Saturday, September 19, 2009

Some additional thoughts on UMG v. Veoh

I assume most readers are now familiar with Judge Howard Matz's September 11 order granting summary judgment in favor of the web-video site Veoh in the copyright suit brought by several Universal Music Group entities. The decision has been universally (and accurately) described as a big win for Veoh, and a worrisome sign for Viacom and the other plaintiffs in the similar suit pending in New York against YouTube. I wanted to dig in a bit deeper and identify some of what I think are the most significant, and troubling, parts of Judge Matz's decision.

The death of "red flag" infringement
Section 512(c) of the DMCA identifies two triggers for the obligation of the host to remove the subject material (if it wants to maintain the safe harbor). First is actual knowledge of infringement (which can be obtained through receipt of a facially valid takedown notice pursuant to Section 512(c)(3)). Second is where the host becomes "aware of facts or circumstances from which infringing activity is apparent." Id. § 512(c)(1)(A)(ii). This latter situation is known as "red flag" infringement; the idea is that the host can't claim the safe harbor if red flags are being waved in its face, suggesting the obvious presence of infringing activity. The Ninth Circuit gutted the red flag doctrine in Perfect 10 v. CC Bill, specifically in this thoroughly unconvincing paragraph:
Perfect 10 alleges that CCBill and CWIE were aware of a number of "red flags" that signaled apparent infringement. Because CWIE and CCBill provided services to "" and "," Perfect 10 argues that they must have been aware of apparent infringing activity. We disagree. When a website traffics in pictures that are titillating by nature, describing photographs as "illegal" or "stolen" may be an attempt to increase their salacious appeal, rather than an admission that the photographs are actually illegal or stolen. We do not place the burden of determining whether photographs are actually illegal on a service provider.
In other words, under Ninth Circuit precedent (which bound Judge Matz), having material identified by its poster as "illegal" and "stolen" is not a red flag that infringing activity is taking place. One is left to wonder whether the panel would have ruled the same way had actual red flags been waved in the defendants' faces.

Judge Matz's decision, which cited the "high bar" for red flag infringement placed by CCBill, further renders Section 512(c)(1)(A)(ii) a dead letter. He rejected UMG's argument that Veoh had red flag knowledge "because its founders, employees, and investors knew that widespread infringement was occurring on the Veoh system," and because of several other alleged "red flags," including Veoh's knowledge that music is protected by copyright, and its tagging of videos as "music videos." I'm unaware of a single case from any jurisdiction where a court has actually relied on the "red flag" portion of the statute to conclude that a site is not entitled to the Section 512(c) safe harbor. Courts, including this one, simply read it so narrowly that, for all intents and purposes, it might as well not even exist.

"Right and ability to control"
A host loses the safe harbor where it "receive[s] 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 USC § 512(c)(1)(B). Judge Matz gave a very narrow reading to "right and ability to control" -- one narrower than the standard in the 9th Circuit's Napster decision and the "right and ability to control" standard under the common law vicarious liability doctrine. But the 9th Circuit in CC Bill said the "direct financial benefit" in the same clause does get the same definition as in the common law. I think this part of the ruling is fairly vulnerable on appeal, though it may not be enough for the whole thing to get overturned. (I love the way Prof. Eric Goldman put it: "This dichotomous language parsing seems particularly unstable." That's a polite, academic way of saying that Judge Matz's ruling on this point is simply inconsistent with CC Bill and Napster.)

What about inducement?
Judge Matz's opinion never explains how a site can induce users to infringe (which UMG alleged) and yet still be protected by the DMCA safe harbors. It seems incoherent to me to say that a site can take steps to actively encourage users to infringe (a rough description of the inducement doctrine), and then still be able to claim the safe harbor (which, broadly speaking, covers only those sites that act in good faith to combat infringement). Can it really be the case that a hypothetical UGC site that advertises "Upload primetime TV, Hollywood movies, and top 40 hits here!" really claim the safe harbor as long as it takes down infringing material promptly upon receipt of takedown notices? As absurd as it sounds, that seems to be the logic of Judge Matz's decision.

Can a takedown notice include a mere "representative list" of infringements?
Among the elements that must be included in a takedown notice under Section 512(c)(3)(A) is the following:
Identification of the copyrighted work claimed to have been infringed, or, if multiple copyrighted works at a single online site are covered by a single notification, a representative list of such works at that site.
§ 512(c)(3)(A)(ii) (emphasis added). This clause suggests that, at least in some circumstances, a DMCA notice need not list every single instance of infringement; a "representative list" is enough to trigger takedown obligations (in order to stay within the safe harbor). In other words, a site would need to take down not just the works specifically identified, but also those within a category of which the copyright owner provided a representative list. UMG (through its agent the RIAA) apparently provided lists of artists whose recordings it owns, with the implication that Veoh had to search for videos containing those artists' songs. But the court rejected UMG's argument, holding that a list of artist names doesn't suffice.

I'm not aware of any case where a court has actually held that the provision of a "representative list" of infringed works places the onus on the site to take down works not specifically referenced -- even though that appears to be the import of the statute. Judge Matz's decision does not provide much clarity as to when such a "representative list" will suffice.

Again, this was undoubtedly a big win for Veoh. But does it necessarily mean a loss for Viacom and the other plaintiffs in the YouTube suits? Not at all. This is a district court opinion that binds no one except UMG and Veoh; Judge Stanton in New York is perfectly free to ignore it. And the facts in the YouTube litigation may be different; the fruits of discovery have not yet been made public, so no one except the parties and their attorneys know for sure.


  1. Seems like the right kind of decision to me. Very fact specific case. Who knows about how the facts play out in youtube?

  2. We're currently experiencing a schizophrenic jurisprudence when it comes to these social aspects of the internet. Out of one mouth, the courts throw up flags like this preventing content creators from shuttering services that, let's face it, are cesspools of copyright infringement. To say that a video hosting service doesn't or shouldn't have constructive knowledge that copyrights are being infringed by its users simply displays a profound ignorance of reality. Yet, out of the other judicial mouth spews admonitions against content creators suing their consumers directly.

    Well, which is it, courts? If you prevent suits against the hosts, and you don't want individual infringers being sued, then what recourse do you expect the creators to take???

  3. Red flags aside, just curious why no one has mentioned that this particular site, per its Ts and Cs, as a part of the consideration for hosting videos has reserved for itself a quite broad license for the use of such videos.

  4. On "red flags," the opinion points to one potential source of "red flag" knowledge -- employees who encountered plainly infringing materials. The court, however, notes that these were promptly removed. And the statute makes it clear that "red flag" knowledge only counts if the service provider fails to promptly remove. That seems right to me.

    On inducement, any "absurdity" you have identified is embedded in the structure of the statute, not the judge's ruling. The legislative history clearly says that the safe harbors are intended to cover damages from all forms of infringement, including direct, contributory and vicarious. And since the Supreme Court, when dreaming up "inducement" in MGM v. Grokster, branded it a form of contributory infringement, I think that settles that.

    On "right and ability to control," the district court's reading is the only one that allows the safe harbor to have any relevance to vicarious liability claims (which the legislative history expressly says Congress intended). And at least 3 other district court rulings have agreed, so it's not as if J. Matz is out of step here.

    Finally, on "representative lists," I don't think you want to stand behind UMG here. The statute says a representative list of "works," not artists. So J. Matz was right in rejecting UMG's list. After all, UMG does not own every item on which the name of an artist appears.

  5. Fred -- isn't "employees who encountered plainly infringing materials" actual knowledge under Section (c)(1)(A)(i), not just "red flag" knowledge ("facts or circumstances from which infringing activity is apparent") under (c)(1)(A)(ii)?

  6. Fred -- isn't "employees who encountered plainly infringing materials" actual knowledge

    Not necessarily. You can encounter material and not be sure whether it is infringing (after all, rightsholders can change their minds about whether they want something up, and different departments can make different choices for different works on different days), but can also encounter facts and circumstances from which infringement is apparent (to use the language of the statute). The legislative history suggests that this is a more demanding standard than "knew or should have known." I agree with you that we haven't yet seen a court give us an example.

    The important point here is where the burden of policing falls. Most of the issues you are pointing to ("red flags" and "representative lists" ) are directed to when a rightsholder can force the service provider to shoulder the burden of policing. The courts are sending a clear message that Section 512 already gives rightsholders powerful, fast, effective tools -- the takedown notice -- and that they are going to be reluctant to push further obligations on service providers that are making good faith efforts to address infringements on their sites.

    The message here is that rightsholders are shooting themselves in the foot by continuing to litigate against service providers that are working hard to deploy filters, respond to takedowns, and otherwise make a real effort on behalf of rightsholders within the limits of 512 (e.g., YouTube, Veoh, Amazon, Google, eBay). There are lessons here about what happens when you choose "legit" companies as the battlefield for pushing innovative readings of the law.

  7. Fred --

    I agree with your description of courts' statements about "burden." But the fact is that the statute gives several ways that the host can be forced to take down the material if it wants to keep the safe harbor in addition to receipt of a notice that IDs the specific infringing work: actual knowledge, red flag knowledge, and representative list. I realize those provisions are inconvenient for owners of UGC sites, but that doesn't mean courts can ignore them, or read them so narrowly as to render them dead letters.


Comments here are moderated. I appreciate substantive comments, whether or not they agree with what I've written. Stay on topic, and be civil. Comments that contain name-calling, personal attacks, or the like will be rejected. If you want to rant about how evil the RIAA and MPAA are, and how entertainment companies' employees and attorneys are bad people, there are plenty of other places for you to go.