Willfully Blind Acts Establish Copyright Infringement Piercing DMCA Immunity for Website Host Provider

The Second Circuit Court of Appeals in New York has ruled that Internet service providers cannot turn a blind eye (be willfully blind) to users who post copyrighted content on the provider’s website. This appellate court decision diminishes the service provider’s immunity under the DMCA, the Digital Millennium Copyright Act, 17 U.S.C. § 512. Viacom Int’l, Inc. V. YouTube, Inc., Case no. 10-3270 (2nd Cir. Apr. 5, 2012)(available here). If the web hosting service provider is found to engage in “conscious avoidance” amounting to knowledge that the provider “was aware of a high probability of the fact in dispute and consciously avoided confirming that fact,” the provider’s immunity from liability under the DMCA safe harbor provisions may be compromised. The “fact” being an unauthorized reproduction and display of copyrighted material owned by someone other than the user posting material on the provider’s website.

The DMCA limits the liability of online service providers (like YouTube) for copyright infringement that occurs “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.” 17 U.S.C. § 512(c). The Second Circuit reversed and remanded the lower court’s summary judgment applying DMCA immunity to YouTube’s actions. The lower court had found that YouTube was not liable for direct and secondary copyright infringement because YouTube was immunized by the safe harbor protection provisions of the DMCA § 512. Per the Second Circuit, “we vacate the [district court] order granting summary judgment because a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website.” Viacom slip opn. p. 2.

The DMCA creates a series of four “safeharbors” that allow qualifying service providers to limit their liability for claims of copyright infringement based on (a) “transitory digital network communications,” (b) “system caching,” (c) “information residing on systems or networks at [the] direction of users,” and (d) “information location tools.” 17 U.S.C. §§ 512(a)–(d). To qualify for protection under any of the safe harbors, a party must meet a set of threshold criteria. First, the party must in fact be a “service provider,” defined, in pertinent part, as “a provider of online services or network access, or the operator of facilities therefor.” 17 U.S.C. §512(k)(1)(B). A party that qualifies as a service provider must also satisfy certain “conditions of eligibility,” including the adoption and reasonable implementation of a “repeat infringer” policy that “provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network.” Id. § 512(i)(1)(A). In addition, a qualifying service provider must accommodate “standard technical measures” that are “used by copyright owners to identify or protect copyrighted works.” §§ 512(i)(1)(B), (i)(2). See Viacom, p. 10.

In addition, the safe harbor applies only if the service provider:

“(A) (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.” DMCA §§ 512(c)(1)(A)–(C).

The service provider must have a notification scheme with a designated agent to receive notices of claimed infringement. Customarily, these notices are called DMCA takedown notices and the website service provider must, in its Terms of Service (TOS) or Terms of Use (TOU), identify an agent and a clear communications channel and path to the agent for dealing with DMCA takedown notices.

Viacom sued YouTube for direct and secondary copyright infringement “based on the public performance, display, and reproduction of approximately 79,000 audiovisual “clips” that appeared on the YouTube website between 2005 and 2008.” p. 8. YouTube permits users to upload and view video clips free of charge. Only registered users can upload material. The Terms of Use (sometimes called Terms of Service or “TOS”) prohibited users from violating the Copyright Act. YouTube, upon notification of a specific violation, did take down offending video clips. The District Court had earlier held that YouTube could only be liable if it had “knowledge of specific and identifiable infringements” or “item-specific knowledge.” The Court of Appeals held that liability may be based upon knowledge other than item-specific knowledge.

The Court reasoned that since the DMCA refers to “facts or circumstances,” the DMCA was not limited to “actual knowledge” (YouTube’s position) but included both actual knowledge and “red flag knowledge.” P. 17. “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.” p. 17. See also, Capitol Records, Inc. v. MP3tunes, LLC, __ F. Supp. 2d __, 2011 WL 5104616, at *14 (S.D.N.Y. Oct. 25, 2011) (“Undoubtedly, MP3tunes is aware that some level of infringement occurs. But, there is no genuine dispute that MP3tunes did not have specific ‘red flag’ knowledge with respect to any particular link . . . .”); UMG Recordings, Inc. v. Veoh Networks, Inc., 665 F. Supp. 2d 1099, 1108 (C.D. Cal. 2009) (“UMG II”) (“[I]f investigation of ‘facts and circumstances’ is required to identify material as infringing, then those facts and circumstances are not ‘red flags.’”).

To show a red flag or facts that would have made the specific infringement objectively obvious to a reasonable person, Viacom pointed to a Credit Suisse valuation report that indicated that more than 60% of YouTube’s content was premium copyrighted content owned by others but only 10% of that content was authorized. The Court held that the Credit Suisse survey was not enough for a triable fact on the issue of willful blindness. However, YouTube personnel targeted and sought out football (soccer) video footage for “valuing” usage for an acquisition but then continued to show the football footage after it abandoned the acquisition. Also, internal memos by YouTube’s founder identified unauthorized content and noted its benefit to the company, as well as preemptive steps that could be taken to remove such content. The Court said this was enough to present the willful blindness theory for secondary liability to the jury. P. 21.

“‘The principle that willful blindness is tantamount to knowledge is hardly novel.’ Tiffany (NJ) Inc. v eBay, Inc., 600 F.3d 93, 110 n.16 (2d Cir. 2010) (collecting cases); see In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003) (‘Willful blindness is knowledge, in copyright law . . . as it is in the law generally.’). A person is ‘willfully blind’ or engages in ‘conscious avoidance’ amounting to knowledge where the person ‘was aware of a high probability of the fact in dispute and consciously avoided confirming that fact.’ United States v. Aina-Marshall, 336 F.3d 167, 170 (2d Cir. 2003) (quoting United States v. Rodriguez, 983 F.2d 455, 458 (2d Cir. 1993)); cf. Global-Tech Appliances, Inc. v. SEB S.A., __ U.S. __, 131 S. Ct. 2060, 2070–71 (2011) (applying the willful blindness doctrine in a patent infringement case). Writing in the trademark infringement context, we have held that ‘[a] service provider is not . . . permitted willful blindness. When it has reason to suspect that users of its service are infringing a protected mark, it may not shield itself from learning of the particular infringing transactions by looking the other way.’ Tiffany, 600 F.3d at 109.” p. 23.

Although willful blindness can be applied to the DMCA safe harbor “facts or circumstances,” the DMCA explicitly does not require affirmative monitoring of content provided by others. DMCA sec. 512(m).

The Court also discussed control and benefit under DMCA sec. 512(c). The Court rejected theories of vicarious liability given the explicit provisions of the DMCA. The Court said the service provider must engage in “something more” to be liable. The Court also addressed several software functions relative to controlling content uploads.

In conclusion, the safe harbor immunity provision of the DMCA has been tempered by the theory of willful blindness. Website service providers cannot be willfully blind to copyright infringement. However, the blindness may be limited to item-specific content which the service provider has otherwise identified on its site. The Court’s finding that “a reasonable jury could find that YouTube had actual knowledge or awareness of specific infringing activity on its website” should be heeded by all service providers.

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