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Thursday, 24 June 2010

Breaking News: Google wins $1 billion summary judgment against Viacom and Premier League


Yesterday, Judge Louis Stanton of the Southern District of New York granted summary judgment for Google in two cases brought separately by Viacom and the Premier League. Judge Stanton held that general knowledge of copyright infringement, no matter how widespread and blatant, was not enough for YouTube not to benefit from the Safe Harbour provisions of the Digital Millennium Copyright Act. The IPKat sets out in detail the reasoning of the court in its brief 30-page (double-spaced, mind you) decision.


Readers will recall from various IPKat and AmeriKat reports (found here), that the complaints centered on the plaintiffs’ copyrighted content being uploaded onto YouTube by third-party users and YouTube, once notified, not doing enough to remove the infringing content or preventing future infringements. YouTube sailed into the DMCA’s Safe Harbour provisions which state that under Section 512(c)(1) a service provider:

“shall not be liable for monetary relief or other equitable relief, for infringement of copyright by reason of the storage at the direction of a user of material that resides on a system if the provider:

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

(ii) – is not aware of facts or circumstances from which infringing activity is apparent (the "red flag test"); or

(iii) – upon obtaining knowledge or awareness expeditiously removes it; AND

(B) – does not receive a financial benefit directly attributable to the infringing activity; AND

(C) – upon notification of claimed infringement it responds expeditiously to remove the material”

In December, Viacom wrote to Judge Stanton stating their intent to file a motion for summary judgment. In March of this year, around 200 pages of summary judgment motions from both parties were filed (see AmeriKat’s report on both motions here and here).

The question to be decided in the summary judgment was whether the statutory phrases under Section 512(c)(1)(A)(i) and (ii) meant that general awareness of infringements (which were claimed by the plaintiffs to be widespread and common), or actual or constructive knowledge of specific and identifiable infringements of individual items was required for a service provider to fall foul of the Safe Harbor provisions. To determine this question the court had delve into first the legislative history of the DMCA and then the case-law.

Legislative Consideration

Senate Judiciary and House Committee Reports were cited at length in Judge Stanton's decision. The Reports specified that Section 512 was intended to limit a service providers’ liability dependent on their “applicable knowledge”. At paragraphs 44-45/53-54 of the Reports, that knowledge standard was met either by actual knowledge or awareness of facts from which infringing activity is apparent. The Reports went on to state that Section 512(c)(1)(A)(ii) could be described as a “red flag test”. Such a test meant that a service provider “need not monitor its service or affirmatively seek facts indicating infringing activity” to benefit from the exception.

The red flag test was proposed to be a test of two halves: First, the test is one of subjectively determining whether the service provider was aware of the facts in question and then objectively determining if the infringing activity would have been apparent to a reasonable person operating under similar circumstances. The Reports go on to discuss the notification requirements, i.e., notice and take down procedure under the DMCA. The Reports state that the copyright owner “must provide information that is reasonably sufficient” and clear “to identify and locate the allegedly infringing material” to the service provider. If the notification is not sufficiently clear and does not comply with Section 512(c)(3), then the service provider may benefit from the limited liability of the Safe Harbor. The Reports repeatedly emphasized the need of the copyright owner to specify the infringing material and activity. As such Judge Stanton held that the sections 512(c)(1)(A)(i) and (ii) meant that the knowledge that a service provider must have to foul foul of the Safe Harbor is

“knowledge of specific and identifiable infringements of particular individual items. Mere knowledge of prevalence of such activity in general is not enough. That is consistent with an area of the law devoted to protection of distinctive individual works, not libraries. To let knowledge of a generalized practice of infringement in the industry, or of a proclivity of users to post infringing materials, impose responsibility on service providers to discover which of their users’ postings infringe a copyright would contravene the structure and operation of the DMCA.”

Judge Stanton said that this standard of knowledge was consistent with the Perfect 10 case which placed the burden of indentifying copyright infringement under the DMCA on the copyright owner, not the service provider. Further, he stated, that the DMCA itself explicitly states at Section 512(m)(1) that the Act should not be construed to condition the enjoyment of a “safe harbour” on a “service provider monitoring its service or affirmatively seeking facts indicating infringing activity”. To illustrate the apparent efficiency of the DMCA notification procedure Judge Stanton stated that when Viacom sent a notice to YouTube about 100,000 infringing videos, YouTube had removed almost all of them the next day.

Case-Law Consideration

Turning to case-law, Judge Stanton cited UMG Recordings v Veoh (2009) which concluded that “if investigation of ‘facts and circumstances’ is required to identify material as infringing, then those facts and circumstances are not ‘red flags’.” This was a further reason why Judge Stanton held that “awareness of pervasive copyright infringing, however flagrant and blatant, do not impose liability on the service provider.”

Interestingly, Judge Stanton went on to cite Tiffany v eBay (2010) (first a summary judgment trade mark case later confirmed by the Court of Appeals) by stating in that case Judge Sullivan held that such generalized knowledge possessed by eBay that some portion of Tiffany goods being sold on its website might be counterfeit was insufficient to impose upon eBay an affirmative duty to remedy the problem. Judge Sullivan held that eBay would have to have knowledge of specific instances of actual infringement to be held contributory liable. As readers may recall, the Court of Appeals agreed. Practitioners will find it interesting, if not useful, that the court was prepared to use trade mark cases to inform the requisite knowledge required in a DMCA case.

Just over two sides of the judgment were devoted to the discussion of the Grokster case (MGM v Grokster, 2005) - a case that was heavily relied upon by Viacom in their summary judgement - and its ‘progeny’ - Arista Records v Usenet (2009), Columbia Pictures v Fung (2009), and Arista Records v Lime Group LLC (2010). The Grokster Court had held that one is liable for the consequent acts of third-party infringement if they “distribute a device with the object of promoting its use to infringe copyright”. YouTube had said that they did not exist “solely to provide the site and facilities for copyright infringement.” [Note YouTube’s use of the word ‘solely’, a word that did not appear in Grokster, as far as this Kat is aware]. Judge Stanton went only so far as to state that Grokster-type cases were not ones of a service provider who furnishes a platform for users to post and access materials, of which the service provider is unaware. The facts of these cases were different. Therefore, he indicated that the Grokster cases were of little relevance in relation to application of the DMCA provisions.

Other Considerations

Judge Stanton went on to consider the plaintiffs’ claim that the display of videos on YouTube fell outside the DMCA protection as it was not “storage” of the material. Judge Stanton held that this construed the term “storage” too narrowly, especially in light of the definition of “service provider” in Section 512(k)(1)(B). This definition included “an entity offering the transmission, routing, or providing of connections for digital online communications.” This was supported by the Veoh case which held that the transmission of online communications was included in the term “storage”.

Another argument advanced by the plaintiffs was that YouTube could not benefit from the Safe Harbor because they financially benefited (picture, right - Viacom's view of YouTube?) from the infringing material being uploaded on the site. Readers may recall that during the mud-slinging of late last year and earlier this year, the disclosure documents alluded to YouTube/Google actively uploading infringing content to YouTube to increase site traffic themselves and doing nothing about infringing material once there. Judge Stanton referred back to the knowledge criteria and stated that under Section 512(C)(1)(B) a service provider must 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...”. Judge Stanton held that the “right and ability to control” the activity requires item-specific knowledge of it. Therefore, he held that without such specific knowledge, YouTube did not fall foul of this section.

The final two pages of Judge Stanton’s judgment was a hodgepodge of how YouTube’s conduct in respect of terminating user accounts after receiving two DMCA notices, not removing similar infringing material as set out in a DMCA notice and other apparently virtuous activities was reasonable and did not restrict their enjoyment of the Safe Harbor.

What's Next?

The IPKat is incredibly impressed with what a glowing report this summary judgment seems to have been for YouTube and Google’s activities. Google and YouTube are obviously delighted. Via their official Blog they have stated that:

"This is an important victory not just for us, but also for the billions of people around the world who use the web to communicate and share experiences with each other. We’re excited about this decision and look forward to renewing our focus on supporting the incredible variety of ideas and expression that billions of people post and watch on YouTube every day around the world."
Considering the mass of documents that Viacom had disclosed which seemingly evidenced YouTube’s own uploading of infringing content, the IPKat wonders why little hay was made of these documents. Unfortunately, several of the discovery documents in the case were redacted, so one wonders if this alleged smoking gun may not have been the pistol Viacom wanted it to be. The IPKat especially finds this interesting because Judge Stanton specifically distinguished the case of Fung, where the defendant was an admitted copyright thief, with this case. Google, whose overworked PR machine has managed to keep a somewhat squeakily clean image (picture, left - a product that Google perhaps may be using?) in never knowingly promoting copyright infringement on their website obviously helped in this determination.

In any event, this case is not over. It would be unrealistic for Viacom to relinquish the fight after presumingly millions in legal fees and the vested interests of many copyright conglomerates at stake. According to this report, Viacom are set to appeal the summary judgment.

So following this decision, the take home lesson for copyright owners wanting to get infringing material off YouTube or any other service provider's site is to draft your DMCA notice with a high degree of specificity and to actively police websites for your copyright works. For service providers, know nothing - but once you do, act fast.

Judge Stanton's summary judgment found here.

5 comments:

MTPT said...

Although it doesn't impact Youtube's potential liability, it's worth noting the "anti-smoking gun" which emerged over Viacom's conduct: they sought to upload their own material in such a way as to make it look infringing.

Unsurprisingly this was to gain commercial benefit, which really makes me wonder at the commerciality of the specific decision to litigate this case, and the broader decision to pull works rather than accept advertising revenue

Quite properly that conduct isn't mentioned in the summary judgement (that I can see) but it does raise questions about Viacom's wider conduct and good faith during this whole saga.

Caleb said...

I think the title for this entry is a little misleading because Google was not awarded any money judgment but rather through the summary judgment was protected from having to pay a judgment.

Annsley Merelle Ward said...

Caleb- Thank you for your comment, but that is why I wrote "won", not "awarded".... The value of the summary judgment was $1billion, the judgment which they won.

But headlines are headlines...there to grab people's attention so they read the article.

Anonymous said...

Well, I'm with Caleb. I admit that Google may be $1billion better off as a result of winning rather than losing the judgment, but what the headline suggests to the casual reader is that Google had collected that sum as a result of the case. I spent some time trying to work out how. I don't think that it is sufficient excuse for a misleading headline that it attracts more readers (I'm sure you have plenty of readers without this!).

Annsley Merelle Ward said...

I still disagree that it is misleading given the usage of the word 'won' and not 'awarded'. Had it meant what you say it does it would have to say "Google wins $1 billion IN summary judgment against Viacom and Premier League". Without the 'in', the 1billion is descriptive of the value not of an award.

And at least in this jurisdiction, the headline is not taken as whether or not an article is, as you say, 'misleading' - it is understood and accepted that the headline, although the hook for the ordinary reader, is not decisive of the actual content of the story or accuracy of the story contained beneath.

Having looked at the press cuttings, you may be surprised about how many people including legal journals, AP, Metro etc with dedicated journalists had similar headlines - and these are full-time professional journalists!

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