Federal Courts Clarify Agent Designation Requirement and Meaning of “User” under DMCA

So far this year two federal courts have addressed important issues relating to Internet service providers’ (“ISP”) safe harbor protection under the Digital Millennium Copyright Act (“DMCA”).  One court dealt with the necessity of registering a DMCA agent for the service of takedown notices with the Copyright Office, and the other addressed, for the first time, what is meant by the term “user” in connection with the user-generated-content safe harbor provision, 17 U.S.C. § 512(c).  These two cases’ holdings provide important clarifications and practical guidance for ISPs in securing DMCA eligibility and determining section 512(c)’s applicability.

BWP Media USA Inc. v. Hollywood Fan Sites LLC, No. 14-CV-121(JPO), 2015 WL 3971750 (S.D.N.Y. June 30, 2015), represents a teachable moment to help ISPs ensure that they are entitled to DMCA protection from an administrative standpoint.  The case makes clear that ISPs must register contact information for their designated agents with the Copyright Office and list that agent’s contact information on the ISP’s website and, importantly, that ISPs cannot rely on another related corporate entity to file a designation on their behalf or assume that they are encompassed by a parent company’s designation.  Each ISP, individually, must file its own agent designation with the Copyright Office.

The plaintiffs in Hollywood Fan Sites – owners of the copyrights in various paparazzi photographs – sued the owner/operator of over 4,500 “fan sites” dedicated to celebrities for direct and secondary copyright infringement of their photographs.  Although defendants apparently timely took down infringing photographs and maintained an active link to an agent for DMCA purposes on their websites, the plaintiff still challenged defendants’ reliance on DMCA safe harbor defense under section 512(c), arguing that they had not “designate[d] an agent to receive notifications of claimed infringement[s].”  17 U.S.C. 512(c)(2).  One of the defendants – a subsidiary of defendant Hollywood.com LLC – had filed its own agent designation in late 2013, but attempted to rely on the 2008 agent designation filed by its parent company in order to insulate itself for those five additional years.  But the court held that nothing in that 2008 designation indicated that it was intended to cover subsidiaries, and noted that Copyright Office regulations did not even allow for a single designation to cover multiple entities.  The court held the subsidiary was ineligible for protection against any infringements occurring prior to its 2013 designation, explaining that ISPs “cannot retroactively qualify for the [DMCA] safe harbor for infringements occurring before the proper designation of an agent.”

Assuming an ISP satisfies its “parallel” administrative obligations of registering its agent with the Copyright Office and listing it on its website (as well as other DMCA threshold requirements) an ISP might then reasonably wonder whether its particular situation is embraced by the DMCA.  This is where BWP Media USA Inc. v. Clarity Digital Group, LLC, No. 14-CV-00467-PAB-KMT, 2015 WL 1538366 (D. Colo. Mar. 31, 2015), could be quite informative.  The Clarity Digital opinion addressed a critical question concerning the scope of section 512(c) – which applies to infringement claims arising “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 ISP – that has been unexpectedly untouched in 17 years of DMCA jurisprudence: who is considered a “user”?  In a ruling largely seen as a boon to ISPs, the court held that the term “user” should be accorded its plain and natural meaning, which is a broad one, particularly in the ISP context: “a person or entity who avails itself of the [ISP’s] system or network to store material.”   

In Clarity Digital, BWP and another paparazzi photo aggregator sued the owners and operators of Examiner.com – an online news site featuring stories posted by independent-contractor authors – for unauthorized use of 75 photographs in various stories about celebrities.  Examiner sought DMCA protection, arguing that that its authors were “users” as opposed to its employees or agents because Examiner was not involved in the authors’ selection or posting of the photographs, and it did not control or influence the authors’ actions.  The plaintiffs argued that “user” should exclude an ISP’s owners, employees, and agents, and that the authors were akin to employees because Examiner at least minimally vetted them, provided guidance on article content, and compensated them based on web traffic.  The court disagreed, finding no basis in the law for plaintiffs’ interpretation, and noting that Congress could have so defined “user” if it had wanted to.  Further, such a definition was unnecessary because other sections of the DMCA excluded from safe harbor protection ISPs that, themselves, are closely involved with the infringing conduct.  The authors were therefore deemed “users” and the court upheld Examiner’s DMCA defense.

The two BWP Media cases illustrate a dichotomy in the DMCA: on one hand are the critical procedural requirements necessary to ensure eligibility for safe harbor protection, and on the other hand is the potentially broad sweep of that safeguard once it is in play.  ISPs should not underestimate the importance of seemingly trivial matters such as registering a DMCA agent or listing that agent’s contact information conspicuously on its website; failure to comply with the letter of the law could result in the loss of a significant defense against secondary copyright infringement claims, particularly for ISPs who rely heavily – if not exclusively – on user-generated or user-submitted content.  When in doubt, ISPs should consult with copyright counsel to ensure that their rights under the DMCA are preserved.