Category Archives: DMCA

CRO Smack Down: 2nd Cir. Holds 512 covers Pre-72

The Second Circuit delivered its highly anticipated decision in the Capitol Records v. Vimeo case. Various record labels sued UGC site Vimeo for copyright infringement of sound recording fixed prior to February 14, 1972, so-called Pre-72 recordings. The labels argued that the safe harbor provisions of Sec. 512 of the Copyright Act, which provides immunity to copyright infringement liability to UGC host sites subject to certain conditions, do not apply to Pre 72 recordings, which are not covered by the Copyright Act but rather are the subject to various state statutory and common law protections. Relying heavily on a 2011 report concerning the legal state of Pre 72 recordings from the Copyright Office, the federal district court for the Souther District of New York granted the labels’ motion for summary judgment.1  Vimeo appealed.

In discussing the origins of Sec. 512, the Second Circuit describes the “compromise” that Congress sought to establish between content creators and content users. That compromise provided creators with a ‘notice and takedown’ provision, which allowed creators to avoid filing individual copyright infringement actions against each and every unauthorized use online. That compromise provided users immunity from infringement claims and monitoring responsibilities, provided the user expeditiously remove content in response to a takedown request. This compromise, the Second Circuit concludes, would be illusory if Pre 72 recordings weren’t subject to the 512 safe harbor.

The Second Circuit begins by noting that  “the district court accepted without discussion the position taken by the United States Copyright Office in a report prepared in 2011 that the safe harbor does not protect against liability for infringement of pre-1972 sound recordings.” The Second Circuit then dissects the report and its shortcomings.

The Second Circuit points out that

The Report begins its analysis by asserting that § 512(c)’s term “infringement of copyright” is defined in § 501(a) as the violation of “any of the exclusive rights of the copyright owner as provided by sections 106 through 122.” Section 501(a), however, does not contain such a definition. The Copyright Act’s definitions are set forth in § 101, and do not include a definition for “infringement of copyright.

The Second Circuit rejects the Office’s conclusion, reasoning

The statement that one who violates rights identified in specified sections is an “infringer of copyright” does not purport to set forth an exclusive definition of “infringer of copyright.” … To state that conduct x violates a law is not the same thing as saying that conduct x is the only conduct that violates the law. (emphasis in original)

The Second Circuit concludes, therefore, that the safe harbor must include Pre 72 recordings or the entire “compromise” envisaged by Congress would be illusory.

what Congress intended in passing § 512(c) was to strike a compromise under which, in return for the obligation to take down infringing works promptly on receipt of notice of infringement from the owner, Internet service providers would be relieved of liability for user-posted infringements of which they were unaware, as well as of the obligation to scour matter posted on their services to ensure against copyright infringement. The purpose of the compromise was to make economically feasible the provision of valuable Internet services while expanding protections of the interests of copyright owners through the new notice-and-takedown provision. To construe § 512(c) as leaving service providers subject to liability under state copyright laws for postings by users of infringements of which the service providers were unaware would defeat the very purpose Congress sought to achieve in passing the statute.

 

 

Second Circuit Decision

Capitol Records v Vimeo (2nd Cir. Op)

Copyright Office Pre-72 Report

Copyright Office Pre 72 Report

  1. There were also questions of red flag knowledge that were decided under the Second Circuit’s prior YouTube decision, but I don’t find those particularly interesting or newsworthy.

Shiver me timbers! Cox Has No Safe Harbor by Failing to Terminate Pirates

Judge Liam O’Grady of the Eastern District of Virginia has issued his full opinion and order granting partial summary judgment to plaintiff music publisher BMG against cable / ISP-provider Cox Communications. Judge O’Grady found that Cox’s “repeat offender” policy against customers accused of committing copyright infringement by downloading content without authorization using Cox network was insufficient as a matter of law. Cox could not, therefore, take advantage of the “safe harbor” provisions of Sec. 512 to escape secondary liability to BMG.

When Congress passed the Digital Millennium Copyright Act in 1998, it created four safe harbors that protect ISPs such as Cox from direct and indirect liability for copyright infringement when their involvement is limited to certain activities—transitory digital networking communications, system caching, information residing on systems or networks at the direction of users, and information location tools. See 17 U.S.C. §§ 512(a)–(d). As an Internet Service Provider, Cox sought protection as a “mere conduit for transmission” to protect against claims of secondary copyright infringement liability for the unauthorized exploitation of BMG’s copyrights by Cox’ subscribers.

In order for Cox to qualify for this “safe harbor,” however, it must demonstrate that it has “adopted and reasonably implemented, and informed subscribers and account holders of the service provider’s system or network 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.” 17 U.S.C. § 512(i)(1)(A). Court’s have interpreted this requirement to obligate an ISP such as Cox has to “adopt” a policy that is “reasonable.” As the Copyright Act makes clear, for a policy to be “reasonable,” it must provide “for the termination in appropriate circumstances of subscribers … who are repeat infringers.” See Capital Records, LLC v. Escape Media Grp., Inc., No. 12-cv-6646, 2015 WL 1402049, at *9 (S.D.N.Y. March 25, 2015).

Although Cox sought the Court to find that an “infringer” could only be someone adjudicated as such by a court of competent jurisdiction, Judge O’Grady held that an ISP only requires “knowledge” of infringement by a particular user. While this might seem problematic–since the ISP only gains “knowledge” by receiving take-down notices from copyright owners and, as demonstrated by the “Dancing Baby” case (Lenz v. UMG), the copyright owner might be wrong–in practice, as described below, an ISP only takes actions against a subscriber after receiving multiple take-down notices over short periods of time.

Judge O’Grady details Cox’ Abuse Tracking System (“CATS”), which includes graduated responses to complaints about its customers unauthorized access to copyrighted content. In summary, here is CATS

1st Complaint – Cox does nothing
2nd Complaint – Cox sends an email to the customer
3rd Complaint – Cox sends the same email again
4th Complaint – Cox sends the same email again
5th Complaint – Cox sends the same email again
6th Complaint – Cox sends the same email again
7th Complaint – Cox sends the same email again
8th Complaint – Cox suspends the customers account, placing the customer in a “soft-walled garden,” which means the customer’s landing page is a warning message and link to reactive the account
9th Complaint – Cox sends customer back into “soft-walled garden”
10th Complaint – Cox sends customer to a “hard-walled garden,” a landing page that directs the customer to call Cox, during which call the customer can request reactivation
11th Complaint – Cox sends customer back to “hard-walled garden”
12th Complaint – Cox sends customer back to “hard-walled garden,” but now a higher-level Cox customer service rep must be involved for reactivation
13th Complaint – same as #12
14th Complaint – the customer’s account is considered for termination

Mind you, these 14 complaints against a single account-holder had to occur with a 6 month time period! That’s more than one complaint against a single account-holder every 2 weeks!! But it was not the volume of complaints that Cox had to receive before considering termination that caused it to lose the Sec. 512(a) safe harbor. It was the fact even after receiving 14 complaints, Cox never actually ever terminated anyone.

Initially, Cox “pretended” to terminate subscribers, only to reactive them immediately. As described in an email from Cox’ Manager of Customer Abuse Operations,

if a customer is terminated for DMCA, you are able to reactivate them after you give them a stern warning about violating our AUP and the DMCA. We must still terminate in order for us to be in compliance  with safe harbor but once termination is complete, we have fulfilled our obligation. After you reactivate them the DMCA ‘counter’ restarts; The procedure restarts with the sending of warning letters, just like a first offense. This is to be an unwritten semi-policy..

There were numerous other emails imparting similar instructions.

Cox was more lenient with subscribers illegally downloading copyrighted material because it had little impact on the network; “It does not cause a big problem on the network. Not like spam, Dos attacks, hacking, etc. do.”

In late 2012, Cox abandoned even this illusory termination and simply stopped terminating anyone. BMG introduced evidence that from January 2010 until August 2012, Cox terminated an average of 15.5 account holders a month. Between September 2012 and November 2014, Cox terminated an average of 0.8 accounts per month, notwithstanding the fact that Cox issued 711,000 email warnings and suspensions in response to alleged infringements during this same period. “Cox also admits that of the 22 terminated accounts, 17 of those had also either failed to pay their bills on time or were excessive bandwidth users.”

Again, Judge O’Grady cites to numerous emails in which Cox’ customer service team dismiss knowledge that a subscriber is using the network to access copyrighted content, often because the subscriber is paying Cox a lot of money: “So, the BitTorrent client is running on one of their computers (their child’s, etc.) and they need to uninstall it. This customer pays us over $400/month and if we terminate their service, they will likely cancel the rest of their services. Every terminated Customer becomes lost revenue and a potential Detractor to our Net Promoter Score;” and “This customer will likely fail again, but let’s give him one more change [sic]. [H]e pays 317.63 a month.”

The decision is below:

BMG v Cox Comm. (12!2!15)

That Sound You Hear Is Another Lawsuit

UK label Ministry of Sound has filed suit against Spotify, alleging that Spotify users are creating playlists that are identical to compilations created by MOS. Apparently, Spotify users are creating playlists that mirror MOS compilation albums, at times even using MOS in the name of the playlist.
Photo credit:Spotify Ministry of Sound playlists

According to the story in The Guardian, “The case will hinge on whether compilation albums qualify for copyright protection due to the selection and arrangement involved in putting them together. Spotify has the rights to stream all the tracks on the playlists in question, but the issue here is whether the compilation structure – the order of the songs – can be copyrighted.”  That might be the case in the UK, but in the US I think the question is different.

The Copyright Act clearly protects compilations–a defined term in Sec. 101 (“A “compilation” is a work formed by the collection and assembling of preexisting materials or of data that are selected, coordinated, or arranged in such a way that the resulting work as a whole constitutes an original work of authorship.”).  The question I have is whether Spotify can be liable for the playlists created by its users.  This strikes me as a claim of secondary liability – since Spotify isn’t undertaking any volitional action in the creation of the playlist.  There might be an opportunity to issue a DMCA takedown request, but Spotify actually has the rights to stream the songs in question.

Mega-Hot – Megaupload Case Sparks Disney’s Summary Judgment Against Hotfile

The ripple effects of the federal government’s criminal copyright infringement case against piratical website Megaupload and its larger-than-life founder Kim Dotcom continue.  First, Disney used the indictment in its motion for summary judgment against Hotfile and its owner

Disney’s MSJ is below:
[scribd id=87490557 key=key-258pkczg9bdr88e9zvkk mode=list]

Then Carpathia, the hosting company that leased Megaupload more than 1,100 servers on which 25 petabytes of Megaupload files are hosted, filed a motion in the government’s suit alleging it is paying $9,000 per day to maintain Megaupload’s files. According to its motion,

The parties who have so far claimed some interest in the data on the Mega Servers include: (1) Mega, which claims to need the data preserved for its defense and so that it may be returned to its customers; (2) the United States government, which has disclaimed a need for the data but objects to the transfer of ownership of the Mega Servers from Carpathia to Mega; (3) the Electronic Frontier Foundation (the “EFF”), which claims to represent the interests of end users who have non-infringing content stored on the Mega Servers and has requested that the data be preserved in order to facilitate its return to Mega users who have not engaged in copyright infringement; and (4) the Motion Picture Association of America (the “MPAA”), which, on behalf of its member studios, asserts a copyright interest in certain data purportedly located on the Mega Servers, has requested that Carpathia preserve the data in order to facilitate potential civil claims against Mega and the other Defendants in this action, and has indicated that it objects to any transfer of the data to third-parties

Carpathia is asking the court to use its discretion “under Fed. R. Crim. P. 16 and enter a protective order either: (1) allowing Carpathia to reprovision the Mega Servers after a brief period of access has elapsed; (2) requiring one or more of the parties to this action to take possession of the Mega Servers in exchange for reasonable compensation to Carpathia; or (3) requiring any and all interested parties to compensate Carpathia for the substantial costs of transporting and continuing to maintain the Mega Servers until the conclusion of this action.”

Carpathia’s motion is below:
[scribd id=87492411 key=key-x882ywzfnvomesfvg24 mode=list]

Now a civil action has been filed by Microhits, which claims to own “federally registered copyrights on sound recordings featuring the musical performances of the legendary Billie Holiday, Nat King Cole, Marvin Gaye, Frank Sinatra, AI Martino, Donny Hathaway, Rod Stewart, Muddy Waters, Howlin’ Wolf, Lightnin’ Hopkins, Junior Wells, Nina Simone, Louis Armstrong, Jerry Lee Lewis, Herbie Mann, and Bob James as well as such well-known modern artists as Missy Elliott, Christina Aguilera, Vanessa Hudgens” and Valcom, which claims to own “federally registered copyrights which includes feature films and television programs starring Denzel Washington, Bill Murray, Jackie Chan, Charlton Heston, Ronald Reagan, George C. Scott, Martin Sheen, Judy Garland, Bela Lugosi, John Carradine, Roy Rogers, Richard Chamberlain, Martin Landau, January Jones, Ryan Seacrest and many others.”  The plaintiffs are represented by the law firm Dunlap, Grubb and Weaver, the infamous plaintiff’s firm that brought mass John Doe lawsuits against BitTorrent users.

The Complaint is below:
[scribd id=87492040 key=key-zvcnxdz2lnwf4ekq6bq mode=list]

Does the DMCA Work?

If you are a copyright owner, two recent cases involving the Digital Millennium Copyright Act (“DMCA”) must have you feeling like Mugato (Will Ferrell) in Zoolander:

[youtube http://www.youtube.com/watch?v=4DVAsmrwdtQ&w=560&h=315]

In UMG Recordings, Inc. v. Veoh Networks, Inc., No. 09-56777 (9th Cir. Dec. 20, 2011), the Ninth Circuit affirmed a Central District of California court’s order granting summary judgment to Veoh after determining that it was protected by the DMCA “safe harbor” limiting service providers’ liability 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.” 17 U.S.C. § 512(c).

In Megaupload Ltd. v. Universal Music Group, Inc., 11-cv-6216-CW (N.D. Cal. Dec. 16, 2011), alleged piratical website operator Megaupload moved ex parte for a temporary restraining order against record label UMG for “sabotaging [Megaupload’s promotional video] campaign through abuse of the notice and takedown procedures of the” DMCA.  Although the TRO motion was denied as moot, the underlying suit remains.

These two cases exemplify the Bizarro World the DMCA has become, in which the business models of service providers require copyright infringement on a massive scale (e.g., Sina Simantob, a principal at Highlander Wealth Services and Chairman of Grooveshark, in an email to Drew Lipsher, a partner at media VC firm Greycroft, stated “we bet the company on the fact that it is easier to ask for forgiveness than it is to ask for permission. … I think [Grooveshark has] a real chance to settle with UMG within a year and by that time [Grooveshark will] be up to 35m uniques and a force to be dealt with.”  UMG Recordings, Inc. v. Escape Media Group, Inc., 11-civ-8407 (Nov. 18, 2011, S.D.N.Y)), but labels get sued over takedown notices.

Megaupload v UMG

The Megaupload case involves a promotional video it made available on YouTube that included many famous celebrities and artists endorsing the Internet locker service.  In its complaint and application for a temporary restraining order Megaupload alleged that UMG filed a takedown notice with YouTube knowing that it did not own any copyright in the Megaupload video.  Before turning to the merits of Megaupload’s case, a word about the promotional video at issue…

If you thought the Rebecca Black video was annoying, wait until you see the Megaupload video:

[youtube http://www.youtube.com/watch?v=K9caPFPQUNs&w=560&h=315]

With lyrics such as the following, it rivals the lyrics to “Friday” (e.g., “Kickin’ in the front seat; Sittin’ in the back seat; Gotta make my mind up; Which seat can I take?”)

Users 1 billion
Per day 50 million
4 percent
of the Internet
Get the Mega Manager
Its 10 times faster
Bit by bit
Unlimited
It’s a hit
It’s a hit
M
E
G
A
Upload to me today
Send me a file
Megaupload

The Megaupload video features endorsements by several “famous” “celebrities” and artists, including Kasseem Dean (Swizz Beatz), Kanye West, Mary Jane Blige, Estelle Swaray (Estelle), Ciara Harris (Ciara), Jayceon Taylor (Game), Carmelo Anthony, Will Adams (Will.i.am), Kim Kardashian, Sean Combs (Diddy), Alicia Keys, Chris Brown, Floyd Mayweather, Jamie Foxx, Jonathan Smith (Lil Jon), Brett Ratner, Serena Williams, and Russell Simmons.  Megaupload claims that it obtained very broad releases from every artist who appears in its promotional video, including consents to record the artist’s “performance and interview (called the “Appearance”), editing it, and publishing it on the Internet through streaming media, precisely as [Megaupload] has done.”  Megaupload also claims that its releases grant it the right to

“copyright, record, reproduce, broadcast, distribute, edit, publish, exhibit, disseminate, couple and use in any way throughout the universe and in perpetuity the audio and/or visual portions of any videotape, film, pictures, negatives, prints, photographs, stills or other recordings of the Appearance, and any reproduction thereof.”  These celebrities also relinquished any right to inspect or approve any finished product or “derivatives thereof, or any subsequent uses made of the Appearance.”

Three things come to mind:

(1) Did Their Lawyers Review the Release?  I can’t imagine a lawyer from a white shoe entertainment firm such as Greenberg Traurig, Mitchell Silberberg & Knupp, or Fenwick & West, which represents Megaupload, letting a client sign a release that didn’t provide the artist—particularly an artist of the prominence appearing in the Megaupload video—with the right to inspect or approve the final product.

(2) Did Megaupload Pay These Artists?  Megaupload doesn’t say whether it paid for the celebrities to appear in the video, other than to note that it “invested heavily [in the video] to ensure that the music, number and selection of celebrities, and video design would appeal to a large audience that would then continue virally to spread the word.”  I find it hard to believe that Megaupload didn’t pay these artists a lot of money.  And this certainly wouldn’t be the first time artists took money and later regretted it.  Remember when Nelly Furtado, Mariah Carey, and Beyonce “discovered” that Saif al-Islam Gaddafi, who had paid each of them million dollar fees to perform at his parties in 2007, 2008 and 2009, respectively, was the son of ruthless Libyan dictator Muammar Gaddafi.  While appearing in a Megaupload video isn’t equivalent to performing for the son of the “mad dog of the Middle East,” it does suggest that artists are sometimes willing to be “naive and unaware,” as Mariah claimed she was, when a contract comes with a check for a million dollars.

(3) Do These Artists Even Know What Megaupload Is or Actually Use It?  Do we really believe that Lil’ Jon or Kim Kardashian personally spend any time uploading videos to the Internet?  (ok, maybe Kim used to, but those were the naughty kind)

The Problem with the DMCA

While this suit will probably unfold like the kerfuffle that ensued after Prince issued a DMCA takedown notice to YouTube over a home video Stephanie Lenz posted of her children dancing to Prince’s song “Let’s Go Crazy,” the suit signifies a broader problem with the DMCA.  The DMCA was intended to facilitate the legal distribution of digital copyrighted works and encourage investment in the Internet.  As the Senate Report explains

Due to the ease with which digital works can be copied and distributed worldwide virtually instantaneously, copyright owners will hesitate to make their works readily available on the Internet without reasonable assurance that they will be protected against massive piracy. Legislation implementing the treaties provides this protection and creates the legal platform for launching the global digital on-line marketplace for copyrighted works. It will facilitate making available quickly and conveniently via the Internet the movies, music, software, and literary works that are the fruit of American creative genius. It will also encourage the continued growth of the existing off-line global marketplace for copyrighted works in digital format by setting strong international copyright standards.

At the same time, without clarification of their liability, service providers may hesitate to make the necessary investment in the expansion of the speed and capacity of the Internet. In the ordinary course of their operations service providers must engage in all kinds of acts that expose them to potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting information over the Internet. Certain electronic copies are made to speed up the delivery of information to users. Other electronic copies are made in order to host World Wide Web sites. Many service providers engage in directing users to sites in response to inquiries by users or they volunteer sites that users may find attractive. Some of these sites might contain infringing material. In short, by limiting the liability of service providers, the DMCA ensures that the efficiency of the Internet will continue to improve and that the variety and quality of services on the Internet will continue to expand. (emphasis added)

When the Senate writes about “making available quickly … via the Internet” it clearly assumed that the copyright owners would be authorizing the “making available.” As the Senate Report emphasizes, the goal of the DMCA is to encourage (1) the Internet to become a “legal platform” for digital distribution of copyright works and (2) investments in the “speed and capacity” of the Internet.  From the perspective of the copyright owner, however, the recent jurisprudence regarding the obligations of the copyright owners and the service providers under DMCA is creating a frustrating situation where service providers appear to build their websites in response to the latest legal interpretation of the DMCA.  This is eerily reminiscent of the evolution of the audio file sharing services; i.e., as the result of lawsuits, Napster and its centralized server model gave way to Grokster and its distributed content model, which gave way to BitTorrent and its use of “swarms” to download a “bits” of a single file from many users simultaneously.

In a blog post, Megaupload’s Dotcom described the situation thusly:

“When one of the top artists endorsing Mega received a letter from the CEO of the RIAA with some active download links on Megaupload containing that artist’s music it was shocking at first. But in the same letter it was described how those links were found with a Google search. Giving Mega a hard time when we don’t even provide a search feature on Megaupload? It’s bizarre. And at the same time you find the world’s largest piracy index on Google and most other search engines. But hey, these guys are not rogue. They are just rich.” (emphasis added)  Dotcom’s comment describes exactly what is so frustrating about the DMCA.

How Does Megaupload Work?

In her recent order regarding Megaupload’s motion to dismiss a lawsuit brought by Internet pornographer Perfect 10, Inc., (Perfect 10, Inc. v. Megaupload Limited, 11-cv-191-IEG (SD. Cal. July 27, 2011) Chief Judge Irma Gonzalez of the federal District Court for the Southern District of California described Megaupload thusly (internal citations omitted)

After a file is uploaded to megaupload.com, Megaupload creates a unique Uniform Resource Locator (“URL”). The URL is the address of the file on the internet. Anyone with the URL can download the file from Megaupload’s servers. Megaupload and its users disseminate URLs for various files throughout the internet. In order to view, copy, or download such files from the Megaupload websites without waiting, users must pay a membership fee. … This much is clear: Megaupload allegedly stores billions of dollars of “pirated” full-length movies, songs, software, and images on its servers. Megaupload apparently depends on, and provides substantial payouts to, affiliate websites who catalogue the URLs providing access to the mass of “pirated” content on Megaupload’s servers. For example, at the affiliate search engine megaupload.net, users who perform a search are directed to Megaupload’s website and offered the opportunity to purchase a membership. Megaupload also encourages its users to upload materials through its “Rewards Programs.” Megavideo.com and megaporn.com have a rewards program called “Megaporn Rewards.” Megaupload.com also has a rewards program, which it runs in a similar fashion, stating:

The more downloads your files get, the more you can earn through our Megaupload Rewards program. Every qualifying download of one of your files will earn you a reward point. When you have reached a certain number of points, you can redeem them for premium status or even cash. There is no limit! And even better: The more downloads your files get, the more you can earn through our Megaupload Rewards program.

Megaupload offers $10,000 for 5,000,000 reward points.  So, while Megaupload doesn’t offer a search function as part of the Megaupload site itself, it has created a complex (and effective) means of cataloging all the content stored in its digital lockers.  Why would Megauload go to the trouble and expense of offering $10,000 bonuses in a rewards program rather than simply include a search function that would accomplish the same outcome?  I can’t believe that the one-time cost of incorporating search functionality is more expensive than the on-going expense of maintaining its rewards program.  The answer must lie in Megaupload’s lawyers reading of the safe harbor provisions of § 512, especially § 512(c), which as we will see in the next case the Ninth Circuit views as quite broad.

UMG v Veoh

Like YouTube and other Internet video aggregators, Veoh’s business model involved building a large user base by offering as much content as possible and later generate profits from paid advertising.  Just like its competitors, in order to aggregate the content necessary to build a user base large enough to monetize, Veoh allowed users to upload to the Veoh website without Veoh reviewing such videos[i], wherein the user would provide identifying information about the video, including its title, a description of its contents, a descriptive category (e.g., music), and keyword “tags” for the video.  The information and “tags” entered by the user became the video’s “metadata” and were used by Veoh to return search results initiated by other users of its service.  In addition, Veoh used recommendation software to return additional videos that might be of interest to a particular user based on that user’s past viewing history.

UMG objected to Veoh’s site because thousands of UMG’s music videos were uploaded without authorization.  Before the district court and on appeal, UMG argued that Veoh was not entitled to the safe harbor protection of § 512 because it engaged in activities beyond “storage at the direction of a user;” e.g., “Veoh’s infringement … arises by reason of its decision to copy, publicly perform, and distribute UMG’s protected works.”  As UMG argued in its appeal brief, “The District Court’s opinion absolves Veoh of responsibility for conduct as or more egregious than that which led to Napster’s, Grokster’s, or Kazaa’s liability.  Napster, Grokster, and Kazaa offered indices that helped their users find infringing content and obtain it from other users. But they neither stored the infringing files nor directly distributed those files, as Veoh did.”

In affirming the district court’s grant of summary judgment in favor of Veoh, the Ninth Circuit first considered what “by reason of the storage at the direction of a user” means under § 512(c)(1).  While UMG argued that “nothing in the ordinary definition of ‘storage’ encompasses” the automatic processes undertaken to facilitate public access to user uploaded videos,” the Ninth Circuit concluded that the notice and takedown provisions of § 512 would be meaningless if public access to uploaded videos weren’t contemplated by the DMCA safe harbor provisions.  As the Ninth Circuit explained,

Section 512(c) codifies a detailed notice and takedown procedure by which copyright holders inform service providers of infringing material accessible through their sites, and service providers then “disable access to” such materials. 17 U.S.C. § 512(c)(1)(A)(iii), (c)(1)(C) & (c)(3)(A)(iii). This carefully considered protocol, and the statute’s attendant references to “disabl[ing] access” to infringing materials … would be superfluous if we accepted UMG’s constrained reading of the statute. … Indeed, it is not clear how copyright holders could even discover infringing materials on service providers’ sites to notify them as the protocol dictates if § 512(c) did not contemplate that there would be access to the materials.

The legislative history does not seem to me, however, to support such a wide read of § 512(c).  In the Senate Report on the DMCA, the examples used to illustrate the types of behaviors in which a service provider might engage that could expose such service provider to liability is much narrower in scope than the actions of Veoh.  As the Senate Report states

In the ordinary course of their operations service providers must engage in all kinds of acts that expose them to potential copyright infringement liability. For example, service providers must make innumerable electronic copies by simply transmitting information over the Internet. Certain electronic copies are made to speed up the delivery of information to users. Other electronic copies are made in order to host World Wide Web sites.

When discussing § 512(c) in particular, the Senate Report notes “Examples of such storage include providing server space for a user’s web site, for a chatroom, or other forum in which material may be posted at the direction of users.”  The “chatroom or other forum” examples make sense, as the House Report on the DMCA indicated that “the [DMCA] essentially codifies the result in the leading and most thoughtful judicial decision to date: Religious Technology Center v. Netcom On-line Communications Services, Inc., 907 F. Supp. 1361 (N.D. Cal. 1995),” which held that a web-hosting service provider (as distinct from a website operator like Veoh) was not liable for direct copyright infringement where users posted materials to a Usenet site whose protocols automatically transmitted those materials.

By way of background, as explained in Arista Records LLC v. Usenet.com, Inc., 07-cv-8822 (S.D.N.Y. June 30, 2009),

The USENET network, created over twenty years ago, is a global system of online bulletin boards on which users (or “subscribers”) may post their own messages or read messages posted by others.  To obtain access to the USENET, a user must gain access through a commercial USENET provider … or an internet service provider.  Messages posted to the USENET are commonly known as “articles.”  Articles, in turn, are posted to bulletin boards called “newsgroups.”  Newsgroups often are organized according to a specific topic or subject matter, and are oftentimes named according to the subject matter to which the articles posted to the newsgroup relate.  The USENET is divided into nine major subject headings known as “hierarchies,” one of which is the alt.* hierarchy.  Content files known as “binaries,” which represent computer files such as images, videos, sounds, computer programs and text, are found in the alt.* hierarchy.  These binary files are encoded in text form for storage and processing, and require a software program to convert the text into a content file such as an image or music file.

It should be noted that Judge Baer granted Arista’s motion for summary judgment on both direct and secondary copyright infringement against Usenet.com.

The point of the above is that when Congress passed the DMCA, it envisioned a world in which users posted content in chatrooms and forums.  That is vastly different than the aggregation of content onto searchable websites the very purpose of which is to make it easy for people who did not upload content to view content uploaded by others, the copyright for which content is often owned by someone other than the user doing the uploading.

Compare § 512(d), which “provides a safe harbor that would limit the liability of a service provider that refers or links users to an online location containing infringing material or activity by using ‘information location tools,’ such as hyperlink directories and indexes.”  So, for example, Google enjoys a safe harbor when it returns search results that point to websites that contain infringing materials, just as Megaupload’s Dotcom notes in his blog post.  Would Veoh likewise qualify for a safe harbor if the search results that it returned were URLs on its website?  I think this juxtaposition explains, in part, why Megaupload decided not to include a search function as part of its locker service.


[i] It is true that Veoh’s terms of service included a provision whereby users represented that they owned all of the copyright in the uploaded content and affirmed that they would not upload copyrighted content without permission.