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Thursday, March 15, 2007

Viacom v. YouTube

On Tuesday Viacom, owners of Paramount Pictures and Comedy Central, sued Google and YouTube for copyright infringement. Commentary has been all over the news, including in yesterday''s New York Times business section. Here is a copy of the complaint.

Some have questioned whether the Viacom suit will be able to overcome the Section 512 safe harbor for ISPs. Indeed, there is speculation that Viacom's suit is little more than a negotiation tactic to force Google and YouTube to come back to the table with more favorable terms. I think that view makes more sense, however, if you assume that Viacom executives are at heart just like the average YouTube user, and attach little intrinsic importance to control over content. Viacom's content, however, is the business's main product, and control over the revenue generated by it is Viacom's bread and butter. I think the lawsuit is serious.

There's hay to be made on the Section 512 and liability issues, but the real heart of the complaint concerns the level of duty ISPs will have to screen their systems for infringing content. Paragraph 7 sets out what are perhaps Viacom's best facts:

7. Moreover, YouTube has deliberately withheld the application of available copyright protection measures in order to coerce rights holders to grant it licenses on favorable terms. YouTube’s chief executive and cofounder Chad Hurley was quoted in the New York Times on February 3, 2007, as saying that YouTube has agreed to use filtering technology “to identify and possibly remove copyrighted material,” but only after YouTube obtains a license from the copyright owner. Geraldine Fabrikant & Saul Hansell, Viacom Tells YouTube: Hands Off, N.Y. Times, Feb. 3, 2007, at C1. Those who refuse to be coerced are subjected to continuing infringement. Id.; see also Saul Hansell, A Bet That Media Companies Will Want to Share Ad Revenue, N.Y. Times, Sept. 30, 2006, at C1.

It was over this alleged demand by YouTube that negotiations with Viacom broke down in February.

Such facts could set up contributory infringement and inducement claims under Grokster, although Justice Souter for the unanimous court was careful to note that failure to take affirmative steps alone is insufficient for inducement liability. They could also establish the basis for an argument that Section 512 does not apply. Section 512(c)(1), the safe harbor most applicable here, immunizes YouTube from most copyright liability if it:

   (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 . . . , responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.

That's an inclusive test, meaning that YouTube has to satisfy all three of (A), (B), and (C). YouTube's failure to implement filtering technology that it is offering others, after receiving a list of infringing works posted on YouTube, could arguably violate (A)(iii), (B), and (C). Such withholding of technology could (if true) constitute a failure to "act[ ] expeditiously to remove, or disable access to, the material," and could also translate into an effective "right and ability to control" the activity from which the ISP receives a direct financial benefit.

Section 512(m) throws a monkey wrench in any such argument, however, by providing, in a subsection entitled "Protection of Privacy," that "Nothing in this section shall be construed to condition the applicability of subsections (a) through (d) on . . . a service provider monitoring its service or affirmatively seeking facts indicating infringing activity . . . ."  The issue is what constitutes "monitoring." The purpose of the subsection was to protect the privacy of users from information-gathering by ISPs. Automatic blocking or removal technologies would do not present that concern. In any event, even if a service provider is under no duty to filter, that may not imply that the ISP is immune from liability if it discriminatorily filters only the content from providers it likes.

Bottom line: this should be an interesting fight, and a lot will depend on the facts.

Posted by Bruce Boyden on March 15, 2007 at 12:59 AM in Intellectual Property | Permalink


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The thought process behind my suggestion that § 512(c) might not apply to the direct infringement claims is that, as you say, the safe harbor "applies to *any* 'monetary relief ... for infringement of copyright 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.'"

That is, the safe harbor applies to any monetary relief sought as a consequence of... What behavior? Well, for infringing behavior. What kind of infringing behavior, particularly? Particularly, it seems to me, the statute limits liability in cases of infringements arising when the "infringement of copyright [is] 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" (emphasis added).

That seems to describe materials that are infringing by virtue of their presence on the system. But Viacom's complaint isn't just that these materials are being stored - they also make direct infringement claims, suggesting that direct infringement of copyright takes place when YouTube publicly performs a video stored in its archive. That's surely an independent action from (a) storing the infringing content ("storage ... of material that resides on a system") and (b) how the infringing material got there in the first place ("storage at the direction of a user"). That the performance and storage infractions are separate seems to be underscored by the fact that Viacom is also suing for indirect infringement as a consequence of the afore-mentioned storage of the material and how it got there.

Has any court held that § 512(c) can apply to a direct infringement claim?

Posted by: Simon | Mar 19, 2007 8:47:19 PM

Simon, I noticed that too. I think the line between direct and secondary liability is a bit blurred in these situations because there's entanglement of the service provider's equipment with the individual user's use. With, say, the Sony Betamax, the Betamax in the home is clearly no longer Sony's property. With the Fonovisa swap meet case, it was not swap meet personnel that were conducting the sales. But with YouTube, it's YouTube servers that store copies of and publicly perform the files. Is that direct infringement or only contributory/vicarious? I think the answer depends on whether YouTube knew about the infringing file -- which is also what its exemption under 512(c) depends on. I don't see 512(c) as limited to secondary liability -- it applies to *any* "monetary relief . . . for infringement of copyright 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." So it should provide an out for a direct infringement claim, but only if YouTube can show it did not know or have reason to know of the infringement. Viacom's response to that defense is essentially an "Oh come on!" argument.

Posted by: Bruce Boyden | Mar 18, 2007 11:15:35 PM

Bruce, I finally got a chance to read the full complaint, and it looks like Viacom's going after YouTube not only for contributory and vicarious infringement, but also direct infringement. If they prevail on those claims, presumably that closes out any OCILLA defense - as I read it, 512(c) provides safe harbor only against indirect infringement: "[a] service provider shall not be liable for monetary[,] ... injunctive 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 or network controlled or operated by or for the service provider."

Do you have any thoughts on this?

Posted by: Simon | Mar 18, 2007 2:59:28 PM

It's true, as the "Revolt of YouTubers" post suggests, that the clear trend is that "they will watch what they want when they want to watch it." The real question is who is going to pay for it, and how. I don't think "no one" is a realistic answer.

One side note, while it's been pretty clear for several years now that the days of one-hour broadcasts tied to a particular location and time are numbered, knowing that doesn't tell you when, or how, the end will come. I've been surprised by how slow DVRs have been to catch on, and while I haven't seen numbers, my impression is that video-on-demand isn't a runaway success either, outside of the occasional boxing match. (Movie theaters may be on the decline, too, as today's New York Times suggests, but they still offer advantages hard to duplicate in the home.) Plus there's a whole legacy television broadcast system in place, premised on local semi-independent network affiliates, that it's unclear what's going to happen to. I suspect the resolution, one way or the other, will depend on more average broadband capacity than we currently have.

Posted by: Bruce Boyden | Mar 15, 2007 3:42:35 PM

[W]hat level of generality applies to the requirement that the defendant 'not have actual knowledge that the material or an activity using the material on the system or network is infringing'? More bluntly - what does 'the' mean?

That's a good question. The issue is whether "actual knowledge" or "aware[ness] of facts and circumstances" is limited to particular files ("public/music/heyjude.mp3"), classes of files ("all copies of heyjude.mp3"), particular works ("Hey Jude"), or classes of works ("all songs by the Beatles").

The cases so far have focused on prong (C), namely what constitutes proper notice under 512(c)(3). Section 512(c)(3) requires only that

"a notification of claimed infringement . . . include[ ] substantially the following: . . .
(ii) Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site.
(iii) Identification of the material that is claimed to be infringing or to be the subject of infringing activity and that is to be removed or access to which is to be disabled, and information reasonably sufficient to permit the service provider to locate the material."

On THAT question, the Fourth Circuit has held that merely referring an ISP to a couple of Usenet groups where, it is asserted, "virtually all the images at the two sites were [the copyright owner's] copyrighted material," suffices as sufficient notice. ALS Scan, Inc. v. Remarq Communities, Inc., 239 F.3d 619 (4th Cir. 2001). Similarly, two district courts in California have indicated that reference to a work by title is sufficient, if all copies of that work offered on a site are likely to be infringing. Hendrickson v. Amazon.com, Inc., 298 F. Supp. 2d 914 (C.D. Cal. 2003); Hendrickson v. Ebay Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001). Hendrickson was a film-maker who had never authorized recording of his film to DVD, and therefore all DVD copies offered on eBay and Amazon were infringing. However, the Amazon court held that a notice, once given, does not create an obligation to remove such works going forward. No filtering technology was at issue, however; removing items going forward would have required Amazon to continually search its listings other than in the ordinary course of business. ("There is no evidence to suggest that Amazon had the ability to know that an infringing sale by a third party seller would occur.")

However, there's nothing in the statute saying that ISPs cannot come by "actual knowledge," "awareness of facts and circumstances" or "right and ability to control such activity" by means other than the 512(c)(3) notice. If they do, then the safe harbor isn't available.

Posted by: Bruce Boyden | Mar 15, 2007 3:14:38 PM

Revolt of YouTubers Not Surprising

Posted by: Dave | Mar 15, 2007 12:01:22 PM

I think withholding the screening unless content owners sign a deal is going to hurt them, in the end. That is clearly coercion.

Personally, I'm happy to this sort of mass infringement tested in the courts. I think the presence of massive piracy on the web is holding back legitimate services. If YouTube got shut down, I wouldn't miss its massive selection of terrible videos.

It's good to see Viacom putting it's foot down. They are getting smarter about the web -- as their new web strategy for MTV shows -- and this is good for the state of digital media.

- Kimberly

Posted by: Kimberly | Mar 15, 2007 11:32:57 AM

I have some initial thoughts on this here, reviewing the relationship of contributory infringement, online services and OCILLA. My immediate question, however, is this: in order to claim 512(c) protections, what level of generality applies to the requirement that the defendant "not have actual knowledge that the material or an activity using the material on the system or network is infringing"? More bluntly - what does "the" mean? To keep YouTube from mooring, does Viacom have to prove that YouTube was aware of specific infringing materials resident in its archive (e.g. "YouTube was aware that our property 'The Daily Show' from 3/14/07 was available in their archive") or need it prove only that there are infringing materials generally (e.g. "YouTube was aware that snippets of our property 'The Daily Show' from various broadcast dates were available in their archive," or even "YouTube was aware that infringing materials existed in their archive")? When I've looked at OCILLA before, it's been from the viewpoint of an ISP, which focuses on the § 512(a) harbor. I don't think the Supreme Court's addressed this - what have various circuits said?

Posted by: Simon | Mar 15, 2007 10:31:16 AM

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