Viacom's Copyright Suit against YouTube Gets a Second Chance from the Second Circuit

by Foley Hoag LLP - Trademark, Copyright & Unfair Competition
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The Second Circuit has ruled that the summary judgment granted last year in favor of YouTube in a copyright suit brought by Viacom and other content owners was premature. The District Court had found that YouTube was protected by one of the Digital Millennium Copyright Act’s (“DMCA”) safe harbor provisions, namely, 17 U.S.C. § 512(c), which shields online service providers from liability for infringing content posted by users. Although it agreed with some of the District Court’s central reasoning, the appellate court has sent the case back for reconsideration on a number of issues.

“Red Flag” Knowledge Applies to Specific, Identifiable Infringement

The Second Circuit affirmed the District Court’s decision on the main legal question at issue, holding that two different circumstances that can defeat the statutory safe harbor protections – when the defendant has actual knowledge of infringement and when the defendant is “aware of facts and circumstances from which infringing activity is apparent” – both require knowledge or awareness of specific and identifiable instances of infringement. In other words, a defendant can still claim safe harbor even if it is aware of “red flags” suggesting that, in general, its web site likely contains infringing user-posted material. Rather, the Second Circuit explained that “[t]he difference between actual and red flag knowledge is . . . not between specific and generalized knowledge, but instead between a subjective and an objective standard.”

YouTube May Have Been Aware of Specific Infringement

Despite upholding the District Court’s legal conclusion on this point, the Second Circuit has remanded for additional fact-finding because evidence submitted by the plaintiffs on summary judgment might enable a jury to find that YouTube executives did have actual or “red flag” knowledge of specific and identifiable infringement. On remand, the District Court will need to conduct a more “detailed examination of the extensive record on summary judgment,” including determining whether the clips of which YouTube may have had knowledge are among those that are the subject of the plaintiffs’ lawsuits.

Willful Blindness, Right to Control, and Syndication

The Second Circuit also ruled on several related questions. First, it held that the DMCA limited but did not abrogate the common-law “willful blindness” doctrine, so that the District Court on remand should consider whether YouTube deliberately avoided learning of infringing content.

The appellate court also held that the DMCA provision that defeats safe harbor if the defendant benefits financially from infringement and has the “right and ability to control” it requires something more than the ability to block access to infringing material, but does not require knowledge of specific infringing activity, as the District Court had held. Therefore, the District Court on remand must consider whether plaintiffs have presented evidence that YouTube had the “something more” that would constitute the right and ability to control infringing activity.

Finally, while the Second Circuit agreed with defendants and the District Court that most of YouTube’s software processing activities fall within the statutory provisions covering content posted by users, it questioned whether YouTube’s selection of certain videos for syndication to third party business partners qualified, and it instructed the District Court on remand to determine whether any of the videos in suit were syndicated.

What Does This Mean for the Parties?

As the Wall Street Journal reports, both sides have spun the opinion as a victory: Viacom’s statement points out that “intentionally ignoring theft is not protected by the law,” while YouTube asserts that “[n]othing in this decision impacts the way YouTube is operating.” In analyzing the safe harbor question, the Second Circuit cited various e-mails exchanged among YouTube’s founders and executives in the service’s early days suggesting that they may have been aware of specific infringing content and chosen not to take it down. If YouTube’s statement is accurate, perhaps its approach to copyright has evolved since its infancy and YouTube’s current practice would meet the standards set by the Second Circuit. In that sense, although $1 billion in damages are still at stake for alleged past infringement, Viacom’s suit may already have served at least part of the plaintiffs’ purpose.

What Does This Mean for Everyone Else?

The Second Circuit’s ruling confirms that the DMCA safe harbors are viable, but that they do not mean online content hosts can wash their hands of all responsibility for combating infringement. In particular, service providers cannot simply sit back and wait for a copyright owner to learn of infringement and request that it be removed. Rather, if the service provider has knowledge of an identifiable infringement – even if that knowledge was developed internally rather than from a takedown notice – the provider should remove the content in order to maintain its safe harbor protection.

The ruling also clarifies that, while the statute says safe harbor is not conditioned on a service provider’s monitoring its service or actively seeking out infringement, providers cannot with impunity “bury their heads in the sand” to avoid obtaining knowledge of specific infringements. The District Court’s factual analysis of the willful blindness issue on remand may provide some helpful guidance as to where content hosts can draw the line between simply not monitoring and deliberately avoiding learning of specific infringements.

 

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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