The recent decision in Viacom International, Inc. v. Youtube, Inc., 676 F.3d 19 (2d Cir. 2012), is likely to have significant and far-reaching implications for website operators and other online service providers, especially those allowing users to post or upload content to their sites. Viacom and other similarly situated copyright holders sued Youtube for infringement based on thousands of Youtube videos that contain unauthorized reproductions of copyrighted works. The Digital Millennium Copyright Act (“DMCA”) provides online service providers with broad protection against such claims, and the Viacom decision concerns efforts to bypass those protections in order to hold service providers liable for infringing content posted by third-party users.
The DMCA was enacted in 1998 to update copyright law for the digital age. Rather than engaging in a wholesale clarification of existing copyright law, the DMCA instead created safe harbor provisions to protect service providers from copyright infringement liability based on certain common industry practices. In order to qualify for protection under any of the DMCA’s safe harbor provisions, a service provider must satisfy certain 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.” Id. § 512(i)(1)(B), (i) (2).
Of particular issue in the Viacom case was the DMCA safe harbor provision that limits the liability of a service provider 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). Beyond the threshold criteria, the § 512(c) safe harbor for user-uploaded content will only apply 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.
17 U.S.C. § 512(c)(1).
Section 512(c) also sets forth a detailed notification scheme that requires service providers to “designate[ ] an agent to receive notifications of claimed infringement,” id. § 512(c)(2), and specifies the components of a proper notification, commonly known as a “takedown notice,” to that agent, see id. § 512(c)(3). Thus, actual knowledge of infringing material, awareness of facts or circumstances that make infringing activity apparent, or receipt of a takedown notice will each trigger an obligation expeditiously to remove the infringing material.
One of the most significant aspects of the decision in Viacom concerns the interpretation of the requirements in § 512(c)(1)(A)(i) and (ii) for bypassing the safe harbor and imposing liability on the service provider when it has either “actual knowledge” of infringing material or, in the absence of actual knowledge, knowledge of “facts and circumstances” from which infringing material or activity is apparent, often referred to as “red flag” knowledge. Viacom argued that red flag knowledge did not have to be knowledge of specific instances of infringement, but it argued instead that this provision could be satisfied from non-specific information about infringement on the site generally, such as surveys conducted by Youtube itself, which indicated that as much as 75-80% of all Youtube streams contained copyrighted material. As a matter of statutory interpretation, Viacom sought to bolster this interpretation of red flag knowledge by arguing that if the red flag provision was interpreted to require specific, particularized knowledge of infringing material, then it would be rendered superfluous because that is what the preceding actual knowledge provision already requires. Viacom relied on the oft-cited canon of statutory construction that interpretations rendering a provision superfluous are disfavored. Ultimately, the court rejected Viacom’s argument, holding that both the actual knowledge and red flag provisions require the service provider to have knowledge of specific, particularized instances of infringing material. The court relied principally on the common sense rationale that such specificity was required because the duty imposed on the service provider who has either actual or red flag knowledge is the same – i.e., the service provider must act expeditiously to remove the infringing content. The court reasoned that the service provider could only fulfill this requirement when it knows about specific instances of infringing material. Dismissing the concern over an interpretation that rendered the red flag provision superfluous, the court held that the difference between the actual knowledge and red flag provisions was the difference between subjective belief and objective knowledge. That is, the court held that the actual knowledge provision applies when a service provider is subjectively aware of infringing material or activities, and the red flag provision applies when the service provider is aware of facts and circumstances from which it objectively should know about infringing material or activities.
Although this interpretation seemed to favor Youtube, the Second Circuit nevertheless overturned the district court’s grant of summary judgment in its favor on this point and remanded the case for further factfinding by the district court to determine whether the either knowledge requirement was satisfied by the survey evidence and evidence of emails exchanged between Youtube’s founders in which they discussed specific infringing content (e.g., clips from TV shows like The Daily Show and South Park, footage belonging to CNN, BudLight commercials, etc.), referred to such content as “blatantly infringing,” but nonetheless decided to leave it on the site unless and until they received DMCA takedown notices from the affected copyright owners.
Of equal or greater importance, in a matter of first impression, the court examined whether the doctrine of willful blindness could be used to satisfy the actual knowledge or red flag provisions and abrogate a service provider’s protection under the DMCA’s safe harbor provision. The court acknowledged the longstanding application in copyright, trademark, and patent infringement cases of the common law principle that willful blindness is tantamount to actual knowledge. 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. The DMCA, of course, does not mention willful blindness. Youtube argued that the willful blindness doctrine should not be applied to the DMCA because of § 512(m), which provides that safe harbor protection shall not be conditioned on “a service provider monitoring its service or affirmatively seeking facts indicating infringing activity, except to the extent consistent with a standard technical measure complying with the provisions of subsection (i).” For that reason, Youtube argued that the DMCA is utterly incompatible with a broad common law duty to monitor or seek out infringing activity based on a general awareness that such activity likely is occurring. Nevertheless, the Second Circuit held that while § 512(m) would limit the circumstances in which willful blindness could be applied, it did not entirely prevent the doctrine from being used to establish knowledge or awareness of instances of infringement under the DMCA. The court held that whether Youtube made a “deliberate effort to avoid guilty knowledge,” was a fact question to be determined on remand to the district court.
Website operators and their legal counsel should take note of the Viacom decision as it will likely be used by copyright owner plaintiffs seeking to avoid the application of the DMCA safe harbor provisions and impose liability on website owners for the infringing activities of their users. The decision will likely make it more difficult for websites to obtain quick, early dismissals as courts will now conduct searching, fact-intensive inquiries into issues such as whether a website engaged in willful blindness. All of this has the potential to magnify the legal costs of such disputes in an industry that is naturally cost-averse. The issues in Viacom are also likely to be re-litigated for some time to come as the tension between copyright owners and online service providers continues to be fodder for court cases and as copyright owners seek to shift some or all of the burden of policing copyrights onto website operators and other online service providers, who have traditionally relied on the DMCA safe harbor provisions to avoid any responsibility for the rampant infringement of copyrights throughout much of the Internet.