Thursday, January 12, 2012

Court holds that Website Operator Not Liable Without Specific Knowledge of Copyright Infringement

Court holds that Website Operator Not Liable Without Specific Knowledge of Copyright Infringement
In a case of first impression, UMG Recordings v. Shelter Capital Partners, et al., the Ninth Circuit refused to hold a website operator liable for copyright infringement based solely on the operator’s general knowledge that some of the third party content on its site may be infringing copyright owners’ rights.  While the case only involved video content submitted by users, its holding applies to text, audio, photos and all user generated content.   The holding also applies to all industries and businesses that have websites, social media or blogs and that permit uploading of user-generated content.
Facts and Issues
The Defendant Veoh operates a publicly accessible website that enables users to share videos with other users. The Plaintiff, Universal Music Group, produces and distributes recorded music and music videos. Although Veoh has implemented various procedures to prevent copyright infringement through its upload system and its website, users of Veoh’s service have in the past been able, without authorization from copyright owners, such as UMG, to upload music videos containing songs in which UMG owns the copyright rights.  This in turn allows other Veoh users to view and even download those music videos.
The Digital Millennium Copyright Act (DMCA) provides so-called “safe harbor” for website operators so that even when a user of the website operator’s site shares a copyright protected video with other users, if the website operator meets the requirements set forth in the “safe harbor”, that operator is not liable for copyright infringement.
In the UMG Recordings case, the particular “safe harbor” Veoh invoked protects website operators and other “service providers” from liability for the copyright infringement of others who provide content on their sites when the provider “expeditiously” takes down the allegedly infringing content residing on its servers in response to a notice from a copyright owner (commonly referred to as a DMCA notice) that the content is infringing the owner’s copyright.
UMG’s Claims
There was no question that Veoh acted expeditiously to remove allegedly infringing content from its servers upon receipt of DMCA notices alleging that specific content on its site was infringing.  UMG claimed, however, that Veoh’s actions were insufficient  due to Veoh’s late adoption of filtering technology to detect infringing material and that Veoh removed only the specific videos identified in DMCA takedown notices, but not other infringing material that the filter detected. 
UMG argued that Veoh’s failure to remove other infringing material detected by its filters imputed Veoh with “actual knowledge” of the infringing activity, which, if true, would deprive Veoh of the DMCA safe harbor.  UMG also raised numerous factors that could have tipped off Veoh to the presence of infringing content on its servers, such as the presence of music videos without any license from a rights holder.
The Court’s Ruling
The Court concluded that to be liable for infringement a service provider must be aware of specific infringing material to have the ability to control that infringing activity.
In finding that Veoh was entitled to the DMCA safe harbor, the Court first found that Veoh’s functions in connection with video uploads by users fell within the safe harbor requirement that the uploaded content on Veoh’s website was “by reason of the storage at the direction of the user.”  The court upheld summary judgment and a Rule 12(b)(6) dismissal in favor of defendants.
The Court reached the same conclusion regarding the safe harbor condition that, “in the absence of [actual] knowledge, [the service provider] is not aware of facts or circumstances from which infringing activity is apparent.”
When statutorily compliant and specific DMCA takedown notices are received, a website operator or service provider that acts expeditiously to remove the specifically identified infringing content will not likely lose the DMCA safe harbor insulating liability for user-generated content.  At least that is the law in the Ninth Circuit and persuasive authority in other circuits until the Second Circuit issues its decision on the same issue in Viacom v. YouTube.

       Paul Van Slyke

Gregory Casamento

Mike Schulman