New York Business Lawyers

SXSW Online Content Panel: Legal Summary of Grokster vs. Viacom in Plain’ish Eng. Pt.2

by / Monday, 28 February 2011 / Published in Technology & eCommerce

Digital Content and Social Media Law Firm at SXSW

With our SXSW panel coming up, we are gearing up with content that sets the stage for the discussion and provides a plain English vector into the issues that face online content distributors in the coming years.  The following second part of our two part breakdown of the two pillar cases driving the legal discussion, Groskter and Viacom, is designed to give everyone an easy to follow roadmap with actual case cites to the source material. So now without further adieu here is part II.  Click Here for Part I

We thank David Ugelow, our new intern for putting this together.

II. Viacom International Inc., v. YouTube, Inc.

  1. Procedural Posture

In March of 2007, Viacom International, along with four film and television production companies (hereinafter “Viacom”)[1], sued YouTube, and its parent company Google, for acts of copyright infringement committed by users who uploaded videos on youtube.com.  On June 23, 2010, the District Court for the Southern District of New York granted summary judgment in favor of YouTube.  The Court found that YouTube qualified for protection from liability under the Digital Millennium Copyright Act (“DMCA”).  Viacom has appealed to the Court of Appeals for the Second Circuit.

  1. The District Court Decision

YouTube offered a service, at youtube.com, for users to upload video clips free of charge.  The files were available for viewing on the website.  YouTube did not prevent users from uploading copyrighted material.  However, when YouTube received notices of infringement on behalf of copyright owners, it removed the material in question without undue delay. Viacom v. Youtube, 718 F.Supp 2d 514, 518-519 (S.D.N.Y. 2007).

In its motion for partial summary judgment, Viacom alleged copyright infringement based on claims that YouTube possessed actual specific knowledge of, failed to combat, and profited directly from acts of infringement committed by its users.  Moreover, according to Viacom, YouTube neglected to exert its power to control infringing activity on its network.  It was more of than a storage service.  Viacom claimed it actively encouraged infringement.  Id. at 516.  YouTube cross-moved for partial summary judgment, on the basis that the DMCA protected it from liability because it did not have actual knowledge of the infringing activity and it complied with the DMCA safe-harbor provisions.  Id.

Under the DMCA, a service provider may be exempt from liability for copyright infringement perpetrated by users on its service, if it

(A)(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

(iii) upon obtaining such knowledge or awareness, acts expeditiously to remove, or disable access to, the material;

(B) does not receive a financial benefit directly attributable to the infringing activity, in a case in which the service provider has the right and ability to control such activity; and

(C) upon notification of claimed infringement as described in paragraph (3), responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.  17 U.S.C. § 512(c).

The Court focused on the language in section 512(c)(A)(i) and (A)(ii), particularly, the phrases “actual knowledge that the material or an activity using the material on the system or network is infringing,” and “facts or circumstances from which infringing activity is apparent.  Viacom at 519.  YouTube could incur liability if it possessed a level of knowledge sufficient to remove it from the scope of the DMCA safe-harbor provisions.  The Court looked to both the legislative history of the DMCA and the relevant case law for guidance.

Reading from House and Senate reports, the Court determined that general knowledge of infringement is not enough to exclude a service provider from the protection of the DMCA.  Service providers must have knowledge of specific, identifiable acts of infringement to incur liability.  Id. at 523-524.  According to the Court, it would be unreasonable and impractical to hold service providers responsible for proactively and comprehensively policing their networks to counteract any and all infringement.  The Court concluded that legislature placed the onus on the copyright holders to discover and report individual acts of infringement, not the service providers.  Id.

Recent decisions cited by the Court, namely, CCBill LLC, UMG Recordings v. Veoh, Corbis v. Amazon, Tiffany v. eBay, and MGM v. Grokster, provided further clarity.  The Court found recent case law to be generally in accordance with the legislative history of the DMCA.  Id. at 525.  The Court distinguished the MGM v. Grokster decision, however, and determined that Grokster was not, in fact, a service provider, and therefore, did not fall under the purview of the DMCA safe-harbor provision.  As the Court explained,

[t]he Grokster model does not comport with that of a service provider who furnishes a platform on which its users post and access all sorts of materials as they wish, while the provider is unaware of its content, but identifies an agent to receive complaints of infringement, and removes identified material when he learns it infringes.  To such a provider, the DMCA gives a safe harbor, even if otherwise he would be held as a contributory infringer under the general law.  Id. at 526.

According to the Court, the MGM decision dealt with secondary liability more generally, and not with the application of the DMCA to service providers.  Id.

After determining that YouTube qualified as a protectable service provider under the DMCA, the Court dealt with the somewhat ancillary arguments put forth by Viacom.  Most notably, Viacom attacked the method used by YouTube to profile and remove infringing content.  YouTube initially implemented a strike system to rank offending users and mark them for removal, and it used a identifier tool called Audible Magic to match infringing content with notices received from copyright owners.  Viacom considered these methods inadequate under the DMCA.  Id. at 528.  The Court categorically rejected this argument, however, and found that YouTube had made a good faith effort to set up removal procedures.  Id.  Viacom also took issue with YouTube’s failure to remove content beyond that identified by copyright owners, despite the existence of additional content infringing the same works.  Id. The Court once again cited the specificity requirement of the DMCA, and held that YouTube was not responsible for proactively removing more than the particular content identified in the DMCA notifications.  Id.

The Court concluded that YouTube’s actions fell within the DMCA’s safe-harbor provision, and granted summary judgment in favor of YouTube on the claims of direct and secondary copyright infringement.  Id. at 529.

Conclusion

The Viacom Court distinguished the Grokster decision mainly on the grounds that Grokster did not qualify as a service provider pursuant to the DMCA, and therefore did not merit protection under the statute.  Id. at 526.  The more meaningful distinction to be gleaned from both opinions turns on the manner in which each court approached the issues.  The Grokster court based liability on intent, by way of inducement, while the Viacom court implied that YouTube was less culpable than Grokster and StreamCast had been, and therefore protected by the DMCA, because it had expeditiously removed infringing material upon notification.  Id. The Viacom Court looked favorably upon positive steps taken by YouTube to counteract infringement, while the Grokster Court condemned Grokster’s and StreamCast’s business practices.  The nature of each network and service makes it somewhat difficult to determine where DMCA protection begins and ends, however.  It seems that each court based its decision, at least somewhat, on the image and perception of each company.  Product manufacturers, and even service providers, who display an unwillingness to counteract infringement, may be more susceptible to liability, as courts may base liability on intent, general blameworthiness, and even public perception.

Click Here for Part I


[1] Viacom International Inc., was joined by Comedy Partners, Country Music Television, Inc., Paramount Pictures Corporation, and Black Entertainment Television LLC. Viacom v. Youtube, 718 F.Supp 2d 514 (S.D.N.Y. 2007).

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