The United States Court of Appeals for the Second Circuit today has overturned a previous grant of summary judgment in YouTube's favor,
and revived a billion-dollar lawsuit alleging intentional copyright infringement back during YouTube's early days (the mid-Aughts), which was brought against it by a broad coalition of plaintiffs, including Viacom, Paramount, the Premier League and others. (Seriously, there's a six-page listing of all the lawyers involved.)
The decision is here. Basically, while the Court generally agreed with YouTube about how broad the safe harbor provisions of the DMCA were, it disagreed with YouTube (and the district court below) as to whether YouTube qualified for such protections. The Court ruled that there was sufficient evidence that a reasonable jury could determine that YouTube had actual knowledge or awareness of facts that indicated specific and identifiable instances of infringement and failed to stop it. As such, this case goes back to the trial court to determine what YouTube knew, when it knew it, and when it decided to stop the problem. What kind of evidence? Follow me below the magic gnocchi:
For example, Viacom cites evidence that YouTube employees conducted website surveys and estimated that 75–80% of all YouTube streams contained copyrighted material. The class plaintiffs similarly claim that Credit Suisse, acting as financial advisor to Google, estimated that more than 60% of YouTube’s content was “premium” copyrighted content—and that only 10% of the premium content was authorized. These approximations suggest that the defendants were conscious that significant quantities of material on the YouTube website were infringing.... But such estimates are insufficient, standing alone, to create a triable issue of fact as to whether YouTube actually knew, or was aware of facts or circumstances that would indicate, the existence of particular instances of infringement.
Beyond the survey results, the plaintiffs rely upon internal YouTube communications that do refer to particular clips or groups of clips. The class plaintiffs argue that YouTube was aware of specific infringing material because, inter alia, YouTube attempted to search for specific Premier League videos on the site in order to gauge their “value based on video usage.” In particular, the class plaintiffs cite a February 7, 2007 e-mail from Patrick Walker, director of video partnerships for Google and YouTube, requesting that his colleagues calculate the number of daily searches for the terms “soccer,” “football,” and “Premier League” in preparation for a bid on the global rights to Premier League content. On another occasion, Walker requested that any “clearly infringing, official broadcast footage” from a list of top Premier League clubs—including Liverpool Football Club, Chelsea Football Club, Manchester United Football Club, and Arsenal Football Club—be taken down in advance of a meeting with the heads of “several major sports teams and leagues.” YouTube ultimately decided not to make a bid for the Premier League rights—but the infringing content allegedly remained on the website.
The record in the Viacom action includes additional examples. For instance, YouTube founder Jawed Karim prepared a report in March 2006 which stated that, “[a]s of today[,] episodes and clips of the following well-known shows can still be found [on YouTube]: Family Guy, South Park, MTV Cribs, Daily Show, Reno 911, [and] Dave Chapelle [sic].” Karim further opined that, “although YouTube is not legally required to monitor content . . . and complies with DMCA takedown requests, we would benefit from preemptively removing content that is blatantly illegal and likely to attract criticism.” He also noted that “a more thorough analysis” of the issue would be required. At least some of the TV shows to which Karim referred are owned by Viacom. A reasonable juror could conclude from the March 2006 report that Karim knew of the presence of Viacom-owned material on YouTube, since he presumably located specific clips of the shows in question before he could announce that YouTube hosted the content “[a]s of today.” A reasonable juror could also conclude that Karim believed the clips he located to be infringing (since he refers to them as “blatantly illegal”), and that YouTube did not remove the content from the website until conducting “a more thorough analysis,” thus exposing the company to liability in the interim.
Furthermore, in a July 4, 2005 e-mail exchange, YouTube founder Chad Hurley sent an e-mail to his co-founders with the subject line “budlight commercials,” and stated, “we need to reject these too.” Steve Chen responded, “can we please leave these in a bit longer? another week or two can’t hurt.” Karim also replied, indicating that he “added back in all 28 bud videos.” Similarly, in an August 9, 2005 e-mail exchange, Hurley urged his colleagues “to start being diligent about rejecting copyrighted / inappropriate content,” noting that “there is a cnn clip of the shuttle clip on the site today, if the boys from Turner would come to the site, they might be pissed?” Again, Chen resisted:
but we should just keep that stuff on the site. i really don’t see what will happen. what? someone from cnn sees it? he happens to be someone with power? he happens to want to take it down right away. he gets in touch with cnn legal. 2 weeks later, we get a cease & desist letter. we take the video down.
And again, Karim agreed, indicating that “the CNN space shuttle clip, I like. we can remove it once we’re bigger and better known, but for now that clip is fine.”
The case has been remanded to the trial court for more briefing and fun, including answering the question of whether YouTube had the ability to control the infringing activity and received a financial benefit directly attributable to that activity:
On remand, the District Court shall allow the parties to brief the following issues, with a view to permitting renewed motions for summary judgment as soon as practicable:
(A) Whether, on the current record, YouTube had knowledge or awareness of any specific infringements (including any clips-in-suit not expressly noted in this opinion);
(B) Whether, on the current record, YouTube willfully blinded itself to specific infringements;
(C) Whether YouTube had the “right and ability to control” infringing activity within the meaning of § 512(c)(1)(B); and
(D) Whether any clips-in-suit were syndicated to a third party and, if so, whether such syndication occurred “by reason of the storage at the direction of the user” within the meaning of § 512(c)(1), so that YouTube may claim the protection of the § 512(c) safe harbor.
We leave to the sound discretion of the District Court the question of whether some additional, guided discovery is appropriate in order to resolve “(C)” (“[w]hether YouTube had ‘the right and ability to control’ infringing activity”), and “(D)” (“[w]hether any clips-in-suit were syndicated to a third party”). As noted above, for purposes of this case, the record with respect to “(A)” (“[w]hether . . . YouTube had knowledge or awareness of any specific infringements”) and “(B)” (“[w]hether . . . YouTube willfully blinded itself to specific infringements”) is now complete.
Um, what does it mean? Here's
what TechDirt has to say:
It still leans towards YouTube's position. The key question in the lawsuit revolved around the so-called "red flag" knowledge question -- and whether or not that meant specific knowledge of items that were infringing (as YouTube and the lower court believed) or just general knowledge of infringement on the site (as Viacom argued). Here, the appeals court got it right, saying that specific knowledge is necessary ... but they have to be red flags for infringement of specific items, not knowledge that there is infringement in general. That's a good ruling and it makes sense. Accepting Viacom's interpretation would have effectively killed large parts of the DMCA. YouTube's interpretation (now supported by both the district and the appeals court) keeps the DMCA's safe harbors in existence.
...[T]his is a mostly good ruling. It gets the biggest question of law right, even if it's not sure about YouTube's specific actions. On some of the other points, it's a little fuzzy in its thinking, but this is still mostly a victory for YouTube at this stage (though, who knows how the lower court and a jury will rule on some of the specifics). It could have been a more complete victory, but this is hardly the complete rejection of the district court ruling that some maximalists insisted was going to be delivered.
The Hollywood Reporter:
Make no mistake, this is ultimately a huge legal win for Viacom. The parties already have spent tens of millions of dollars litigating this dispute, and Judge Louis Stanton's decision last year to dismiss the case at the summary stage was a huge slap in the face to Viacom's efforts to punish YouTube for what the media giant believed were blatant efforts to ignore copyright infringement. The case now proceeds, and before any discussion of the precedent set by the 2nd Circuit commences, that reality must be recognized....
[I]n retrospect, had YouTube never made any efforts to do the survey, it might have been in the clear on the "actual knowledge" standard, but because it went through the trouble of checking, the company might have triggered some liability. The same holds true about e-mails by YouTube's various executives about rampant piracy. Had they only shut up …