Viacom v. YouTube/Google: How Red Must a Red Flag Be?

pdate: In an update to the below, on Thursday, April 5, 2012, the U.S. Second Circuit Court of Appeals revived and remanded the case to a lower court, instructing the district judge to determine if YouTube had knowledge or awareness of specific infringing material and whether it willfully blinded itself to that specific knowledge. Please visit this site for an analysis of this news shortly.

In the ongoing Viacom v. YouTube lawsuit, the case is now on appeal before the Second Circuit.

In a case involving eligibility for the Section 512(c) safe harbor, Judge Louis Stanton of the Southern District of New York granted summary judgment in favor of YouTube June 23, 2010 in Viacom’s copyright infringement suit against YouTube, holding that YouTube is protected under the safe harbor provision of the Digital Millennium Copyright Act (DMCA).

Viacom appealed. The case has been fully briefed and heard in the Second Circuit and is now awaiting decision from the three-judge panel, (Judges Roger J. Miner, Jose A. Cabranes and Debra Ann Livingston presiding). Promptly following the October 18, 2011 hearing, the panel requested additional briefing on two issues: “(1) whether and how the red-flag knowledge provision would apply under the Defendants’ “specific” knowledge construction of §512 (c)(1)(A); and (2) whether YouTube’s “syndication” of videos to third parties falls outside the scope of safe harbor protection for activities that occur “by reason of… storage at the direction of a user” under §512 (c)(1).”

Under the safe harbor provision in 17 U.S.C. §512 (c) of the DMCA, a service provider that would otherwise be liable for infringement, “by reason of storage at the direction of a user” is protected from liability for copyright infringement if it meets a number of eligibility requirements, including that it not have “actual knowledge” that the material is infringing (§512(c)(1)(A)(i)), nor awareness of “facts and circumstances from which infringing activity is apparent.” (§512(c)(1)(A)(ii)). The service provider may still be protected upon obtaining such knowledge or awareness if it acts expeditiously to remove or disable the infringing material or activity.

A principal issue in the case, and other recent cases in which the section 512(c) and (d) safe harbors has been invoked, is what constitutes awareness of “facts and circumstances from which infringing activity is apparent” – known as “red flags” knowledge. The district court analyzed whether actual or red flags knowledge means specific or general knowledge and concluded that both require knowledge of a specific item of infringing content at a specific location (e.g., URL).

In his opinion, Judge Stanton stated that “[g]eneral knowledge that infringement is ‘ubiquitous’ does not impose a duty on the service provider to monitor or search its services.” The court acknowledged that “a jury could find that the defendants not only were generally aware of, but welcomed, copyright infringing material being placed on their website.” Nevertheless, the court held that YouTube did not have “awareness” rising to the level of the red flags standard because, in the court’s view, it did not have the required specific knowledge of infringement -except in the case of those items for which it received a DMCA notice and expeditiously removed.

On appeal, in its November 1, 2011 response to the court’s request for supplementary briefing, YouTube argued that the district court’s analysis of the red flags knowledge standard was correct – namely, that the red-flag provision would apply only when a “particular infringement would have been apparent to a reasonable person.” YouTube also contended that “[a] plaintiff bears the burden of proving red-flag awareness.”

According to YouTube, the burden rests squarely with the content owners to police sites, and with users to follow the law. YouTube maintains that it is merely providing a storage system which is guided solely at the direction of the user. And though YouTube may have “general knowledge” that its site contains copyrighted material, it contends this general knowledge is immaterial and wholly different from specific, actual and actionable knowledge which, YouTube argues, is all they are responsible for. As long as YouTube complies with DMCA-compliant notices that it receives by taking down or disabling the identified clips posted at the URLs identified in the notice, it has done all it needs do to be eligible for the safe harbor.

Viacom asserted in its briefs that, to the contrary, the red flags provision applies when the infringing activity is “apparent” and “obvious” and, in the instance of YouTube, the “obviousness threshold is clearly crossed when the service provider not only is profiting massively from infringing activity but has actually confirmed and quantified widespread infringement, concluding that, in the absence of the infringing activity its views would sink by 80% or more.”

Based on the email correspondence among the founders and senior managers of YouTube and other evidence in the record, it is clear that YouTube intentionally allowed the posting of vast, growing quantities of infringing content and relied on it to draw eyeballs and increase the value of the site (estimated by YouTube itself to account for 70-80% the views on the site), and allowed that content to remain on the site so that it could profit from it. If this is not red flags awareness, it is hard to imagine what short of actual, specific knowledge would be.

Further, Viacom argued that YouTube already has detection systems in place – albeit mostly tasked for YouTube’s own profit-making purposes. Indeed, YouTube’s principal business strategies are based on such complex and sensitive metrics regarding what content is trending, what the content consists of, who is viewing it and where it comes from, which inform YouTube’s ad placements, syndication deals with mobile companies such as Apple and Sony, and myriad other business decisions.

In response to the court’s question regarding the meaning of “storage at the direction of a user,” Viacom argued that the §512 (c) safe harbor applies only to infringement resulting from the actual “storage” or hosting of user content, and that this stored content should not be made available to other users as YouTube did. Moreover, according to Viacom, YouTube’s multi-million dollar syndication deals with various mobile platforms greatly expanded these infringing activities, and were “…the result of YouTube’s own strategic business decisions and are entirely independent of any action by the user.” Users were never consulted on such syndication deals nor do users reap the millions in profits for such deals as YouTube and its parent company Google does.

The underlying question that the Second Circuit must address in this case is whether a service provider that knowingly provides access to a vast amounts of infringing content posted by users, and profits from it, has any meaningful responsibility under §512 beyond responding to DMCA takedown notices? The district court in Viacom answered that question with a resounding “no” by collapsing the various requirements in the §512 (c) safe harbor into the notice and takedown provision (one of several requirements including the actual knowledge, red flags and vicarious liability standards).

The Ninth Circuit in UMG v. Veoh just affirmed the district court’s similar views in its December 20, 2011 opinion, which harshly criticized UMG for not utilizing the notice and takedown procedures in §512 (c), implying that the takedown provisions are the copyright owner’s main recourse. The problem with this heavy reliance on notice and take down, however, is that it is ineffective for abating infringement on sites that allow users to post content or store it in the cloud for others to access. It is virtually impossible for any copyright owner to locate and identify each and every item of infringing content on the Internet or even a particular site (while a service provider can filter material being posted as it is ingested, a third party cannot), and once content is removed pursuant to a takedown notice, it is immediately put back up somewhere else.

Written in 1998, the DMCA did not contemplate user generated (or posted) content sites, such as YouTube, nor the volume of or speed with which material is now uploaded to internet sites (for YouTube approximately 35 hours of video each minute). At the same time, it may also not have anticipated the sophistication of systems that can automatically self-police a site, scanning for red-flags, and surfacing and streamlining its findings to decision-makers. It is questionable (if not already clear) whether any method other than the use of software systems will be able to keep pace with amounts of infringing content available on the Internet. At the same time, copyright-management systems such as RightsFlow (which Google/YouTube acquired this month) are quickly evolving and may provide reasonable, cost-effective solutions.

With the Ninth Circuit affirmation in UMG Recordings, Inc. v. Veoh Networks, Inc. (Nos. 09-56777, 10-55732 (9th Cir. Dec. 20, 2011)) of YouTube’s argument that “[a] plaintiff bears the burden of proving red-flag awareness,” and other recent decisions that have adopted this view (see, e.g., Capitol Records, Inc. v. MP3Tunes, LLC, No. 07 Civ. 9931 (S.D.N.Y. Aug. 22, 2011), the Second Circuit’s decision will be pivotal in determining whether service providers will have any responsibility beyond notice and take-down for curbing the massive amounts of online infringement on their sites from which they knowingly profit (and in some of these cases encourage) at the expense of the copyright owners.

(Click here for YouTube’s letter brief of 11/1/11 in 10-3270, Viacom International Inc., et al. v. YouTube, Inc., et al.; 10-3270, and also The Football Association Premier League Ltd. v. YouTube Inc. 10-3342 and click here for Viacom’s response of 11/8/11).