Breaking: Appeals Court Sends Viacom-YouTube Case Back To District Court, Future Of Safe Harbors Still Uncertain

Legal Issues

from the some-good,-some-bad dept

The original ruling in the Viacom vs. YouTube case was a complete and total victory for YouTube. The court effectively dumped the case at the summary judgment stage, correctly recognizing that YouTube qualified for the DMCA’s safe harbors, and that Viacom was trying to change the clear definitions in those safe harbor provisions. This upset many copyright maximalists, and we heard stories about how the ruling would never survive the appeal. To some extent that was correct. The ruling in the appeal came out today, and it definitely walks back some of the original ruling, but, on the whole, it still leans towards YouTube’s position.

The key question in the lawsuit revolved around the so-called “red flag” knowledge question — and whether or not that meant specific knowledge of items that were infringing (as YouTube and the lower court believed) or just general knowledge of infringement on the site (as Viacom argued). Here, the appeals court got it right, saying that specific knowledge is necessary.

Although the parties marshal a battery of other arguments on appeal, it is the text of the statute that compels our conclusion. In particular, we are persuaded that the basic operation of § 512(c) requires knowledge or awareness of specific infringing activity. Under § 512(c)(1)(A), knowledge or awareness alone does not disqualify the service provider; rather, the provider that gains knowledge or awareness of infringing activity retains safe-harbor protection if it “acts expeditiously to remove, or disable access to, the material.” 17 U.S.C. § 512(c)(1)(A)(iii). Thus, the nature of the removal obligation itself contemplates knowledge or awareness of specific infringing material, because expeditious removal is possible only if the service provider knows with particularity which items to remove. Indeed, to require expeditious removal in the absence of specific knowledge or awareness would be to mandate an amorphous obligation to “take commercially reasonable steps” in response to a generalized awareness of infringement. Viacom Br. 33. Such a view cannot be reconciled with the language of the statute, which requires “expeditious[ ]” action to remove or disable “the material” at issue. 17 U.S.C. § 512(c)(1)(A)(iii) (emphasis added).

The court rightfully rejects the idea that the “red flag” knowledge part of the DMCA means that just knowing that there’s some infringement — without knowing specifics — means you lose the safe harbors. Since this is the key question in the lawsuit, it’s great that the appeals court got this right. This was also the point that the maximalists insisted that no appeals court would uphold, and, clearly, they were wrong about that.

The court responds to the claim that if red flag knowledge does not apply to “general” knowledge of infringement, then it’s superfluous, by noting that’s not true:

The difference between actual and red flag knowledge is thus not between specific and generalized knowledge, but instead between a subjective and an objective standard. In other words, the actual knowledge provision turns on whether the provider actually or “subjectively” knew of specific infringement, while the red flag provision turns on whether the provider was subjectively aware of facts that would have made the specific infringement “objectively” obvious to a reasonable person. The red flag provision, because it incorporates an objective standard, is not swallowed up by the actual knowledge provision under our construction of the § 512(c) safe harbor. Both provisions do independent work, and both apply only to specific instances of infringement.

In other words, it’s possible to show that there are red flags, but they have to be red flags for infringement of specific items, not knowledge that there is infringement in general. That’s a good ruling and it makes sense. Accepting Viacom’s interpretation would have effectively killed large parts of the DMCA. YouTube’s interpretation (now supported by both the district and the appeals court) keeps the DMCA’s safe harbors in existence.

That said, the court then suggests that the district court may have erred in granting the summary judgment on that point. Here, the court is talking specifically about YouTube’s actions, and saying that Viacom at least raised enough issues that it is possible to argue that YouTube did, in fact, have knowledge of specific infringement. In other words, the court agrees on the big picture interpretation of the law, but disagrees on the specific application by the district court. It doesn’t mean that the court thinks that YouTube violated the DMCA — just that Viacom at least raised enough issues that it should be handled by a jury in a trial, rather than decided at the summary judgment stage. So the case will now go back to the district court to be heard over that issue.

Even here, the judge notes that while Viacom pointed to some email evidence that YouTube execs may have known of some specific instances of infringement which they ignored, it also points out that it’s unclear if those specific instances involve videos that are part of this lawsuit — and that’s necessary if YouTube is to lose its safe harbor provisions.

A second issue involves the question of whether or not YouTube exhibited “willful blindness” to infringement on the site. Here, the ruling is a bit troublesome. It notes that the DMCA does not refer to willful blindness (and that the DMCA does note that there is no duty to monitor). But… it then still suggests that there can be a willful blindness question under the DMCA if there is specific knowledge of infringement. So, again, going back to the main issue in this case, if Viacom can show specific knowledge, it might also be able to get YouTube for being “willfully blind.” But, it’s no sure thing that Viacom can actually show specific knowledge of clips that are a part of this lawsuit.

The third issue is the question of what “the right and ability to control” infringing activity means. Both YouTube and Viacom interpret that phrase differently… and here, the court rejects them both. The district court accepted YouTube’s interpretation, saying (reasonably, in my opinion) that a service provider must know of the particular case before it is required to “control” it. That is, how can the “right and ability to control” apply to a situation where there is no specific issue at hand? What is the service provider expected to control if it doesn’t know what it’s controlling? Viacom, instead, argued that the issue around the “right and ability to control” created a magical “vicarious liability” for service providers if their services were used to infringe. Both courts reject that argument as making little sense and (importantly) going against the Congressional record (which specifically left out vicarious liability, which had been found in an earlier DMCA draft). Here, the appeals court tries to thread the needle with a somewhat confused ruling that doesn’t quite agree with either side. It’s not a vicarious liability standard, but it doesn’t quite require specific knowledge. Instead, the court literally says “something more” is required — and asks the district court to consider what that “something more” might be.

Finally, there’s an issue of what “by reason of” storage means. The DMCA’s safe harbors give protection for infringement that happens “by reason of the storage at the direction of a user of material that resides on a system or network controlled or operated by or for the service provider.” YouTube (and the district court) pointed out that YouTube fits under this definition. Viacom tried to argue that YouTube does not qualify because it does much more than storage — such as converting (transcoding) videos, offering playback of videos and offering “related videos.” Viacom tried (at both levels) to argue that those functions go beyond mere storage, and do not qualify for safe harbor protections. Thankfully, the appeals court here agrees with the lower court and says those are protected. It notes that it’s clear that Congress intended “service provider” to mean much more than just a storage provider. I should note that one of our frequent critics in the comments has been insistent that the DMCA was designed only to apply to pure storage providers — but now we’ve got yet another detailed court ruling pointing out that this is 100% false.

However, the court does send one “feature” back to the lower court for review. It questions whether or not the syndication of videos to third party sites then falls outside the safe harbor provisions concerning “by reason of storage.” The court isn’t sure that this is outside the safe harbors, but at least asks the lower court to explore the issue.

In the end, this is a mostly good ruling. It gets the biggest question of law right, even if it’s not sure about YouTube’s specific actions. On some of the other points, it’s a little fuzzy in its thinking, but this is still mostly a victory for YouTube at this stage (though, who knows how the lower court and a jury will rule on some of the specifics). It could have been a more complete victory, but this is hardly the complete rejection of the district court ruling that some maximalists insisted was going to be delivered.

Filed Under: dmca, liability, red flag knowledge, safe harbors
Companies: viacom, youtube