Viacom vs YouTube Another Round in the Fight

Viacom lives to fight another day against YouTube.   The United States Court of Appeals for the Second Circuit reversed a trial court ruling which summarily dismissed Viacom’s copyright infringement claims against YouTube.

Viacom and the other joint plaintiffs in the action sued YouTube in 2007 for copyright infringement of approximately 75,000 video clips.   After discovery, both sides moved for summary judgment.  The trial court ruled that YouTube was protected from any copyright infringement claims based on the Digital Millennium Copyright Act (“DMCA”) safe harbors.  These safe harbor provisions protect service providers from copyright infringement committed by users.

Affirming the trial court’s opinion in part, the Second Circuit held that “actual knowledge or awareness of facts or circumstances that indicate specific and identifiable instances of infringement will disqualify a service provider from the safe harbor.”  On the question of whether summary judgment was appropriate, however, the Second Circuit reversed holding that summary judgment was premature.

Upon a review of the record, we are persuaded that the plaintiffs may have raised a material issue of fact regarding YouTube’s knowledge or awareness of specific instances of infringement. we hold that the willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA”.

To qualify for any of the DMCA safe harbor provisions, a service provider must implement a repeat infringer policy to terminate user accounts and accommodate standard technical measures used by copyright holders to identify infringing works.
Beyond these threshold requirements, the alleged infringing activity then must fall into one of the statutory safe harbors. The § 512(c) safe harbor at issue in this case only applies if the service provider appoints an agent with the copyright office for service of DMCA complaints and:

(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)(1)(A)–(C). Viacom argued that YouTube did not qualify for the safe harbor as it had actual knowledge of infringing activity or that it was aware of facts or circumstances from which infringing activity was apparent.
Among the evidence that the Second Circuit indicated that a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website included estimates prepared by Credit Suisse:

Credit Suisse, acting as financial advisor to Google, estimated that more than 60% of YouTube’s content was “premium” copyrighted content—and that only 10% of the premium content was authorized.

The Second Circuit also pointed to  reports and emails from YouTube’s founders as possible actual knowledge of infringing activity.

YouTube founder Jawed Karim prepared a report in March 2006 which stated that, “[a]s of today[,] episodes and clips of the following well-known shows can still be found [on YouTube]: Family Guy, South Park, MTV Cribs, Daily Show, Reno 911, [and] Dave Chapelle [sic].” Karim further opined that, “although YouTube is not legally required to monitor content . . . and complies with DMCA takedown requests, we would benefit from preemptively removing content that is blatantly illegal and likely to attract criticism.”
. . .
Furthermore, in a July 4, 2005 e-mail exchange, YouTube founder Chad Hurley sent an e-mail to his co-founders with the subject line “budlight commercials,” and stated, “we need to reject thes too.” Steve Chen responded, “can we please leave these in a bit longer? another week or two can’ hurt.” Karim also replied, indicating that he “added back in all 28 bud videos.” Similarly, in an August 9, 2005 e-mail exchange, Hurley urged his colleagues “to start being diligent about rejecting copyrighted / inappropriate content,” noting that “there is a cnn clip of the shuttle clip on the site today, if the boys from Turner would come to the site, they might be pissed?” Again, Chen resisted: but we should just keep that stuff on the site. i really don’t see what will happen. what? someone from cnn sees it? he happens to be someone with power? He happens to want to take it down right away. he gets in touch with cnn legal. 2 weeks later, we get a cease & desist letter. we take the video down. And again, Karim agreed, indicating that “the CNN space shuttle clip, I like. we can remove it once we’re bigger and better known, but for now that clip is fine.”

The Second Circuit went on to discuss several alternative theories put forth by Viacom including the willful blindness doctrine  in which a person is found to have knowledge of certain facts when the  person “was aware of a high probability of the fact in dispute and consciously avoided confirming that fact.”  The Second circuit held that whether YouTube made a “deliberate effort to avoid guilty knowledge,” remains a fact question for the District Court on remand.

The Second Circuit also remanded to the trial court to determine whether YouTube failed to qualify for the safe harbor provision for allegedly receiving a financial benefit directly attributable to the infringing activity, and the right and ability to control such activity.

In light of our holding that § 512(c)(1)(B) does not include a specific knowledge requirement, we think it prudent to remand to the District Court to consider in the first instance whether the plaintiffs have adduced sufficient evidence to allow a reasonable jury to conclude that YouTube had the right and ability to control the infringing activity and received a financial benefit directly attributable to that activity.

And so the case has been remanded to the district court for further proceedings and fact finding.