Google won a significant victory in the United States with the highly anticipated June 23 lower court summary judgment ruling that its subsidiary, YouTube, Inc., is not liable for direct or secondary copyright infringement due to its hosting of infringing content posted by users of the wildly popular website. The U.S. District Court for the Southern District of New York ruled that YouTube’s general knowledge that a substantial portion of the posted videos infringed copyright was insufficient to impose liability, and that its prompt take-down of specific infringing material of which it was notified entitled it to the “safe harbor” for internet service providers (“ISPs”) established by the Digital Millennium Copyright Act (DMCA).

The DMCA is a 1998 amendment to the Copyright Act that clarifies the copyright responsibilities and liabilities of those who provide “online services or network access.” The Act extends to providers of information location tools (e.g., search engines), and to sites that organize and present user-provided information, such as eBay and Amazon. Citing the Act’s legislative history and developing case law, the Viacom decision holds that the DMCA also applies to video-hosting websites such as YouTube.

The court’s other significant findings include the following:

“Generalized knowledge” of infringing activity is not “actual knowledge.” Under the DMCA, a service provider can lose the advantage of limited liability if it has “actual knowledge” of infringing activity, or becomes aware of such activity, and does not act to prevent it. The court ruled that “actual knowledge” requires knowledge of the “specific and identifiable infringements” at issue, and that general knowledge does not obligate a provider to monitor its site for infringing materials.

Under this interpretation, a copyright owner will have to prove that the ISP has knowledge of each infringing video at issue, for example, and not just a general knowledge that infringing materials exist on the website. It is a much higher standard, one the court found Viacom had not met, in spite of evidence that YouTube and was aware that a high volume of infringing content was routinely posted on its site. “…[A]wareness of pervasive copyright-infringing, however flagrant and blatant, doe not impose liability on the service provider, “ said the court.

As the court explained, a qualifying ISP that complies with the DMCA’s “notice and takedown” procedures is entitled to safe harbor protection, and copyright owners are responsible for policing ISP websites and notifying ISPs of infringing content. Although a service provider cannot turn a blind eye to a “red flag” indicating obvious infringement, neither is it obligated to monitor user uploads and affirmatively seek and ferret out infringing content. Rather, the DMCA places this policing burden “squarely on the owners of the copyright.” Once a service provider is notified of a specific infringement, if it acts expeditiously to remove the offending material, the DMCA provides a safe harbor, even if the ISP would otherwise be held liable as a contributory infringer under the general law. In this connection, the court noted that YouTube had complied with the Act by registering an agent with the Copyright Office for notification of infringements, and by acting promptly when notified of a problem. The court cited approvingly the fact that, when Viacom sent YouTube a mass take-down notice alleging that some 100,000 videos on the site were infringing, YouTube removed virtually all of them by the next business day.

The court’s reasoning follows that found in several other recently decided cases. For example, Universal Music Group (UMG) Recordings, Inc. and Io Group, Inc. charged online video host site Veoh Networks, Inc. with copyright infringement of sound recordings owned by UMG and clips from adult videos owned by Io, respectively, that had been uploaded by users. Two federal district courts extended DMCA safe harbor protection to Veoh and dismissed the charges. See UMG Recordings, Inc. v. Veoh Networks, Inc., 665 F.Supp.2d 1099 (C.D. California 2009); Io Group, Inc. v. Veoh Networks, Inc., 586 F.Supp.2d 1132 (N.D. California 2008). Like YouTube, Veoh’s victories are attributable, in part, to scrupulous compliance with the DMCA’s notice and takedown requirements: Veoh registered a copyright agent and responded to takedown notices on a same-day basis.

In Tiffany (NJ) Inc. v. eBay Inc., 600 F.3d 93 (2d. Cir. 2010), which is cited approvingly in the Viacom decision, the Second Circuit dismissed analogous trademark infringement claims. The court found that eBay “had generalized notice that some portion of the Tiffany goods sold on its website might be counterfeit,” but that this was not enough to impose liability, even though the Trademark Act does not contain a safe harbor provision. Where eBay was notified of specific infringing goods being offered for sale, those auctions were promptly shut down.

Viacom claimed support from the Supreme Court’s decision in Metro-Goldwyn-Mayer Studios Inc. v. Grokster, Ltd., 545 U.S. 913 (2005), which held Grokster liable for user-committed infringements via unauthorized movie and music uploads. However, the Viacom opinion distinguishes the peer-to-peer file-sharing structure of the Grokster site, and the way it was blatantly promoted as a successor to Napster, encouraging infringing activity. Here, “[i]t is not remotely the case that YouTube exists ‘solely to provide the site and facilities for copyright infringement,’” ruled the court.

The Viacom decision comes on the heels of another significant Google victory with some parallels to this case: The decision by the European Union’s Court of Justice that Google’s AdWords keyword advertising program does not facilitate trademark infringement, in part because Google enjoys the status of a “referencing service provider” under E.U. law. See our March 23, 2010 Alert. Taken together, these decisions appear to validate Google’s strategy of aggressively defending every lawsuit that presents a challenge to one of its core business models.

If, as seems likely, Viacom appeals the district court’s decision to the U.S. Court of Appeals for the Second Circuit, a defeat there will certainly have implications for copyright enforcement efforts against YouTube and other video-hosting sites. Given the Second Circuit’s Tiffany decision, one might anticipate a ruling that is not likely to be applauded by content owners.

Electronic and internet copyright law continues to evolve. To learn more about the implications of the Viacom decision and navigating the copyright and trademark laws online, contact:

Sheldon H. Klein
klein.sheldon@arentfox.com
202.857.6404