To the delight of content owners everywhere, the Second Circuit Court of Appeals has become the first court in the country to rule that Internet Service Providers (ISPs) can be liable for copyright infringement even if they comply with the “takedown” provisions of the Digital Millennium Copyright Act (DMCA). However, the ruling is actually narrower than it appears, and the impact of the decision going forward is uncertain.

The DMCA provides, among other things, that qualifying ISPs can avoid copyright infringement liability for certain common activities they routinely perform that might otherwise give rise to secondary liability for copyright infringement, such as posting infringing material submitted by a computer user, in certain circumstances. Under § 512(c) of the DMCA, a qualifying service provider may seek “safe harbor” from such liability if it (1) lacks actual knowledge of the infringing material or activity, is not aware of facts or circumstances from which the infringing activity is apparent, and acts expeditiously to remove or disable access to the infringing material upon discovering it; (2) does not receive a financial benefit directly attributable to the infringing activity, where the service provider has the right and ability to control that activity; and (3) responds expeditiously to remove or disable access to the infringing material upon receiving notice of the infringing activity. Actual or “apparent” knowledge of infringing activity, in theory, voids this protection. However, for 14 years after the DMCA was enacted, no court held that an ISP complying with the DMCA’s “takedown” provisions had sufficient knowledge of “apparent” infringement to be liable for infringement, instead requiring that ISP’s have actual knowledge of specific infringements. See Mark S. Lee, Entertainment and Intellectual Property Law § 16:33 (West 2011) and cases cited therein. In other words, no ISP was ever held liable under this standard. Id.