Saturday, February 27, 2010

Court narrowly construes damages provision of DMCA Section 512(f); litigation fees not recoverable

A federal court this week narrowly construed the damages and attorneys' fees provisions of the DMCA section that provides a cause of action for sending knowingly false takedown notices. The court held that a plaintiff in a case under 17 USC § 512(f) may only recover damages "proximately caused by the misrepresentation to the service provider and the service provider’s reliance on the misrepresentation" and may only recover attorneys' fees under Section 512(f) for pre-litigation activity -- "i.e., in drafting and issuing the counter notice" -- but not for litigating the case itself.
Order on damages and attorneys fees

The ruling came in the Lenz v. Universal case, in which UMG, acting on behalf of Prince, issued a takedown notice to YouTube over a 29-second video that features a baby dancing to "Let's Go Crazy." According to the complaint, Stephanie Lenz uploaded the video to YouTube Feb. 8, 2007; UMG sent a takedown notice June 4; YouTube removed the video shortly thereafter; and Lenz filed a DMCA counternotice June 27. UMG never sued for copyright infringement, and so YouTube restored the video in mid-July. On July 24, 2007, represented by the EFF, Lenz sued under Section 512(f), which provides a cause of action against "Any person who knowingly materially misrepresents under this section...that material or activity is infringing." As of today, the video, which Lenz says she posted "for her family and friends to enjoy," has been viewed 954,167 times.

So, assuming that Lenz can indeed show that UMG "
knowingly materially misrepresent[ed]" that the video was infringing, what damages can she recover? The statute says she can get:
any damages, including costs and attorneys’ fees, incurred by [her]...[if she is] injured by such misrepresentation, as the result of the service provider relying upon such misrepresentation in removing or disabling access to the material or activity claimed to be infringing...
Judge Jeremy Fogel's decision concludes Lenz can recover even if she did not suffer economic losses. But I don't see how Lenz suffered more than nominal losses here; she was simply annoyed that her video (hosted for free by YouTube) was temporarily removed, and she found some lawyers/activists who jumped at the chance to make a federal case out of it. Under the court's decision, Lenz may recover for attorneys' "fees incurred both prior to litigation–i.e., in drafting and issuing the counter notice." But such fees must be minimal here. The EFF attorneys spent 30 seconds watching the video, and I'm sure it took them only about 5 more to reach their conclusion that this was a fair use. Drafting and sending a counternotice should have taken them only about 15 minutes. Realistically, the fees unrelated to the actual litigation (which the court held are recoverable even though EFF works pro bono) are probably well under $1,000. The court's interpretation of Section 512(f) as excluding from recoverable fees the fees incurred in the litigation itself makes sense; a plaintiff who suffered little or no actual damages should not be able to effectively manufacture massive damages in the form of attorneys' fees by engaging in years of litigation over an issue that was effectively remedied through the counternotice process. As Judge Fogel notes (citing, ironically, an article critical of copyright owners' takedown practices), the whole point of the DMCA's notice-and-takedown (and counternotice) procedure is to resolve these matters outside of the courthouse.

All is not lost for Lenz, however. Though, if Lenz prevails, she (or, more precisely, EFF) won't be able to recover litigation fees under Section 512(f), she may be able to do so under 17 USC § 505, which provides that in copyright cases, "the court in its discretion may allow the recovery of full costs ... [and] a reasonable attorney's fee to the prevailing party." Litigation-related attorneys' fees in this case, which has now dragged on for 2 1/2 years, could reach well into the six figures for each side. The Supreme Court has opined that factors the court may consider in exercising its discretion to award attorneys' fees to a prevailing party include "frivolousness, motivation, objective unreasonableness (both in the factual and in the legal components of the case) and the need in particular circumstances to advance considerations of compensation and deterrence." Fogerty v. Fantasy, Inc., 510 US 517, n.19 (1994).

Lastly, keep in mind that all this talk about damages and attorneys' fees is relevant only if Lenz ends up prevailing on her substantive Section 512(f) claim. While I've yet to meet anyone who thinks it was actually a good idea for UMG to send a notice on this particular video, it's far from clear that Lenz will be able to prevail under the Ninth Circuit's standard set forth in Rossi v. MPAA, which requires a showing of subjective bad faith on the part of the copyright owner (i.e., the plaintiff must show that the copyright owner actually believed it was sending a takedown notice on non-infringing material); a showing that a reasonable copyright owner would not have sent the notice is insufficient to sustain a cause of action. Indeed, in an earlier ruling in this case, Judge Fogel said he "has considerable doubt that Lenz will be able to prove that Universal acted with the subjective bad faith required by Rossi, and following discovery her claims well may be appropriate for summary judgment." I expect those summary judgment proceedings to occur over the next few months.

(h/t Prof. Eric Goldman)

9 comments:

  1. A narrow construction of statutes is never good as it often leads to irrational and unfair results, take Kansas's self-defense laws for example: http://lawblog.legalmatch.com/2010/02/22/if-you-dont-shoot-your-attacker-in-kansas-then-waive-bye-bye-to-claiming-self-defense/

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  2. Hi, Ben, it’s Tom Sydnor at PFF.

    The argument for fair use in a case like Lenz is mostly bait-and-switch. There would be a very good argument that the Lenz video itself is a fair use of Prince’s song. But that argument falls apart when you focus on the YouTube posting of the video.

    YouTube is not a charitable foundation: when someone uploads a video to YouTube, they enter into a commercial transaction with a commercial service provider in order to gain the benefits of commercial-quality hosting and distribution services.

    As a result, the YouTube Terms of Service require YouTube users to grant to YouTube and its parent company both worldwide commercial-use rights and derivative-works rights and to represent that they either own the copyrights in any work they have sampled or remixed or have the real owner’s authorization to grant YouTube the rights listed above as to the work sampled or remixed. Those Terms of Service seem to seriously undermine every argument for fair use.

    Last year, I did a blog post last year on the sort of “fair-use bootstrapping” attempted in cases like Lenz. Note that in the hypothetical presented, the facts echo those of the Lenz case and the Terms of Service echo those of YouTube:

    http://blog.pff.org/archives/2009/03/copyrights_ugc_sites_and_fair-use_bootstrapping.html

    I just don’t see that Lenz has much of a fair-use argument under any standard of review—at least as to the YouTube takedown notice. --Tom

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  3. "The court's interpretation of Section 512(f) as excluding from recoverable fees the fees incurred in the litigation itself makes sense; a plaintiff who suffered little or no actual damages should not be able to effectively manufacture massive damages in the form of attorneys' fees by engaging in years of litigation over an issue that was effectively remedied through the counternotice process."

    Actually this makes no sense - how can a plaintiff gain anything from damages in the form of attorneys' fees? The fees have to go to the attorneys not the plaintiff. And if indeed a plaintiff has suffered loss as a result of the inappropriate takedown this loss should be able to be recovered in full.

    There needs to be serious penalties for misusing these DMCA notices or the confidence in the balance of the system will be undermined generally.

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  4. @Anonymous 10:12:

    I never suggested that Lenz herself would be enriched by an award of attorneys' fees.

    As Judge Fogel's opinion highlights, the DMCA was intended to channel routine disputes over copyright infringement on the Web away from the courts. In fact, in this case, until Lenz filed suit, the extra-judicial process was actually working pretty well. UMG made a claim that Lenz believed to be unfounded, so she filed a counternotice, and YouTube restored the video; UMG never sued. The story could have ended there, and Lenz would have been entitled to crow that she made UMG back down. Other than a bit of annoyance, it appears Lenz suffered no real damages. While, as I said in the post, I don't think UMG should have sent the takedown notice in the first place, neither do I think hundreds of thousands of dollars should be expended on this incident. If Judge Fogel's decision means that people will only bring 512(f) suits where they have truly suffered significant injury, I think that's a good thing.

    Having looked closely at a lot of the YouTube takedown disputes of the past several years (and having been involved in some of them myself), I'm convinced that the best remedy for an improper takedown notice is not a 512(f) suit, but instead filing a DMCA counternotice, and publicly shaming of the sender of the bogus notice.

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  5. Public shaming however will frequently not provide the deterrence needed to prevent the future inappropriate use of the DMCA notices. Unfortunately, a monetary penalty is the only just remedy.

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  6. Ben, I enjoy your blog, but your attempts at portraying your voice as reasonable and moderate (generally successful) are undermined by passages such as this:

    "But I don't see how Lenz suffered more than nominal losses here; she was simply annoyed that her video (hosted for free by YouTube) was temporarily removed, and she found some lawyers/activists who jumped at the chance to make a federal case out of it."

    The DMCA noticed was issued in error, and, rather than simply accepting this, UMG invented a series of rationalizations that have made this a "federal case." I think you should praise the EFF here for making clear the DMCA notice and counter-claim process. Better enducation on both sides can only be a good thing -- helps avoid the Network Solutions/MSFT debacle for example.

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  7. @Anonymous 4:16:

    As I indicated in my post, I agree that UMG shouldn't have sent the takedown notice in the first place, and I literally have not found a single person who believes otherwise. Lenz was justified in sending her counternotice, and YouTube correctly re-posted it. The issue is what should happen next. I don't think it's unreasonable to conclude that the probably over $1 million in legal fees expended on this litigation could have been better spent elsewhere -- especially since Lenz suffered no real damages.

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  8. Here is another example of the unconstitutional prior restraint that the DMCA takedown system is enabling, affecting law professor Larry Lessig:

    http://techdirt.com/articles/20100302/0354498358.shtml

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  9. @Anonymous 3:07:

    The incident to which the Techdirt post refers did not involve the DMCA, but instead YouTube's automated content ID system. Not to mention that a "prior restraint" involves a government injunction against speech, which is not remotely what happened here.

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