IsoHunt Settles The Last Of Its Lawsuits, Laughably Agrees To 'Pay' Recording Industry $66 Million

from the i'm-sure-musicians-will-see-nothing dept

You may recall that almost three years ago, the BitTorrent search engine IsoHunt agreed to shut down and to "pay" Hollywood studios $110 million. The number was a joke, because IsoHunt and its creator didn't have $110 million. It's just that the legacy copyright players always like to end these lawsuits with a giant headline grabbing number, while they've quietly agreed to accept very little, if any, actual money (and whatever money they do receive is not then distributed to any artists). The Sony email hack a few years back revealed that the industry does this frequently in closing out its lawsuits against search engines. IsoHunt was more or less forced into that settlement after the MPAA misled the court about IsoHunt's actions. But the court bought it, and the IsoHunt court rulings have created some really unfortunate precedents. It's the case that the legacy players always point to, because it's the only case to find that a search engine platform has "red flag knowledge" of copyright infringement without having specific knowledge of infringing files.

The case against Hollywood, however, wasn't the only case IsoHunt was fighting. It also was fighting the recording industry up in Canada in a case that began with IsoHunt filing for declaratory judgment that it didn't infringe in Canada, all the way back in 2008. The Canadian Recording Industry Association (CRIA), then sued back -- but did everything it could to keep the case out of the news because it was also fighting for new copyright laws in Canada... and part of its argument was that the existing Canadian copyright laws were inadequate to go after IsoHunt and similar sites.

Either way, despite the site itself shutting down and "paying" (ha ha) $110 million to Hollywood, the combined cases in Canada kept inching forward. A few days ago, IsoHunt founder Gary Fung announced that those cases have now been settled as well (found via TorrentFreak) with Fung agreeing to "pay" another $66 million he doesn't have. The settlement agreement is a fun read.

Fung's post on the topic has a bit of sarcasm:

And I want to congratulate both Hollywood and CRIA on their victories, in letting me off with fines of $110m and $66m, respectively. Thank you! Here’s to progress, and me leaving my life of innovative hobby to… something else?

He also declares victory in that he was never forced to give up any info on any IsoHunt users throughout all of this.

Either way, as with any other of these "victories" I'm still curious if either the recording or movie industries thinks these shut downs have actually caused anyone to go back to buying more of their products, or if people have just moved on to other ways of getting this kind of content?

Fung, meanwhile, also announced that he's working on a new product, which sounds like an attempt at using AI to get better search results to answer questions. He's given it the code-name AAG, which stands for the "App to Automate Googling." That suggests that he may receive a cease and desist from Google over trademark before too long. Hopefully, he still has the contact info for his lawyers...

Filed Under: canada, copyright, gary fung, red flag knowledge, settlement
Companies: cria, isohunt, mpaa

Appeals Court Gives Big Loss To Record Labels In Their Quixotic Lawsuit Against Vimeo For Lipdubs

from the let-it-go,-guys dept

The record labels basically will find no innovation that's not worth suing, and so back in 2013 they sued the online video hosting/streaming site Vimeo, in part because the site had created a popular genre of videos known as "lipdubs" where people would lip sync to a song in a video. In the fall of 2013, the district court rejected most, but not all, of the record labels' arguments about the DMCA. The labels had argued that Vimeo lost its DMCA safe harbors for a variety of reasons, including not having a reasonable repeat infringer policy (and by "reasonable" the labels claimed it had to be the same as YouTube's), red flag knowledge, and the fact that because Vimeo lets people download videos there's no safe harbor. The court rejected basically all of those arguments -- but did leave open the possibility that red flag knowledge might apply if Vimeo employees had watched some of the videos at play in the case. There was also one very problematic part of the ruling, which is that the court said that pre-1972 sound recordings do not qualify for the DMCA's safe harbors because of the weird quirk of copyright law history by which pre-1972 sound recordings are not actually covered by federal copyright law (but, instead, various state laws and common law).

It's taken quite some time, but on appeal the 2nd Circuit has finally released a ruling that trashes every single of of the record labels' arguments and sides with Vimeo across the board. That is, it upholds all of the stuff the district court had about Vimeo not losing its safe harbors and goes one step further in overturning the lower court's ruling concerning pre-1972 music. The decision was written by Judge Pierre Leval, who tends to be awesome on copyright issues.

In overturning the district court on whether or not the DMCA applies to pre-1972 recordings, the ruling is pretty clear, even going against the Copyright Office's views that argued against the DMCA covering such works.

While we unhesitatingly acknowledge the Copyright Office’s superior expertise on the Copyright Act, we cannot accept its reading of § 512(c). It is based in major part on a misreading of the statute. The Report’s main argument—that § 501(a) defines the words “infringement of copyright” as meaning infringement of the rights granted by the federal statute—misreads this provision. And as for the arguments based on canons of statutory construction, a subject not within the special expertise of the Copyright Office, we respectfully conclude that the pertinent canons were misunderstood and misapplied.

To get to this conclusion, the court just reads the actual law:

A literal and natural reading of the text of § 512(c) leads to the conclusion that its use of the phrase “infringement of copyright” does include infringement of state laws of copyright. One who has been found liable for infringement of copyright under state laws has indisputably been found “liable for infringement of copyright.” In this instance, Congress did not qualify the phrase “infringement of copyright” by adding, as it did in other circumstances, the words, “under this title.” See, e.g., § 106 (“Subject to sections 107 through 122, the owner of copyright under this title has the exclusive rights to do and to authorize any of the following . . . .); § 201(a) (“Copyright in a work protected under this title vests initially in the author or authors of the work.”). To interpret § 512(c)’s guarantee that service providers “shall not be liable . . . for infringement of copyright” to mean that they may nonetheless be liable for infringement of copyright under state laws would be, at the very least, a strained interpretation—one that could be justified only by concluding that Congress must have meant something different from what it said.

In contrast, there is every reason to believe that Congress meant exactly what it said. As explained above, what Congress intended in passing § 512(c) was to strike a compromise under which, in return for the obligation to take down infringing works promptly on receipt of notice of infringement from the owner, Internet service providers would be relieved of liability for user-posted infringements of which they were unaware, as well as of the obligation to scour matter posted on their services to ensure against copyright infringement. The purpose of the compromise was to make economically feasible the provision of valuable Internet services while expanding protections of the interests of copyright owners through the new notice-and-takedown provision. To construe § 512(c) as leaving service providers subject to liability under state copyright laws for postings by users of infringements of which the service providers were unaware would defeat the very purpose Congress sought to achieve in passing the statute. Service providers would be compelled either to incur heavy costs of monitoring every posting to be sure it did not contain infringing pre-1972 recordings, or incurring potentially crushing liabilities under state copyright laws. It is not as if pre-1972 sound recordings were sufficiently outdated as to render the potential liabilities insignificant. Some of the most popular recorded music of all time was recorded before 1972, including work of The Beatles, The Supremes, Elvis Presley, Aretha Franklin, Barbra Streisand, and Marvin Gaye.

Whether we confine our examination to the plain meaning of the text, or consider in addition the purpose the text was intended to achieve, we find no reason to doubt that § 512(c), as it states, protects service providers from all liability for infringement of copyright, and not merely from liability under the federal statute.

Later the court doubles down on the idea that pretending the DMCA's safe harbors don't apply to pre-1972 sound recordings would basically undermine the entire DMCA:

Finally, construing the safe harbor of § 512(c) as not granting protection to service providers from liability for state-law-based copyright infringements would substantially defeat the statute’s purposes. Internet service providers that allow the public to post works on their sites would either need to incur enormous expenses to monitor all postings to ensure the absence of infringing material (contravening the provision of § 512(m) excusing them from such obligation), or would incur state law-based liabilities for copyright infringement by reason of user-posted infringements of which they were unaware. The financial burdens in either case would be substantial and would likely either dissuade service providers from making large investments in the expansion of the growth and speed of the Internet (which Congress sought to encourage) or perhaps cause them to charge so much for the service as to undermine substantially the public usefulness of the service Congress undertook to promote.

On the infamous question of "red flag knowledge" the court notes that the Viacom v. YouTube case settled this a while ago. And this includes the fact that employees of Vimeo may have seen copyright-covered music on Vimeo, so the lower court was wrong to say that just because an employee watched a video, the "red flag" knowledge question could go to trial:

The mere fact that an employee of the service provider has viewed a video posted by a user (absent specific information regarding how much of the video the employee saw or the reason for which it was viewed), and that the video contains all or nearly all of a copyrighted song that is “recognizable,” would be insufficient for many reasons to make infringement obvious to an ordinary reasonable person, who is not an expert in music or the law of copyright.

This is a useful point. Over and over again we see people who support the current copyright system (or who want it expanded) insist that it's "obvious" to everyone when there's infringement happening. We've tried to explain repeatedly why that's not necessarily the case. There are all sorts of factors that make it difficult -- from the fact that the songs may be authorized to questions around fair use to a variety of other issues. So it's good to see the court make such a clear statement on this point and to overturn the lower court ruling that would have made life difficult for a number of platform companies. The court clearly understands this issue that so many copyright maximalists miss:

First, the employee’s viewing might have been brief. The fact that an employee viewed enough of a video to post a brief comment, add it to a channel (such as kitten videos) or hit the “like” button, would not show that she had ascertained that its audio track contains all or virtually all of a piece of music. Second, the insufficiency of some viewing by a service provider’s employee to prove the viewer’s awareness that a video contains all or virtually all of a song is all the more true in contemplation of the many different business purposes for which the employee might have viewed the video. The purpose of the viewing might include application of technical elements of computer expertise, classification by subject matter, sampling to detect inappropriate obscenity or bigotry, and innumerable other objectives having nothing to do with recognition of infringing music in the soundtrack. Furthermore, the fact that music is “recognizable” (which, in its dictionary definition of “capable of being recognized” would seem to apply to all music that is original and thus distinguishable from other music), or even famous (which is perhaps what the district court meant by “recognizable”), is insufficient to demonstrate that the music was in fact recognized by a hypothetical ordinary individual who has no specialized knowledge of the field of music. Some ordinary people know little or nothing of music. Lovers of one style or category of music may have no familiarity with other categories. For example, 60-year-olds, 40-year-olds, and 20-year-olds, even those who are music lovers, may know and love entirely different bodies of music, so that music intimately familiar to some may be entirely unfamiliar to others.

Furthermore, employees of service providers cannot be assumed to have expertise in the laws of copyright. Even assuming awareness that a user posting contains copyrighted music, the service provider’s employee cannot be expected to know how to distinguish, for example, between infringements and parodies that may qualify as fair use. Nor can every employee of a service provider be automatically expected to know how likely or unlikely it may be that the user who posted the material had authorization to use the copyrighted music. Even an employee who was a copyright expert cannot be expected to know when use of a copyrighted song has been licensed. Additionally, the service provider is under no legal obligation to have its employees investigate to determine the answers to these questions.

The court does allow that, during discovery, a copyright plaintiff may work to establish that employees who did view the videos were able to understand that it was infringing, but merely having employees view a video is not evidence of red flag knowledge. The court also rejects the idea -- as many copyright maximalists insist -- that this interpretation of red flag knowledge writes it out of the statute. Not so, the court points out:

This argument has no merit. While the difference between actual knowledge of infringement under § 512(c)(1)(A)(i) and red flag knowledge under § 512(c)(1)(A)(ii) may not be vast, it is nonetheless a real difference. If the facts actually known by an employee of the service provider make infringement obvious, the service provider cannot escape liability through the mechanism of the safe harbor on the ground that the person with knowledge of those facts never thought of the obvious significance of what she knew in relation to infringement. Plaintiffs further argue that this understanding of red flag knowledge reduces it to a very small category. Assuming this is so, it is of no significance. The fact that Congress was unwilling to extend the safe harbor to circumstances where the service provider did not subjectively know that the posted material infringed, but did know facts that made infringement objectively obvious, does not compel the conclusion that Congress expected this extension to cover a large number of instances. That is especially so in view of the fact that the purpose of § 512(c) was to give service providers immunity, in exchange for augmenting the arsenal of copyright owners by creating the notice and-takedown mechanism.

The court goes into detail about the different burdens that each party needs to carry in trying to establish red flag knowledge:

A significant aspect of our ruling relates to the burdens of proof on the question of the defendant’s entitlement to the safe harbor—particularly with respect to the issue of red flag knowledge. The issue is potentially confusing because of the large numbers of factual questions that can arise in connection with a claim of the safe harbor. A service provider’s entitlement to the safe harbor is properly seen as an affirmative defense, and therefore must be raised by the defendant. The defendant undoubtedly bears the burden of raising entitlement to the safe harbor and of demonstrating that it has the status of service provider, as defined, and has taken the steps necessary for eligibility. On the other hand, on the question whether the service provider should be disqualified based on the copyright owner’s accusations of misconduct—i.e., by reason of the service provider’s failure to act as the statute requires after receiving the copyright owner’s notification or otherwise acquiring actual or red flag knowledge—the burden of proof more appropriately shifts to the plaintiff. The service provider cannot reasonably be expected to prove broad negatives, providing affidavits of every person who was in its employ during the time the video was on its site, attesting that they did not know of the infringement and did not know of the innumerable facts that might make infringement obvious. And to read the statute as requiring a trial whenever the plaintiff contests the credibility of such attestations would largely destroy the benefit of the safe harbor Congress intended to create.

Finally the court is fine with the lower court rejecting the argument of "willful blindness." The court points out that the law is clear that services have no proactive duty to monitor sites for infringement, no matter how many times copyright holders insist they must. And this holds true even if they monitor for other stuff:

We see no reason why Vimeo’s voluntary undertaking to monitor videos for infringement of visual material should deprive it of the statutory privilege not to monitor for infringement of music.

The court also rejects the related claim that once Vimeo had some info suggesting some music may be infringing, it had a duty to further investigate -- and the failure to do that was willful blindness. Not so, says the court:

Section 512(c) specifies the consequences of a service provider’s knowledge of facts that might show infringement. If the service provider knows of the infringement, or learns of facts and circumstances that make infringement obvious, it must act expeditiously to take down the infringing matter, or lose the protection of the safe harbor. But we can see no reason to construe the statute as vitiating the protection of § 512(m) and requiring investigation merely because the service provider learns facts raising a suspicion of infringement (as opposed to facts making infringement obvious). Protecting service providers from the expense of monitoring was an important part of the compromise embodied in the safe harbor. Congress’s objective was to serve the public interest by encouraging Internet service providers to make expensive investments in the expansion of the speed and capacity of the Internet by relieving them of burdensome expenses and liabilities to copyright owners, while granting to the latter compensating protections in the service providers’ takedown obligations. If service providers were compelled constantly to take stock of all information their employees may have acquired that might suggest the presence of infringements in user postings, and to undertake monitoring investigations whenever some level of suspicion was surpassed, these obligations would largely undo the value of § 512(m). We see no merit in this argument.

Finally, the labels had tried to argue that Vimeo employees encouraging users to create lipdubs constituted a form of willful blindness because they then refused to recognize that this encouraged infringement. The court isn't buying it:

The evidence cited to us by Plaintiffs, consisting of a handful of sporadic instances (amongst the millions of posted videos) in which Vimeo employees inappropriately encouraged users to post videos that infringed music cannot support a finding of the sort of generalized encouragement of infringement supposed by their legal theory. It therefore cannot suffice to justify stripping Vimeo completely of the protection of § 512(m).

In short, just because some employees may have encouraged lipdub videos it most certainly does not remove all of Vimeo's safe harbors.

This ruling is a complete and total victory for Vimeo against the labels -- and an important win for the safe harbors of the DMCA (and for the ability for websites that create useful services for the public to protect themselves). I'm sure the labels will try to challenge this decision, but it's a very strong and useful ruling as it stands.

Filed Under: copyright, dmca, dmca 512, dmca safe harbors, lipdubs, pierre leval, pre-1972 sound recordings, red flag knowledge, safe harbors, willful blindness
Companies: riaa, vimeo

Wikimedia Takes Down Diary Of Anne Frank, Uses It To Highlight Idiocy Of DMCA Rules, Copyright Terms

from the what-a-mess dept

We've written a few times about the copyright status of the Diary of Anne Frank lately, mainly because it's pretty clear that the original work was supposed to enter the public domain in Europe on January 1st of this year, as it was 70 years after Frank's tragic death. However, the copyright holder, The Anne Frank Fonds organization in Switzerland has been trying to claim that the work is still under copyright, and that Anne's father, Otto Frank, is a co-author of the work. Either way, the work is not in the public domain in the US, because the US (ridiculously) grants copyrights for an even longer term than Europe.

The latest is that the Wikimedia Foundation has announced that it has removed a Dutch-language version of the text -- and used the removal as a chance to highlight some of the ridiculousness of the DMCA:

We took this action to comply with the United States' Digital Millennium Copyright Act (DMCA), as we believe the diary is still under US copyright protection under the law as it is currently written. Nevertheless, our removal serves as an excellent example of why the law should be changed to prevent repeated extensions of copyright terms, an issue that has plagued our communities for years.

Specifically, Wikimedia notes that, as a US company, it's under the jurisdiction of US law, and the DMCA includes a provision on "red flag" knowledge, that says if you are aware of infringing material, and you do not take it down, you may be liable. Thus, it removed it, even though it did not receive a specific DMCA takedown notice.

Based on email discussions sent to the Wikimedia Foundation at legal[at]wikimedia.org, we determined that the Wikimedia Foundation had either "actual knowledge" (i in the statute quoted below) or what is commonly called "red flag knowledge" (ii in the statute quoted below) that the Anne Frank text was hosted on Wikisource and was under copyright. The statute section states that a service provider is only protected by the DMCA when it:

(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing;

(ii) in the absence of such actual knowledge, is not aware of facts or circumstances from which infringing activity is apparent; or

(The rest applies when we get a proper DMCA takedown notice.)

Of particular concern, the US’ 9th Circuit Court of Appeals stated in their ruling for UMG Recordings, Inc. v. Shelter Capital Partners LLC that in circumstances where a hosting provider (like the Wikimedia Foundation) is informed by a third party (like an unrelated user) about infringing copyrighted content, that would likely constitute either actual or red flag knowledge under the DMCA.

We believe, based on the detail and specificity contained in the emails, that we received that we had actual knowledge sufficient for the DMCA to require us to perform a takedown even in the absence of a demand letter.

There is, admittedly, a fair bit of controversy over the whole "red flag knowledge" concept, with different courts ruling different ways. However, you can understand why Wikimedia might not want to take the risk when there's a very real chance a ruling could come down against them. Even if you disagree with the appropriateness of the whole "red flag knowledge" concept or its application here, you have to respect Wikimedia's decision not to set itself up to be a sacrificial lamb in a case that it could very well lose.

However, it does give Wikimedia a chance to rail against ridiculous copyright term extensions, especially those that are retroactively applied or which are used on foreign works that should be in the public domain:

However, in the United States, the Anne Frank original text will be under copyright until 2042. This is the result of several factors coming together, and the English-language Wikipedia has actually covered this issue with a multi-part test on its non-US copyrights content guideline.

In short, there are three major laws that together make the diary still copyrighted:

1. In general, the U.S. copyright for works published before 1978 is 95 years from date of publication. This came about because copyrights in the U.S. were originally for 28 years, with the ability to then extend that for a second 28 years (making a total of 56). Starting with the 1976 Copyright Act and extending to several more acts, the renewal became automatic and was extended. Today, the total term of works published before 1978 is 95 years from date of publication.
2. Foreign works of countries that are treaty partners to the United States are covered as if they were US works.
3. Even if a country was not a treaty partner under copyright law at the time of a publication, the 1994 Uruguay Round Agreements Act (URAA) restored copyright to works that:
   • had been published in a foreign country
   • were still under copyright in that country in 1996
   • and would have had U.S. copyright but for the fact they were published abroad.

 

Court challenges to the URAA have all failed, with the most notable (Golan v. Holder) resulting in a Supreme Court ruling that upheld the URAA.

What that means for Anne Frank’s diary is unfortunately simple: no matter how it wound up in the United States and regardless of what formal copyright notices they used, the US grants it copyright until the year 2042, or 95 years after its original publication in 1947.

Under current copyright law, this remains true regardless of its copyright status anywhere else in the world and regardless of whether it may have been in the public domain in the United States in the past.

It's unfortunate that this is what the law is and that the chilling effects this has is hiding away an important piece of cultural history. But, at the very least, let it be yet another reminder that copyright reform requires a major change to copyright terms, and retroactive expansion of copyright terms is a concept that should never have been allowed.

Filed Under: copyright, copyright term, diary of anne frank, dmca, red flag, red flag knowledge
Companies: wikimedia foundation

Judge Adjusts MP3Tunes Ruling, Blasts Everyone

from the some-good,-some-bad dept

We've been following Capitol Records' (EMI) lawsuit against MP3Tunes and Michael Robertson for a long time now, in part because the lawsuit has been going on forever, with lots of back and forth (and it's still at the district court level!). Back in March, the jury hit Robertson with a bill for over $40 million for his personal involvement with MP3Tunes. As we noted, there were plenty of issues with the ruling, especially with the idea that MP3Tunes was "willfully blind" in creating its music locker. Robertson challenged many of the jury's findings, and we noted that the most important one was the willful blindness.

The judge, William Pauley, has now ruled and it's a mixed bag of just about everything, including the judge berating both parties for their approach to this lawsuit. On the whole, Robertson still loses big time, but not quite as big as before. And, on the issue we found most important -- willful blindness -- the judge has overruled the jury, noting that under the standard in the Viacom v. YouTube case, MP3Tunes was not willfully blind (except for one track where they had been alerted to an infringing copy). That's big and very important, given the potential chilling effects the willful blindness ruling would have had on other startups in the digital locker space.

Red flag knowledge requires awareness of facts that would have made specific instances of infringement objectively obvious to a reasonable person.... General knowledge is insufficient. For example, knowledge that a high percentage of content on a domain is infringing does not establish actual or red flag knowledge of particular instances of infringement.... In this case, MP3tunes lacked even general knowledge. Even if MP3tunes tracked domains posting infringing files, a fact not in evidence..., MP3tunes would still need to investigate how much content the domain hosted before it could calculate what percentage was infringing.

To ascribe red flag knowledge to MP3tunes because it was possible for MP3tunes to research and identify other instances of infringing content hosted by these domains and sideloaded by users would "mandate an amorphous obligation to 'take commercially reasonable steps' in response to generalized awareness of infringement." ... But the DMCA imposes a duty on providers to track repeat infringement by users, not third parties....

The same reasoning disposes of the willful blindness argument. Imputing knowledge to MP3tunes would impose an obligation to affirmatively monitor content, which would contravene section 512(m)'s clear instruction that no such obligation exists.... Therefore, Robertson's motion for judgment as a matter of law is granted as to his liability for secondary infringement of tracks sideloaded by users from these domains.

This is the good news from the ruling. Robertson also more or less won on the issue of whether or not the cover art images that showed up in MP3Tunes were infringing. That was one of the many ridiculous side notes in the whole thing.

One other thing that turned out somewhat well was on the question of whether some of the penalties given to Robertson by the jury were unconstitutionally excessive. This is a claim that has previously been tried (unsuccessfully) in the famed Jamie Thomas Rasset and Joel Tenenbaum trials. But here, it actually worked somewhat. The court goes through the different factors to determine if a monetary award is excessive, given the actual harm, and concludes:

Viewed holistically, the punitive damages award violates due process.

Still, the judge argues there's plenty of reasons to punish Robertson, just not to the punitive damages tune of $7.5 million as the jury originally decided. The court reduces that to $750,000, but offers EMI the chance to hold yet another trial just over this issue (which would only add yet another chapter in this incredibly long saga). And of course, none of this even touches on the possibility of appeals (from both sides), which may still happen...

However, there's plenty of worrisome aspects to this new ruling as well. After the willful blindness issue, our biggest concern was the tertiary liability claims that EMI was making against Robertson. That is, we've now seen that secondary liability is a possible for copyright infringement (i.e., you can be guilty for someone else's infringement), even though that makes little sense. However, in this case, EMI advanced an even more tenuous argument: that Robertson was tertiarily liable for MP3Tunes' secondary liability of its users direct infringement. Unfortunately, the judge says this is fine, arguing that while the judge in the Napster case rejected such a theory, the judge in the Limewire case accepted it, and thus "tertiary liability" is a perfectly reasonable thing. That's going to have some serious chilling effects -- just wait and see.

The court also makes one interesting note concerning the Aereo ruling. EMI sought to use the Aereo ruling as evidence that MP3Tunes was guilty of "public performance" of the works as well, but the judge (thankfully) shut that down, noting that the Supreme Court in Aereo was clear that the ruling only applied narrowly to that specific case:

Plaintiffs also argue that the Supreme court's opinion in Aereo establishes that the third-party websites performed the work publicly. But the Supreme Court expressly excluded "novel issues not before the Court, as to which 'Congress has not plainly marked [the] course.'" ... Because the third-party domains here are not "substantially similar" to a community antenna television provider, they are beyond Aereo's reach.

Phew. Aereo bullet dodged there, for now.

Then we get around to the berating. The judge gets on the EMI execs' cases for how they treated the case, and their ongoing refusal to reveal the dates of the releases of various songs, despite being asked repeatedly. But the real slamming comes for Robertson, who apparently put on quite a show on the witness stand. While that may work in Hollywood movies, or made-for-CNN trials, it doesn't often work in real life, and it appears not to have worked here. The judge's own description of Robertson's appearance indicates that no one bought the performance at all:

This Court observed Robertson's demeanor on the witness stand. No transcript can capture his whole affect; you really had to be there.

The judge then reposts Robertson's somewhat lengthy and bizarre discussion of childhood abuse, which seemed to serve no purpose other than to (try to) tug at the heartstrings of the jury. The court (and the jury) were not impressed:

This seemingly rehearsed, five-minute fable-like narrative left the jury nonplussed and Plaintiffs' counsel shell-shocked. It was a dramatic presentation. Even if true, Robertson's decision to spin this yarn backfired on him. The jury saw it for what it was--a transparent attempt to tug at their heartstrings. Plainfiffs' counsel failed to appreciate what the jury grasped and reflexively moved for a mistrial claiming unfair prejudice. But Robertson's manipulative conduct only prejudiced him and that prejudice was not unfair. In denying Plaintiffs' motion, this Court observed "[j]urors see through performances, and the Oscars are over for this year." The jury's verdict demonstrated that this Court's observation was spot on.

Ouch.

Filed Under: copyright, michael robertson, red flag knowledge, secondary liability, tertiary liability, willful blindness
Companies: capitol records, emi, mp3tunes

Michael Robertson Challenges Ruling That Says He Has To Pay Over $40 Million For Copyright Infringement

from the red-flags-indeed dept

Earlier this year, we wrote about the troubling ruling against MP3Tunes.com, in which it was found to be "willfully blind" to infringement on its music locker service -- raising serious questions for basically any cloud service provider. EMI, the record label suing, used an incredibly low standard for what it considered to be willful blindness, but the jury bought it. On top of that, it found MP3Tunes founder Michael Robertson not just personally liable for certain infringement, but said he'd have to pay somewhere around $41 million for it.

In response, Robertson is fighting back, asking the judge to basically overrule the jury on a number of different matters. There's a lot in the filing that's worth reading, but it highlights just how crazy some of the details are in this case. The biggest issue is the whole "willful blindness" issue or "red flag knowledge." As other courts have noted, this has to be in reference to specific instances of infringement -- but that wasn't shown for many of the files in this case. Rather, the jury was only told of general infringement. This was the issue at the center of the big YouTube/Viacom case, in which YouTube won the argument that Viacom had to show red flag knowledge of specific infringement, rather than just arguing general knowledge of infringement. Yet, in this case, the issue seems to have been flipped.

There's also the troubling aspect of how the jury found Robertson guilty of not just direct infringement (of 22 files), but also "vicarious and contributory liability" on a list of over 2000 additional works. But, as Robertson notes, for that to be the case, EMI would have to have shown Robertson receiving a direct financial benefit from that infringing activity, and, in fact, Robertson received nothing from the infringement, or the company -- instead, he lost millions.

The trial record is devoid of evidence that Robertson received any such direct financial benefit. In fact, not only did Robertson not receive any direct financial benefit from MP3tunes’ and its users’ infringing activity, he personally invested and lost over $6.8 million. Moreover, uncontroverted trial testimony shows that Robertson has (a) never taken a salary or a bonus from MP3tunes... and (b) never received any dividends or any distribution, even directly or indirectly through any of the trusts, from MP3tunes...

Tellingly, Plaintiffs do not dispute these facts. Instead, they argued that Robertson could have made money, if his plan had been a success.... But the Liability Charge rejected such hypothetical conjecture; rather, it requires that “Robertson received a financial benefit directly attributable to the infringing activity of MP3tunes.” .... Indeed, the very conjecture Plaintiffs assert is itself an implicit admission that Robertson did not receive a financial benefit. ... (“Had he succeeded and signed up millions of users, he could have taken the company public, gotten investors or sold the company”) (emphasis added)). Such speculative conjecture is too remote to support vicarious copyright liability

Furthermore, it notes how the jury appears to have confused benefit for the company with benefit for Robertson directly. Furthermore, he argues that some of the arguments seem entirely based on a made up concept of tertiary liability. Basically, the jury argued that MP3Tunes has secondary liability for the actions of its users (already a questionable statement, given its compliance with the DMCA's safe harbors), and beyond that Robertson thus has tertiary liability for MP3Tunes' secondary liability. Anyone who believes in the nature of a limited liability corporation, and separating the liability of the company from its staff, might want to pay attention to that issue.

Under the charge, Robertson may be liable for MP3tunes’ secondary liability without any proof of his knowledge of, benefit from, or contribution in, the users’ direct infringement; and without any direct infringement by MP3tunes. That simply is not the law, and is contrary to the fundamental limits of secondary liability.

On the willful blindness/red flag issue, Robertson notes the made up and artificial standard that EMI uses, that if they had recieved DMCA notices with 10 or more links to a particular website, they had red flag knowledge that all links from that website must be infringing.

Plaintiffs simply counted the number of occurrences of domains in their takedown notices, and when the count reached 10, assigned to MP3tunes willful blindness or red flag knowledge that all sideloads from such domain were infringing. That is insufficient. MP3tunes could not discern any specific instances of infringement merely from the fact that any particular domain was present more than 10 times on takedown notices. In fact, counting the number of occurrences on takedown notices does not even rise to a showing of “a high probability of general infringement” or “a generalized awareness of infringement,” which are not enough to establish willful blindness or red flag knowledge.

In addition, the number “10” was plucked from thin air. Why not three? Why not 15 or 20? Where was the evidence showing the significance of 10 occurrences? Moreover, the lack of notice of specifically infringed works means MP3tunes had to conduct an investigation to determine which works were infringed: (i) which domains met the threshold of 10; (ii) which works were owned by Plaintiffs; and (iii) which works were sideloaded without authorization.

He further presents proof that EMI itself miscounted. Five out of thirteen domains they listed had errors. On top of that, he points out that EMI itself authorized free MP3s on many of those domains. In other words, there were authorized works on those same sites, which EMI insists Robertson must have known were infringing.

There are other issues raised in the filing as well, which you can read below, including questions about liability on cover art images. The specific legal issues in the case concerning secondary liability and red flag knowledge are quite important, because it will absolutely be cited as precedent in other cases as well. Unfortunately, as we've noted for a while there's sometimes a difference between "real law" and "file sharing law" in which courts decide if something feels like infringement and then twists itself to make it so. This case has all the indications of a court feeling like Robertson did something wrong, even if it doesn't seem to actually fit under the law. Thus, the effort here may be quite a long shot. Unfortunately, the ramifications of that will be felt by tons of other services, especially those in the cloud computing space.

Filed Under: contributory infringement, copyright, dmca, michael robertson, red flag knowledge, safe harbors, secondary liability, tertiary liability
Companies: emi, mp3tunes

IsoHunt Agrees To Shut Down And 'Pay' $110 Million

from the which-will-never-get-paid dept

Just this morning I'd been putting together a long and involved post highlighting how some of the MPAA's actions in the IsoHunt case raised serious questions about their overall strategy, but I now need to go back and revise and update that post as the news has come down that IsoHunt and the MPAA have "settled" the case with IsoHunt agreeing to "pay" $110 million and shut down. Of course, IsoHunt won't pay $110 million. In court recently, even the MPAA's lawyers admitted that IsoHunt would be dead if the court awarded as little as $2 million. But, the MPAA wants that bogus $110 million number to throw around, just as they wanted to toss around the $105 million that Limewire settled for a couple years ago.

Of course, even if IsoHunt did pay that kind of money, how much would go to artists?

Unfortunately, there were many, many problems with the IsoHunt case in the first place. It was a clear case of bad facts making bad law -- or what Eric Goldman has referred to as the difference between real law and file sharing rule. It's clear, for example, that there was a tremendous amount of infringement done via IsoHunt. But there are serious questions about whether or not the liability for that should fall on IsoHunt as a torrent search engine. IsoHunt remains really the only significant case where the court has accepted Hollywood's bizarre interpretation of "red flag knowledge" in copyright infringement. And, really, that's why the MPAA wanted so damn badly to get this case finished without an appeal.

Now, unfortunately, the MPAA can continue to point to the rulings in IsoHunt, including many of the more problematic claims around inducement liability and red flag knowledge, knowing that they can't be directly challenged in that case any more. You can understand why IsoHunt settled. The company had already lost the key fights, and it was going to get hit with a giant sum to pay no matter what -- clearly more than it could ever pay. So why go through the process of continuing the court fight, when a settlement just gets it over and done with? At that point, the quibble is just about what bogus number the MPAA gets to lead the press release with, and $110 million was apparently the winning ticket. It wouldn't have made a difference if it was $1.1 million or $1.1 billion, the result is basically the same.

Amusingly, Chris Dodd is out there claiming that this is some sort of victory for innovation:

"Today’s settlement is a major step forward in realizing the enormous potential of the Internet as a platform for legitimate commerce and innovation,” said former Sen. Chris Dodd, chairman and chief executive of the MPAA. “It also sends a strong message that those who build businesses around encouraging, enabling, and helping others to commit copyright infringement are themselves infringers, and will be held accountable for their illegal actions.”

Of course, it does nothing of the sort. If the shutting down of Napster, Grokster, Aimster and Limewire failed to make that point, why will IsoHunt's shutdown and unpayable fine make that point any stronger? Either way, I'll have a bit more on this case soon, once I've had a chance to rewrite that other post in light of this latest turn of events.

Filed Under: copyright, gary fung, inducement, red flag knowledge, settlement
Companies: columbia studios, isohunt, mpaa

YouTube Wins Yet Another Complete Victory Over Viacom; Court Mocks Viacom's Ridiculous Legal Theories

from the winner-and-still-champion dept

A few weeks ago we took a look at the latest filings in the long-running Viacom/YouTube dispute and were somewhat stunned at the ridiculous arguments made by Viacom, suggesting that the burden of proof was on YouTube to prove it did not know the videos on its site infringed on Viacom's copyrights. The idea that copyright law works this way, in which the burden of proof is on the service provider to show a lack of knowledge of infringement, is crazy. Thankfully, the court agreed.

In a ruling released today, the court gave a total victory to Google/YouTube, granting it summary judgment, saying that YouTube was protected from claims of infringement via the DMCA's safe harbors, and mocking Viacom's legal theories at the same time. Might as well jump right in with some quotes, including the money quote that Viacom's legal theory is "extravagant." Elsewhere the judge calls it "ingenious."

Viacom's argument that the volume of material and "the absence of record evidence that would allow a jury to decide which clips-in-suit were specifically known to senior YouTube executives" (Viacom Opp. pp. 9-10) combine to deprive YouTube of the statutory safe harbor, is extravagant. If, as plaintiffs assert, neither side can determine the presence or absence of specific infringements because of the volume of material, that merely demonstrates the wisdom of the legislative requirement that it be the owner of the copyright, or his agent, who identifies the infringement by giving the service provider notice. 17 U.S.C. § 512(c)(3)(A). The system is entirely workable: in 2007 Viacom itself gave such notice to YouTube of infringements by some 100,000 videos, which were taken down by YouTube by the next business day. See 718 F. Supp. 2d 514 at 524.

Thus, 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. Congress has determined that the burden of identifying what must be taken down is to be on the copyright owner, a determination which has proven practicable in practice.

This was the crux of Viacom's argument. That because they could show a lot of infringement, and here and there point to some evidence that some people at YouTube might have known of general infringement, then the burden should be on YouTube. But the court clearly calls them on this, noting that's not what the law says, nor does it make sense. Instead, under the law, the burden is on Viacom and that makes sense.

From there, the court cut through the claim of "willful blindness" that Viacom (and some of the folks in our comments) were so fond of. The court's basic response is "huh?" Basically it points out that Viacom's argument makes no sense. It points out that the 2nd Circuit appeals court made it clear that red flag knowledge had to be about specific infringements and Viacom keeps talking about general knowledge. This is, of course, what plenty of us pointed at the time and the court clearly sees through Viacom's wacky argument.

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. As stated in UMG Recordings v. Shelter Capital Partners, LLC, No. 10-55732, 2013 WL 1092793, at *12 (9th Cir. Mar. 14, 2013) ("UMG III"),

Although the parties agree, in retrospect, that at times there was infringing material available on Veoh's services, the DMCA recognizes that service providers who do not locate and remove infringing materials they do not specifically know of should not suffer the loss of safe harbor protection.

The Karim memorandum states that infringing clips of some well-known shows "can still be found," but does not identify the specific clips he saw or where he found them. The Wilkens declaration submitted by plaintiffs asserts that there were over 450 such clips on YouTube at the time, and presumably some of them contained the infringing matter seen by Mr. Karim. To find them would require YouTube to locate and review over 450 clips. The DMCA excuses YouTube from doing that search. Under § 512(m), nothing in the applicable section of the DMCA shall be construed to require YouTube's "affirmatively seeking the facts indicating infringing activity."

Mr. Karim's memorandum does not tie his observations to any specific clips. Application of the principle of willful blindness to his memorandum thus does not produce knowledge or awareness of infringement of specific clips-in-suit, out of the 450 available candidates. Nor does any other example tendered by plaintiffs.

It goes on to reject Viacom's theory that YouTube had the "right and ability to control" infringement on YouTube, by pointing out that its failure to monitor is completely allowed under the DMCA, contrary to Viacom's desire to pretend otherwise:

YouTube's decision to restrict its monitoring efforts to certain groups of infringing clips, like its decisions "to restrict access to its proprietary search mechanisms," do not exclude it from the safe harbor, regardless of their motivation.

Further, it points out that the rest of Viacom's arguments just show "the normal functioning of any service provider, and shows neither participation in, nor coercion of, user infringement activity." Basically, Viacom's bizarre attempt at making all service providers liable across the board has failed.

Finally, the court quickly dismisses Viacom's claim that because YouTube did deals to make its videos accessible via mobile phones, that syndication caused YouTube to lose its safe harbor protections. The court notes that this was just about making the videos accessible, not about YouTube selecting videos, but still letting users pick the videos they want to watch, but via their mobile phones. It notes that contrary to losing the safe harbor provisions, this is actually a reason for why the safe harbors are good, because it "serves the purpose" of the DMCA in "providing access to material stored at the direction of users."

Basically, Viacom has wasted an incredible amount of money on a massive lawsuit based on a very, very shaky premise that the court didn't buy the first time around, or the second time around. Of course, now we fully expect Viacom to throw more good money after bad, and keep trying to convince a court that its entirely unique interpretation of the DMCA makes sense.

Filed Under: burden of proof, copyright, dmca, red flag knowledge, safe harbors, youtube
Companies: google, viacom, youtube

Veoh Still Not Dead Enough For Universal Music; Asks Court To Rehear Case Yet Again

from the again? dept

I sometimes wonder about the lawyers representing the major labels, and their ability to continually bill those supposedly struggling labels top dollar in quixotic attempts to fight any and all innovation. We've written plenty of times about Universal Music Group's legal crusade against online video site Veoh. Veoh was a site not unlike YouTube, but Universal Music sued it years back, eventually losing badly, as the court made it clear that Veoh was protected by the DMCA's safe harbors. UMG appealed and, even though Veoh had won the case, the company itself shut down, later admitting that the legal bills from the UMG case were too much. On appeal, UMG lost again as the appeals court once again pointed to the DMCA's safe harbors. Not able to accept a loss, UMG asked the court to rehear the case, which it did. End result?another big loss for UMG.

Apparently, no one at UMG is getting the hint. The company has now filed, yet again, asking the court to rehear the case. UMG argues that the rulings against it, arguing that the court misinterpreted parts of the DMCA's safe harbor. As in the Viacom v. YouTube case, we see Universal Music here trying to completely rewrite the DMCA -- pretending that it means something that it clearly doesn't, and which many courts have rejected. I can't see how that's a wise use of UMG's money.

Specifically, it argues that the DMCA has always intended the burden for copyright enforcement to fall on service providers.

The new opinion effectively rewrites the DMCA to provide different rules for copyright infringement on the internet. It improperly shifts the burden of online copyright enforcement to content owners whose businesses depend on payment for the use of their works, while broadly shielding internet service providers ("ISPs") who use and reap financial benefits from those works (without compensating their owners) even when they have the right and ability to police their sites. The Opinion upends the carefully-crafted balance embodied in Section 512 of the Copyright Act. And, as explained below, the Opinion fails to clarify the limits or scope of the DMCA's "safe harbors."

Almost nothing there is true. The ruling is entirely consistent with other rulings on the DMCA. The entire point of having safe harbors in the first place is because the burden must be on the copyright holder, since the service provider is never in the position to know that a work is definitely infringing, since the work may actually be authorized. Basically, this is a case where Universal Music's lawyers are presenting their wishful thinking of what the DMCA should be, even though that has been rejected by the courts over and over again. There are three key points that Universal Music is making -- all of them laughable.

First, it's arguing that Veoh doesn't qualify for safe harbors because the safe harbors only apply to storage, and that anything else (such as the display of the work) is not covered.

first, the holding that section 512(c)'s safe harbor for infringement "by reason of the storage at the direction of a user" actually encompasses all "access-facilitating processes that automatically occur when a user" uploads, streams or downloads infringing material eviscerates both the language and structure of the DMCA. Congress created four discrete safe harbors, each addressing different activities. After the Opinion, Section 512(c), now applicable to "access-facilitating processes," swallows several of the other supposedly different and discrete safe harbors whole.

This would basically disregard all of the caselaw surrounding the DMCA since its inception, and pretend that the key safe harbors only apply to web backup/storage. Any service provider (such as a webhost) that allows users to display the content they store wouldn't be eligible under this interpretation. And, of course, that's crazy. Anyone who was around for the original fight that brought about the DMCA's safe harbors knows that it was the telcos who fought for those safe harbors. To think that they were only fighting to protect web backup services is laughable. There is simply no support for this argument, and no court has agreed.

They also argue that this ruling "eviscerates" the "red flag knowledge" part of the DMCA.

Second, the Opinion ignores longstanding copyright law to hold that an ISP does not have either actual or red flag knowledge of infringement unless it has received information identifying "specific instances of infringement." Section 512(c)(1)(A) requires no such thing. As a result, content owners must now incur the expense of continuously scouring hundreds of thousands (or indeed millions) of constantly changing internet websites, to attempt to locate copies of their works and then send take-down notices or otherwise advise ISPs of these "specific instances of infringement" on their sites. The Opinion requires a world wide web game of "Whack-A-Mole" to police infringement.

Again, this argument is wishful thinking. The whole reason why red flags only concern specific knowledge, as outlined in multiple other cases, is because "general knowledge" that there is some infringing works on a site doesn't do anything useful, as the site would have no meaningful way of dealing with it at that stage, not knowing what is actually infringing.

Finally, UMG tries to pretend (despite tons upon tons of caselaw to the contrary) that the DMCA's safe harbors cannot apply to a service provider like Veoh, because of its own total misreading of one of the safe harbor clauses (which the court read properly).

Third, as a consequence of the Opinion's interpretation of Section 512(c)(1)(B), websites like Veoh, which (a) copy, perform, and distribute (by offering digital downloads), tens of thousands of infringing works, (b) receive a direct financial benefit from the infringement in the form of advertising revenues that directly increase with each view of an infringing video by a user, and (c) have the "right and ability to control" the infringement as those terms have historically been understood in copyright law, nevertheless get a free pass under the DMCA unless they also engage in an undefined "something more" -which apparently must be akin to inducing infringement. If the Opinion is left standing, ISPs like Veoh will have no obligation either to affirmatively police their site (indeed, they are disincentivized from doing so lest they find an infringing file which would give them "actual" or red flag knowledge), to adopt readily available technical solutions to mitigate infringement, or to obtain authorization from content owners.

First of all, Veoh's dead, so it's not like it will have anything to do, but that's a separate point. More importantly, UMG's interpretation of almost every key point is questionable here. Veoh qualifies for the safe harbors because it's a service provider. It does not "receive a direct financial benefit from the infringement" because it is receiving financial benefit the exact same way no matter whether the content is infringing or not. Veoh received financial benefit from providing a service of hosting videos. That has nothing to do with whether or not it financially benefits directly from infringement. But, most importantly UMG is pretty blatant in arguing that the DMCA somehow requires service providers to "affirmatively police their site." The law has never said that and no court has ever agreed with that argument either. UMG is simply trying to rewrite the DMCA the way it wishes it was written and hoping a court might agree, even after it's lost time and time again with the nearly identical arguments.

It will come as little surprise that the arguments here mirror those made by Viacom against YouTube, but both have been pretty big losers so far. They're basically trying to insist that the DMCA must mean what they always wanted it to mean, even though it's clear from the language, the legislative history and the caselaw surrounding the law, that it was never meant to be interpreted this way.

In the meantime, though, Veoh is still dead. And all this is doing is throwing more UMG money to lawyers who have no problem presenting silly arguments like this one so long as they keep getting paid.

Filed Under: copyright, dmca, red flag knowledge, safe harbors
Companies: universal music, veoh

Breaking: Appeals Court Sends Viacom-YouTube Case Back To District Court, Future Of Safe Harbors Still Uncertain

from the some-good,-some-bad dept

The original ruling in the Viacom vs. YouTube case was a complete and total victory for YouTube. The court effectively dumped the case at the summary judgment stage, correctly recognizing that YouTube qualified for the DMCA's safe harbors, and that Viacom was trying to change the clear definitions in those safe harbor provisions. This upset many copyright maximalists, and we heard stories about how the ruling would never survive the appeal. To some extent that was correct. The ruling in the appeal came out today, and it definitely walks back some of the original ruling, but, on the whole, it still leans towards YouTube's position.

The key question in the lawsuit revolved around the so-called "red flag" knowledge question -- and whether or not that meant specific knowledge of items that were infringing (as YouTube and the lower court believed) or just general knowledge of infringement on the site (as Viacom argued). Here, the appeals court got it right, saying that specific knowledge is necessary.

Although the parties marshal a battery of other arguments on appeal, it is the text of the statute that compels our conclusion. In particular, we are persuaded that the basic operation of § 512(c) requires knowledge or awareness of specific infringing activity. Under § 512(c)(1)(A), knowledge or awareness alone does not disqualify the service provider; rather, the provider that gains knowledge or awareness of infringing activity retains safe-harbor protection if it “acts expeditiously to remove, or disable access to, the material.” 17 U.S.C. § 512(c)(1)(A)(iii). Thus, the nature of the removal obligation itself contemplates knowledge or awareness of specific infringing material, because expeditious removal is possible only if the service provider knows with particularity which items to remove. Indeed, to require expeditious removal in the absence of specific knowledge or awareness would be to mandate an amorphous obligation to “take commercially reasonable steps” in response to a generalized awareness of infringement. Viacom Br. 33. Such a view cannot be reconciled with the language of the statute, which requires “expeditious[ ]” action to remove or disable “the material” at issue. 17 U.S.C. § 512(c)(1)(A)(iii) (emphasis added).

The court rightfully rejects the idea that the "red flag" knowledge part of the DMCA means that just knowing that there's some infringement -- without knowing specifics -- means you lose the safe harbors. Since this is the key question in the lawsuit, it's great that the appeals court got this right. This was also the point that the maximalists insisted that no appeals court would uphold, and, clearly, they were wrong about that.

The court responds to the claim that if red flag knowledge does not apply to "general" knowledge of infringement, then it's superfluous, by noting that's not true:

The difference between actual and red flag knowledge is thus not between specific and generalized knowledge, but instead between a subjective and an objective standard. In other words, the actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement “objectively” obvious to a reasonable person. The red flag provision, because it incorporates an objective standard, is not swallowed up by the actual knowledge provision under our construction of the § 512(c) safe harbor. Both provisions do independent work, and both apply only to specific instances of infringement.

In other words, it's possible to show that there are red flags, but they have to be red flags for infringement of specific items, not knowledge that there is infringement in general. That's a good ruling and it makes sense. Accepting Viacom's interpretation would have effectively killed large parts of the DMCA. YouTube's interpretation (now supported by both the district and the appeals court) keeps the DMCA's safe harbors in existence.

That said, the court then suggests that the district court may have erred in granting the summary judgment on that point. Here, the court is talking specifically about YouTube's actions, and saying that Viacom at least raised enough issues that it is possible to argue that YouTube did, in fact, have knowledge of specific infringement. In other words, the court agrees on the big picture interpretation of the law, but disagrees on the specific application by the district court. It doesn't mean that the court thinks that YouTube violated the DMCA -- just that Viacom at least raised enough issues that it should be handled by a jury in a trial, rather than decided at the summary judgment stage. So the case will now go back to the district court to be heard over that issue.

Even here, the judge notes that while Viacom pointed to some email evidence that YouTube execs may have known of some specific instances of infringement which they ignored, it also points out that it's unclear if those specific instances involve videos that are part of this lawsuit -- and that's necessary if YouTube is to lose its safe harbor provisions.

A second issue involves the question of whether or not YouTube exhibited "willful blindness" to infringement on the site. Here, the ruling is a bit troublesome. It notes that the DMCA does not refer to willful blindness (and that the DMCA does note that there is no duty to monitor). But... it then still suggests that there can be a willful blindness question under the DMCA if there is specific knowledge of infringement. So, again, going back to the main issue in this case, if Viacom can show specific knowledge, it might also be able to get YouTube for being "willfully blind." But, it's no sure thing that Viacom can actually show specific knowledge of clips that are a part of this lawsuit.

The third issue is the question of what "the right and ability to control" infringing activity means. Both YouTube and Viacom interpret that phrase differently... and here, the court rejects them both. The district court accepted YouTube's interpretation, saying (reasonably, in my opinion) that a service provider must know of the particular case before it is required to "control" it. That is, how can the "right and ability to control" apply to a situation where there is no specific issue at hand? What is the service provider expected to control if it doesn't know what it's controlling? Viacom, instead, argued that the issue around the "right and ability to control" created a magical "vicarious liability" for service providers if their services were used to infringe. Both courts reject that argument as making little sense and (importantly) going against the Congressional record (which specifically left out vicarious liability, which had been found in an earlier DMCA draft). Here, the appeals court tries to thread the needle with a somewhat confused ruling that doesn't quite agree with either side. It's not a vicarious liability standard, but it doesn't quite require specific knowledge. Instead, the court literally says "something more" is required -- and asks the district court to consider what that "something more" might be.

Finally, there's an issue of what "by reason of" storage means. The DMCA's safe harbors give protection for infringement that happens "by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider." YouTube (and the district court) pointed out that YouTube fits under this definition. Viacom tried to argue that YouTube does not qualify because it does much more than storage -- such as converting (transcoding) videos, offering playback of videos and offering "related videos." Viacom tried (at both levels) to argue that those functions go beyond mere storage, and do not qualify for safe harbor protections. Thankfully, the appeals court here agrees with the lower court and says those are protected. It notes that it's clear that Congress intended "service provider" to mean much more than just a storage provider. I should note that one of our frequent critics in the comments has been insistent that the DMCA was designed only to apply to pure storage providers -- but now we've got yet another detailed court ruling pointing out that this is 100% false.

However, the court does send one "feature" back to the lower court for review. It questions whether or not the syndication of videos to third party sites then falls outside the safe harbor provisions concerning "by reason of storage." The court isn't sure that this is outside the safe harbors, but at least asks the lower court to explore the issue.

In the end, this is a mostly good ruling. It gets the biggest question of law right, even if it's not sure about YouTube's specific actions. On some of the other points, it's a little fuzzy in its thinking, but this is still mostly a victory for YouTube at this stage (though, who knows how the lower court and a jury will rule on some of the specifics). It could have been a more complete victory, but this is hardly the complete rejection of the district court ruling that some maximalists insisted was going to be delivered.

Filed Under: dmca, liability, red flag knowledge, safe harbors
Companies: viacom, youtube