Media conglomerate Viacom Inc. has recently filed a $1 billion lawsuit against Google Inc. and its Internet video sharing site YouTube, alleging infringement of Viacom’s copyrighted entertainment content.
The lawsuit accuses Google and YouTube of “massive intentional copyright infringement” of Viacom’s entertainment assets and seeks an injunction against further violations. Viacom contends that almost 160,000 unauthorized clips of its programming have been uploaded onto YouTube’s site and viewed more than 1.5 billion times.
Viacom’s claim is dependent on how the court will interpret provisions of the Digital Millennium Copyright Act (“DMCA”), 17 U.S.C. § 512, a law enacted in 1998 that under certain circumstances exempts service providers from liability relating to online infringing material.
The DMCA
According to the DMCA, a service provider shall not be liable for monetary damages 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, if the service provider satisfies three requirements:
(A) The service provider
(i) does not have actual knowledge that the material or an activity using the material on the system or network is infringing,
(ii) 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 infringing material;
(B) The service provider 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, the service provider responds expeditiously to remove, or disable access to, the material that is claimed to be infringing or to be the subject of infringing activity.
Furthermore, the limitation on liability shall apply to a service provider only if the service provider (a) has adopted and reasonably implemented, and informed its subscribers and account holders of, a policy that provides for the termination in appropriate circumstances of subscribers and account holders of the service provider’s system or network who are repeat infringers; and (b) accommodates and does not interfere with standard technical measures that are used by copyright owners to identify or protect copyrighted works.
Case Law
The two key issues for the court to address in the Viacom lawsuit will be (1) whether Google acted expeditiously to remove or disable access to infringing material upon receiving notification; and (b) whether Google received a financial benefit directly attributable to the infringing activity. If Google fails on either of these two points, it may lose its “safe harbor” protection.
Several cases have addressed the direct financial benefit prong of the exemption test. As stated above, according to the DMCA, to satisfy the second prong of the test, a service provider must show that it “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.” 17 U.S.C. § 512(c)(1)(B). Thus, to forfeit the benefit of the safe harbor, a service provider would have to both (a) have the right and ability to control the infringing activity and (b) have received a financial benefit directly attributable to the infringing activity.
The court in Hendrickson v. eBay, Inc., 165 F. Supp. 2d 1082 (C.D. Cal. 2001) dealt with the question of whether eBay had control over the infringing activity at issue in that case. The court stated that “the ‘right and ability to control’ the infringing activity, as the concept is used in the DMCA, cannot simply mean the ability of a service provider to remove or block access to materials posted on its website or stored in its system.” Since “eBay never has possession of, or opportunity to inspect, such [auction] items because such items are only in the possession of the seller,” and since “all arrangements to consummate the transaction are made directly between the buyer and seller,” and “eBay has no involvement in the final exchange,” the Court held “that the record shows that eBay does not have the right and ability to control the infringing activity at issue.”
Assuming that a service provider does have the right and ability to control the infringing activity, then the next questions is whether the service provide has received a financial benefit directly attributable to the infringing activity. In addressing a similar, though not identical, issue, the Ninth Circuit Court of Appeals in A&M Records, Inc. v. Napster, Inc., 239 F.3d 1004, 1023 (9th Cir. 2001) stated: “Financial benefit exits where the availability of infringing material “acts as a ‘draw’ for customers” [citation omitted]. Ample evidence supports the district court’s finding that Napster’s future revenue is directly dependent upon “increases in user-base.” More users register with the Napster system as the “quality and quantity of available music increases.””
Similarly, in a different context, and not interpreting the DCMA, the Supreme Court in MGM Studios Inc. v. Grokster, Ltd. 545 U.S. 913 (2005) noted that “the more the [infringing] software is used, the more ads are sent out and the greater the advertising revenue becomes. Since the extent of the software’s use determines the gain to the distributors, the commercial sense of their enterprise turns on high-volume use, which the record shows is infringing.”
Conclusion
The lesson to be learned is that service providers who host systems or networks over which users may independently upload content must take pre-emptive and prophylactic measures to ensure that they are entitled to benefit from the limitation on liability set forth in the DMCA. Namely, a service provider should do the following:
…..Adopt and implement a policy providing for the termination of infringing users;
…. Promptly remove or disable access to infringing material;
…..File the required notice with the U.S. Copyright Office; and
…..Ensure that no financial benefit may be directly attributable to infringing activity.
By: Steve Kronengold and David C. Zuckerbrot. © March, 2007. All rights reserved
This article is provided for educational, informational and non-commercial purposes only. The content of this article is not intended to provide legal advice on any subject matter and should not be relied on as such.