By Sasha Bau, Esq. and Danielle Comanducci, Esq.
The growing number of internet-based businesses allowing for user initiated content, social networking and interactive online activities necessitates that individuals venturing into such business endeavors be familiar with key provisions of the Digital Millennium Copyright Act (“DMCA”). In recent years, DMCA has taken on an essential role in striking a balance between the rights of owners of copyrighted content in their quest to protect their materials from unauthorized use and the interest of the general public in gaining access to such copyrighted content.
What it the Digital Millennium Copyright Act?Signed into law by President Bill Clinton in 1998, DMCA implements two 1996 World Intellectual Property Organization (WIPO) treaties (the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty). Among its many provisions, DMCA makes circumventing a technological measure that effectively controls access to copyrighted material illegal and imposes higher civil and criminal penalties for online copyright infringement. In addition, in what is the most relevant aspect of DMCA to this article, DMCA limits liability of online service providers (“OSPs”) for copyright infringement by their users, provided such OSPs comply with DMCA’s “safe harbor” provision.

What is the DMCA Safe Harbor?

In cases where an OSP does not have control over whether infringing content is placed on OSP’s servers by third parties, DMCA provides such OSPs with a “safe harbor.” Thus, OSPs that meet the safe harbor criteria have a valid defense from claims of copyright infringement made against such OSPs as a result of third parties’ upload of infringing materials. The intended result is that OPSs’ ensuing liability is greatly reduced. It should be noted that the safe harbor provisions do not eliminate any OSPs’ rights to other relevant defenses that may be relevant, e.g. “fair use.”

OSPs can only benefit from DMCA’s safe harbor protections under a limited set of circumstances. DMCA’s “safe harbor” provision allows OSPs to be shielded from copyright infringement liability for their acts of direct copyright infringement (for example, when a OSP unknowingly makes unauthorized copies of copyrighted material) and also from potential liability for the infringing acts of third parties (for example, when a user unlawfully uploads copyrighted materials to the OSP’s website without OSP’s knowledge). However, such OSPs must first meet the criteria set forth in the statute and follow the proper notice and “take-down” procedures.

The following are the prerequisites that OSP must meet:

  • The OSP must be an entity offering the transmission, routing, or providing of connections for digital online communications;
  • The OSP must not initiate the transmission of the material;
  • The transmission, routing, provision of connections, or storage must be carried out by an automatic technical process;
  • The OSP, must not select the origination and destination points of the communication;
  • The OSP must not modify the communication selected by the Internet user;
  • The communication must be transmitted through the system or network of the service provider;
  • No copy of the communication is maintained on the system or network in a manner ordinarily accessible to anyone other than anticipated recipients; and
  • No copy is maintained on the system or network in a manner ordinarily accessible to anticipated recipients for a longer period than is reasonably necessary for the transmission, routing, and provision of connections.

Important Judicial Interpretations of DMCA Safe Harbor Provisions.

Of the large number of cases interpreting DMCA safe harbor provisions, a few are particularly worth noting in this article.

Viacom International v. YouTube

In an important decision interpreting DMCA safe harbor provisions entitled Viacom International v. YouTube, Inc., the higher federal court (Second Circuit) reversed the lower federal court’s judgment in favor of YouTube defendants. In a billion dollar lawsuit, the media conglomerate Viacom sued YouTube alleging that YouTube infringed on Viacom’s copyrights by knowingly displaying Viacom’s copyrighted materials on the YouTube website. The allegedly infringing materials were posted by YouTube’s users, but not by YouTube.

YouTube asserted a defense based on DMCA safe harbor provisions and the lower court entered a judgment in favor of YouTube finding that YouTube is immune from liability for the copyright infringement of its users. The lower court found that YouTube did not have sufficient notice of the particular identifiable instances of infringement and that, even if YouTube knew generally that the uploading of infringing content by its users was a prevalent occurrence, this was not enough to find YouTube liable, especially since YouTube had complied with DMCA by removing infringing content once it received notice that a particular item was infringing a copyright.

Viacom appealed the lower’s court’s decision. The Second Circuit agreed with the lower court that if an OSP knew or was aware of facts or circumstances that indicated specific and identifiable instances of infringement , then this would disqualify the OSP (in this case YouTube ) from the protections of DMCA safe harbor provisions. However, the Second Circuit reversed the lower court’s judgment in favor of YouTube and remanded the case back to the lower court finding that, based on the facts of the case, a reasonable jury could potentially conclude that YouTube knew or was aware of certain specific instances of infringement. The lower court will now have to determine whether YouTube had knowledge, awareness of, or willfully blinded itself to specific instances of infringement.

The Second Circuit’s decision in the Viacom v. YouTube case can be viewed both as a victory and as a setback for internet-based businesses that allow for user uploaded content. While this decision reverses the lower court’s earlier decision that found YouTube not liable (and thus had set a favorable legal precedent about an OSP’s responsibility for policing websites), the Second Circuit’s decision has significantly limited the recovery that Viacom can obtain from YouTube. Viacom’s original massive attack on YouTube has now been reduced to a dispute over a small percentage of videos and therefore Viacom, if successful, is likely to be able to recover damages for only the specific instances where YouTube is proven to have had knowledge of the infringing content. With that said, the Viacom decision enunciates that the safe harbor provisions of DMCA by no means present clear-cut rules and judicial interpretation of these rules will continue.

While the Viacom v. YouTube case was argued and decided in the Federal Courts, it is also important to note that DMCA has also been examined in state courts.

UMG Recordings v. Escape Media Group

Recently, in a case called UMG Recordings v. Escape Media Group, a New York state court held that DMCA safe harbor provisions would apply to New York state copyright claims based on pre-1972 sound recordings.

In that case, UMG, the owner or licensee of sound recordings of some of the most popular and successful recording artists of the 20th Century alleged that Escape Media Group (the owner of the Grooveshark digital music streaming website) was infringing on its state common law copyrights by using recordings that UMG owned prior to February 15, 1972. UMG sued Escape Media Group in New York state court for, among other things, common-law copyright infringement.

Escape Media Group asserted a defense based on DMCA safe harbor provision.  However, UMG argued that DMCA should not apply in that instance because the term “copyright” in DMCA safe harbor provisions refers only to federal copyright and therefore does not protect Escape Media Group against state law claims based on pre-1972 sound recordings.

The Manhattan Supreme Court was faced with the question of determining whether DMCA, and specifically its safe harbor provisions, can provide a defense to OSPs who are facing New York state copyright infringement claims as opposed to claims under the Copyright Act  which is a Federal law. In its decision, the Manhattan Supreme Court found that DMCA safe harbor provisions did indeed apply to state copyright protections for sound recordings created prior to February 15, 1972.

IO Group, Inc. v. Veoh Networks, Inc.

In a California case entitled IO Group, Inc. v. Veoh Networks, Inc., the adult entertainment producer IO Group, Inc. sued the internet television network Veoh Networks, Inc. in the U.S. District Court in California claiming that Veoh infringed on IO Group’s copyrighted materials by permitting its users to access videos owned by IO Group through Veoh’s online service.

Veoh required its users to register with Veoh before they could upload content. The content could be uploaded in a variety of formats, but in all instances, upon upload, the content would go through an automated process of transcoding. Transcoding in turn, would generate a formatted video (in Flash format) without any original digital metadata.

The crux of one of IO Group’s key arguments was that by providing the conversion software, Veoh did not merely innocently store the infringing content, but actively modified and transmitted such content. Therefore, argued IO Group, the safe harbor provisions of DMCA are inapplicable to Veoh.

The judge stated that “Veoh has simply established a system whereby software automatically processes user-submitted content and recasts it in a format that is readily accessible to its users. Veoh preselects the software parameters for the process from a range of default values set by the third-party software. […] But Veoh does not itself actively participate or supervise the uploading of files. Nor does it preview or select the files before the upload is completed. Instead, video files are uploaded through an automated process which is initiated entirely at the volition of Veoh’s users.” (IO Group, Inc. v. Veoh Networks, Inc., 586 F. Supp. 2d at 1148).

Conclusion

Internet-based businesses have become a driving force of today’s commerce. The innovative ideas that are born as a result of this process are at time difficult to fit into a particular legal framework. Both Federal and State courts are constantly analyzing, interpreting and sometimes expanding the scope and/or requirements of DMCA safe-harbor provisions in an effort to keep up with the development in digital media and internet-based businesses. Accordingly, it is critical for OSPs to be familiar with their rights and potential liabilities when it comes to copyrighted materials. In the process of building a web-based business that allows its users to upload content without immediate control of the OSP, it is critical, in addition to other corporate matters, to set up a foundation that properly deals with intellectual property issues, including DMCA compliance.

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