After five years in the courts, the Viacom International, Inc., v. YouTube, Inc. The court has finally produced an appellate opinion. The result is a loss for Google/YouTube and user generated content (UGC) in general. While the court largely agreed with many of YouTube’s arguments (and the ruling of the lower court), it nevertheless revived the case, ensuring that Google will spend millions of dollars more in the coming months and years.
Furthermore, the plan identifies at least four “holes” in the 512(c) area that future plaintiffs will certainly try to exploit: e-mails inside the smoking-gun, the blind spot, the right and the ability to control, and content enhancement. This ensures that other UGC websites will spend a lot of money up front to try to close those holes and spend even more money in court to prove that they avoided those holes. So, on balance, I am characterizing this plan as a loss for the UGC community because this ruling increases the company’s costs even if the important aspects of 512 are not changed.
Given that the Second Circuit clearly disagreed with the Ninth Circuit’s UMG v. Shelter Capital judging the right and ability to control the case, I hope that future 512 cases will be brought in the Second Circuit, not the Ninth Circuit. I’m not sure if this conflict is strong enough to get the case to the Supreme Court if Google chooses to try.
More importantly, this plan exposes the structural deficiency of 512(c) safe harbors. The law is too long and detailed. If the defendant fails to satisfy each and every item, the safe harbor is completely lost. This is reminiscent of military strategy and information security: the defense has to work equally well across its entire border, while the enemy can concentrate its attack and has to succeed only in one attack point to win. The same is true with 512(c) protection.
Therefore, it is not important that YouTube wins most of the points of contention. If any aspect of the argument fails, YouTube’s 512(c) defense fails. As I have already emphasized, this provides a good lesson for the developers of safe harbors and vaccines. To work effectively, safe harbors/immunities must be pithy and categorical, or else they create too many potential points of failure.
The whole case was a colossal waste for all concerned, and the fact that the parties could not resolve this case after five years of costly trench warfare continues to baffle me.
Even though Viacom won this ruling, I still don’t understand how Viacom is making progress towards any goal it matters to. Viacom had a long history of not objecting to YouTube’s actions after 2008 (after it got into content ID). Actually, Viacom got angry with YouTube when it removed Viacom posts made for marketing purposes. And only Viacom has expanded its licensing systems including YouTube. At this point, Viacom is clear that it does not want YouTube gone, nor does it want any structural changes to YouTube’s current practices.
So what the hell is this fight about? Viacom may still be looking at this lawsuit for its financial value, but it’s hard to sympathize with that or see that as a grand strategy. Viacom may not be looking at this case to establish an attractive strategy, but it took a well-funded fund and the defendant decided to make the point. The Second Circuit’s ruling—although opening the door for copyright plaintiffs seeking to abandon 512(c) protections—doesn’t have a big announcement that would be a regulatory victory for Viacom. The whole case was a colossal waste for all concerned, and the fact that the parties could not resolve this case after five years of costly trench warfare continues to baffle me.
Analysis of the snake’s discussion
512(c)’s Notice to Direct and Follow-up
One of the court’s most important rulings is in a hand-me-down note with little citation support on page 33: “The District Court decided in fact that the presence of female genitalia necessarily protected the defendant from all claims for financial relief.” This is one of the most important questions in 512(c) jurisprudence: does 512(c) cover only direct violations, or both direct and secondary violations? Most courts have assumed the latter without saying so, but here the court (paraphrasing, but curiously not citing, the Shelter Capital case) clearly says 512(c) applies to all flavors of crime. This allows safe harbor to be released to the case—if YouTube agrees, Viacom loses any right to monetary damages and, at best, can only get a meaningless injunction.
Knowledge of the work done
The proposal describes three types of service provider knowledge of violations that may subject the service provider to 512(c):
1) Actual knowledge of the specific acts of the crime: The Court calls this the self-awareness standard.
2) “Red flags” knowledge of the specific acts of the crime: The court called this the standard of knowledge of reason. I have argued for a long time that the “red flags” are removed in practice because, in fact, it is impossible for anyone other than the content owner to look at a specific piece of content and determine whether it has been posted legitimately or not. . In fact, even content owners can’t figure this out for themselves. Viacom itself periodically identifies which items of its own content are properly posted or uploaded to YouTube. If the content owner can’t make that decision, I’d argue that hopefully no one else can either.
3) Blindness to specific acts of infringement: Due to this type of blindness, by definition it occurs in situations where the service provider otherwise has no knowledge or objective knowledge of the infringing activity. Unfortunately, the court did not say what actions of a service provider would constitute blindness, and many of us are left wondering how blindness can occur when the service provider has no actual knowledge or red flags. Combined with the Tiffany v. eBay Contributing trademark judgment, it shows that the Second Circuit is obsessed with blindness (although it doesn’t explain blindness there either — Gee, thanks). The Ninth Circuit had a brief and oblique reference to willful blindness in the Shelter Capital opinion, but my guess is that the jury will like the Second Circuit’s prompt discussion of willful blindness even better than they like the Ninth Circuit’s casual reference.
The court identified three evidences that YouTube may have had knowledge of negligence. First were emails from Patrick Walker asking the club to find and remove the Football League clips. The second is an email from Jawed Karim indicating that the Viacom clips are on a site that may be “illegal.” Finally, there is evidence of an email exchange between Chad Hurley and Steve Chen debating whether to remove the clips now or later.
The court clearly stated that this evidence may not be sufficient for Viacom to show negligent knowledge (see FN9), but it is sufficient to reach a jury.
In general, these emails remind us that YouTube was an unintelligent startup in its early days. They have no legal advice reviewing these emails or answering your questions about removing the clip. Most UGC startups know that these conversations shouldn’t take place over email. There should be a strict email retention policy, and active legal advice is essential from day one. But today’s process also means that launching new secure UGC launches is more expensive.
This is especially true for UGC startups trying to avoid blind learning. I criticized the Tiffany v. eBay plan to support eBay’s very expensive anti-fraud infrastructure and illegally require startups to maintain the same expensive infrastructure. This idea could have the same bad economic consequences for other UGC startups trying to reduce accusations of blindness in the copyright area.
Because the ruling creates more ways for plaintiffs to go to trial in 512 lawsuits, this ruling also means a 512 lawsuit—even if the defendant is successful—will be more expensive. A needle-in-haystack hunt for e-mails smoking gun means both parties will spend a lot on Awari (a point I complain about in Koseemani Capital is big, too). Furthermore, with respect to willful blindness, unless the courts overrule police allegations, it appears that plaintiffs can use willful blindness allegations to defeat 12(b)(6) prosecutions. If they can find any color evidence, plaintiffs can use that to defeat summary judgment and force jury trials in many future 512(c) cases.
The right and ability to control
The court is casting its own spell on what constitutes a negligent “right and power to control” a service provider’s infringing activity. It disagreed with YouTube and both the lower court and the Ninth Circuit Court of Appeals. All these occur that the service provider’s right and power to control is only used when the service provider has specific knowledge of the infringing activity. But the Second Circuit also disagreed with Viacom’s proposition that “right and power to control” imports its meaning from the common law tort test. The court recognized the fact that it would make the law internally contradictory.
The court agreed with someone. Given that it rejects other public interpretations, it can be expected that the court will carefully interpret what it thinks the sentence means. Sadness, never. The opinion does not provide a clear definition of what qualifies as “the right and ability to control,” instead sending that issue back to the district court to evaluate both the standard and whether YouTube meets it. The most common suggestion that the court provides about the standard is that “it applies to the service provider(s) exerting a significant influence on the activities of the users, without necessarily—or even always—taking knowledge of the specific infringing activity .” I have no idea what that means, other than opening time for the plaintiff’s fiestas.
@SherwinPK: I don’t think “has a significant impact on the activities of users” is “open time.” A slight difference, yes, but limited
@ericgoldman Well, what do you think “having a significant impact on users’ activities” means? That’s the goal of every UGC site!
@SherwinPK Not at all. Cybernet, for example, has OSP literally giving pointers on layout and content. That’s a big influence.
@SherwinPK Youtube doesn’t use editor function wrt to user videos. That’s why there is so much dreck.
My private response: “That’s not how the accusers will put it! They’ll argue the top X lists and incentives to post are “high impact”
Saved to a user directory
The court rejected several of Viacom’s arguments that YouTube’s automatic management of user-supplied videos was not reserved for user guidance, including YouTube’s transcoding and playback functions such as displaying thumbnails in the “related videos” module. However, the court left open the possibility that YouTube’s “endorsement” of user videos does not qualify for 512(c). Specifically, YouTube licenses 2,000 user videos to Verizon Wireless. It’s unclear if any Viacom videos are included. That factual question goes to trial. If no Viacom videos are available, Viacom will not receive any benefit from this offer. However, the ruling leaves open future battles over what constitutes “unification” as a means beyond 512(c). More plaintiff fiestas.
Eric Goldman is a professor of Law at Santa Clara University School of Law and directs that school’s Advanced Law School. You can read more of his work your websitewith yours Technology and Marketing Law Blog.
Image listing by Image by Rego Cross