June 2012: Copyright Litigation Update

by Quinn Emanuel Urquhart & Sullivan, LLP

Supreme Court Confirms U.S. Copyright Protection for Foreign Works Previously in Public Domain: On January 18, 2012, a 6-2 majority of the U.S. Supreme Court affirmed the constitutionality of the Uruguay Round Agreements Act (URAA), granting copyright protection to certain foreign works that had previously been in the public domain in the U.S. In so doing, the Supreme Court affirmed the Tenth Circuit’s decision in Golan v. Holder, 609 F.3d 1076 (10th Cir. 2010).

In this case, a group of orchestra conductors, musicians, publishers and others brought an action challenging the URAA on the grounds that Article I, § 8, Cl. 8 of the Constitution (the “Copyright Clause”), together with the First Amendment, restricted the ability of Congress to grant copyright protection to works that had previously been in the public domain. Codified at 17 U.S.C. § 104A and 109(a), the URAA extends copyright protection to works that obtained copyright protection in their countries of origin, but had no such protection in the United States for one of three reasons:   (i) an absence of copyright relations between the country of origin and the United States at the time of publication; (ii) the lack of protection for sound recordings fixed before 1972; and (iii) a failure to comply with statutory formalities peculiar to the Copyright Act in the U.S.  The petitioners contended that the URAA violated the “limited Times” language of the Copyright Clause because it extended protection to existing public domain works rather than incentivizing the creation of new works, an argument rejected by the Court.

Writing for the majority, Justice Ginsburg noted that the Court’s decision in Eldred v. Ashcroft, 537 U.S. 186 (2003)—a decision that had confirmed the ability of Congress to extend the term of copyright for preexisting works—foreclosed the petitioners’ “limited Times” challenge: “The Copyright Clause does not demand that each copyright provision, examined discretely, operate to induce new works … the Clause ‘empowers Congress to determine the intellectual property regimes that, overall, in that body’s judgment, will serve the ends of the Clause.’”  Golan v. Holder, 132 S.Ct. 873, 888 (2012). The majority found the petitioners’ First Amendment argument similarly unavailing: “[s]ome restriction on expression is the inherent and intended effect of every grant of copyright,” and “[n]othing in the historical record, congressional practice, or our own jurisprudence warrants exceptional First Amendment solicitude for copyrighted works that were once in the public domain.”   Id. at 889-90. Justice Breyer, joined by Justice Alito, dissented from the majority’s opinion, stating that the URAA’s effect of removing material from the public domain meant that “the Copyright Clause, interpreted in the light of the First Amendment, does not authorize Congress to enact this statute.”  Id. at 912.

The dissent notwithstanding, the majority opinion confirms the broad scope of Congressional power to define the boundaries of copyright protection.

Ninth Circuit Affirms Strength of DMCA Safe Harbor Provisions:  On December 20, 2011, the Ninth Circuit affirmed a district court grant of summary judgment to an operator of a publicly accessible website enabling users to share digital videos with other users. The Court’s opinion in UMG Recordings, Inc. v. Shelter Capital Partners LLC, 667 F.3d 1022 (9th Cir. 2011) confirms the strength of the safe harbor provisions of the Digital Millennium Copyright Act (“DMCA”), codified at 17 U.S.C. § 512(c), for internet service providers faced with allegations of copyright infringement by publishers and artists.

In this case, despite efforts by the website operator to prevent copyright infringement on its system, some of its users were able to download unauthorized videos containing music for which the plaintiff owned the copyright. In September of 2007, the plaintiff publisher brought suit against both the website owner and three of its investors, alleging direct, vicarious and contributory copyright infringement, as well as inducement of copyright infringement. The district court granted summary judgment in favor of the defendants on the basis of the DMCA’s safe harbor provision. The safe harbor protects service providers who (i) control systems or networks on which copyrighted material is posted without their actual knowledge; (ii) do not receive a financial benefit directly attributable to the infringing activity; and (iii) take down such material upon notice from the copyright owner.

The Ninth Circuit affirmed, noting first that facilitating access to content, if done at the direction of a user, falls within the ambit of the “storage” language of the safe harbor:   “We hold that the language and structure of the statute, as well as the legislative intent that motivated its enactment, clarify that [the safe harbor] encompasses the access-facilitating processes that automatically occur when a user uploads a video [].” UMG Recordings, 667 F.3d at 1031. The Court noted that the defendants’ system, allowing user-submitted content to be processed and recast in a readily accessible format, satisfied the safe harbor requirement that the content submission be “user-directed.”   Id. at 1035. The Court also noted that general knowledge that one’s services could be used to share infringing material is insufficient to meet the “actual knowledge” standard of the DMCA safe harbor: According to the Court: “[m]erely hosing a category of copyrightable content, such as music videos, with the general knowledge that one’s services could be used to share infringing material, is insufficient to meet the actual knowledge requirement under [the DMCA safe harbor].”  Id. at 1038, 1042. As to the investor defendants, the Court held they were not liable for secondary copyright infringement because there was no allegation that they “agreed to work in concert” to induce the alleged infringement in question—the mere funding of the plaintiffs’ enterprise is not enough to support secondary liability. Id. at 1047.

By affirming the district court grant of summary judgment on the copyright infringement claims, the Ninth Circuit re-affirmed the broad scope of the safe harbor protections of the DMCA for digital service providers and their investors.

Second Circuit Adopts Ninth Circuit Reasoning Regarding “Actual Knowledge” for DMCA Safe Harbor Provisions:  In a related development, on April 5, 2012, the Second Circuit issued its opinion in Viacom Intern., Inc. v. YouTube, Inc., Nos. 10-3270-cv and 10-3342-cv, 2012 WL 1150851 (2d Cir. Apr. 5, 2012). In that case, the Court was presented with a question similar to the one tackled by the Ninth Circuit in UMG Recordings v. Shelter Capital Partners LLC, 667 F.3d 1022 (9th Cir. 2011)—namely, what level of specificity is required of a service provider’s knowledge of infringement before its conduct falls outside the safe harbor provisions of the DMCA. Rejecting the plaintiff’s contention that objective knowledge of “facts and circumstances” is enough to meet the “actual knowledge” standard of 17 U.S.C. § 512(c), the Court adopted the reasoning of the Ninth Circuit in holding that the statute requires “[a]ctual knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement [to] disqualify a service provider from the safe harbor.” Viacom Intern., Inc. at *7. According to the Second Circuit, subjective knowledge of facts and circumstances of the specific infringement is required by the actual knowledge standard. Id. at *6. In adopting the reasoning of the Ninth Circuit on this point and confirming the necessity of subjective knowledge in order to remove a service provider from the benefits of the DMCA safe harbor provisions, the Second Circuit has further confirmed the strength of these provisions for digital service providers.

Ninth Circuit Reverses Summary Judgment for Major Apparel Retailer; Holds That Erroneous Inclusion of Published Works in Unpublished Collection Does Not Invalidate Copyright Registration:  On April 9, 2012, the Ninth Circuit Court of Appeals handed down its ruling in the copyright case of L.A. Printex, Industries, Inc. v. Aeropostale, Inc., No. 10-56187, 2012 WL 1150273 (9th Cir. Apr. 9, 2012). The plaintiffs (copyright owners of a small floral design) alleged that a major apparel retailer and manufacturer infringed their copyright by using the design on shirts bearing the apparel retailer’s trademark. The district court granted the apparel retailer’s motion for summary judgment, but the Ninth Circuit reversed. On the question of access, the Ninth Circuit held that the plaintiffs had raised a genuine issue of material fact by presenting evidence that they had sold more than 50,000 yards of fabric bearing the copyrighted design to fabric converters, many in the Los Angeles area—the same location of the defendant who had provided the design to the major apparel retailer. This was enough to avoid summary judgment on the question of access:   “A reasonable jury could find that [the copyrighted design] was widely disseminated in the Los Angeles-area fabric industry, and hence that there was a ‘reasonable possibility’ that Defendants had an opportunity to view and copy L.A. Printex’s design.”

The Ninth Circuit also took issue with the district court’s view that the differences between the copyrighted work and the apparel retailer’s shirts were enough to grant summary judgment for the defendant. According to the Court:  “[a] copyright defendant need not copy a plaintiff’s work in its entirety to infringe that work. It is enough that the defendant appropriated a substantial portion of the plaintiff’s work.”  L.A. Printex at *7. The Court also rejected defendants’ contention that an error in the plaintiffs’ copyright registration precluded the suit. Although 17 U.S.C. § 411(b)(1) provides that the knowing inclusion of inaccurate information in a copyright registration can render the certificate incapable of supporting an infringement action, the Ninth Circuit disagreed that the inaccuracy in this case met this standard of invalidity. The Court noted, “[t]here is no evidence that L.A. Printex knew that the two designs had been published at the time it submitted its application for copyright registration,” and that the Copyright Office’s issuance of a certificate of supplementary registration when the plaintiffs noticed the error and corrected the registration “shows that the error was not one that ‘if known, would have caused the Register of Copyrights to refuse registration.’” L.A. Printex at *9.

This decision emphasizes both the difficulty that copyright defendants face in winning on summary judgment and the reluctance of federal courts to invalidate copyright registrations.

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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