Courts considering the perplexing copyright questions created by the Internet have been remarkably consistent in one area. A large body of case law provides significant protections to online service providers and places significant burdens on content owners who want to protect their rights. The Ninth Circuit Court of Appeals recently continued this trend when it aligned itself with the Second Circuit's interpretation of the Digital Millennium Copyright Act's ("DMCA's") "safe harbor" provision in 17 U.S.C. § 512(c).
The safe harbor provision in 17 U.S.C. § 512(c) protects a service provider from liability for copyright infringement when (i) the service provider has no actual knowledge that it is hosting infringing material, and (ii) the service provider is not aware of any "red flags" which make it apparent that infringing activity is afoot, if (iii) upon obtaining such actual knowledge or "red flag" awareness, the service provider expeditiously removes or disables access to the infringing material. Additionally, if the service provider has the "right and ability to control" its users' activity, it cannot receive a financial benefit directly attributable to the infringing activity to qualify for DMCA protection.
Over the years, courts have broadly interpreted the DMCA's safe harbor provision to protect content aggregators, and the Ninth Circuit's most recent decision continues that trend. UMG Recordings, Inc. v. Shelter Capital Partners LLC, --- F.3d --- (9th Cir. Mar. 14, 2013), held that the DMCA's safe harbor provision applied to defendant Veoh Networks, a service provider that operated an online platform similar to YouTube. A number of Veoh users uploaded infringing material on the Veoh website, including some music videos owned by plaintiff Universal Music Group (UMG). Rather than contacting Veoh to ask for removal of the videos, UMG filed a lawsuit against Veoh for direct, vicarious, contributory and "inducement" copyright infringement. Veoh raised the safe harbor protection under the DMCA as an affirmative defense and moved for summary judgment. The district court granted summary judgment in favor of Veoh.
The Ninth Circuit affirmed. It ruled that Veoh was entitled to safe harbor protection for three primary reasons.
First, Veoh had no actual knowledge that it was hosting plaintiff's copyrighted content. Contrary to the protocol prescribed by the DMCA, UMG failed to notify Veoh of any specific infringing videos prior to the initiation of its lawsuit.
Second, Veoh was not aware of any "red flags" that should have alerted it to infringing activity. The mere fact that Veoh knew its platform could be used to share infringing material was not enough to exclude it from safe harbor protection. While a service provider cannot protect itself by willfully burying its head in the sand to avoid knowledge or awareness, it did not appear to the Court that Veoh had done so.
Finally, the Ninth Circuit ruled that contrary to UMG's assertions, Veoh did not have the "right and ability to control" the infringing activity. Merely having the capability to block users from posting content, without "something more," was not enough to disqualify Veoh from safe harbor protection.
With respect to this final reason, the Court expressly adopted the standard iterated by the Second Circuit in Viacom Int'l, Inc. v. YouTube, Inc., 676 F.3d 19, 38 (2d Cir. 2012). The Court stated: "We agree with the Second Circuit and hold that, in order to have the 'right and ability to control,' the service provider must 'exert substantial influence on the activities of users.'" "Substantial influence," it went on to explain, "may include high levels of control over activities of users. . . [or] purposeful conduct [intended to induce infringement]." In this case, the Court concluded, Veoh's conduct toward its users did not rise to such a level.
The Veoh case appears to be another victory for service providers and another setback for content owners. It reinforces a principle that has been emerging in judicial decisions across the country since the enactment of the DMCA: that the burden of identifying infringing material falls "squarely on the owners of the copyright." Musicians, artists, authors and other copyright owners cannot solely rely on Internet service providers to detect and rectify unauthorized uses of their intellectual property. Now that the Ninth Circuit and Second Circuit are clearly in agreement on this point, it seems likely that other circuits will follow.