffs reach a relatively favorable settlement agreement in 2001.


 

Topics:  Copyright, Copyright Infringement, DMCA, Google, Online Videos, Safe Harbors, Viacom, Viacom v YouTube, YouTube

Published In: Art, Entertainment & Sports Updates, Civil Procedure Updates, General Business Updates, International Trade Updates, Science, Computers & Technology Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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