Second Circuit Partially Overturned Viacom vs. YouTube Case

In an April 5, 2012 opinion, the Second Circuit concluded that the district court erred in part by granting summary judgment in YouTube's favor in its August 10, 2010 judgment and remanded the case in part for further proceedings. Viacom Int'l et al. v. YouTube, Inc. et al., No. 10-3270, slip op. (2d Cir. Apr. 5, 2012).

The Second Circuit affirmed certain parts of the underlying opinion – particularly the district court's conclusion that the DMCA's § 512(c) safe harbor requires "knowledge or awareness of specific infringing activity" and its conclusion that three of YouTube's four software functions at issue in this case qualified for the safe harbor – but vacated the opinion in at least one important way. Specifically, the Second Circuit reversed the district court's interpretation of the "right and ability to control infringing activity" to require "item-specific" knowledge. It also remanded the case to the district court for further fact-finding on whether the fourth software function qualified for a safe harbor. Id. at 2.

In the underlying case, Viacom was joined by several other film studios, television networks, music publishers, and sports leagues in alleging direct and secondary copyright infringement "based on the public performance, display, and reproduction of approximately 79,000 audiovisual 'clips'" that appeared on Youtube between 2005 and 2009. Id. at 8. Plaintiffs sought damages in the form of statutory damages under § 504(c) or, alternatively, actual damages – as well as declaratory and injunctive relief. Id. at 9.

After considering the arguments on appeal, the Second Circuit vacated the order granting summary judgment in YouTube's favor because 1) an issue of fact existed whether YouTube had actual knowledge or awareness of specific infringing activity on its website (thus making summary judgment inappropriate), 2) the "right and ability to control" provision does not require "item specific knowledge" and 3) further fact-finding was required before a conclusion could reasonably be reached about whether YouTube's fourth software process qualified for the safe harbor. Id. at 9.

The Court spent a fair amount of time discussing the evidence presented showing that YouTube officials may have had more than a general understanding that someone might post infringing material to their site. Id. at 19-22. Among other facts, the Court pointed to the following as persuasive that a jury could conclude that YouTube was on notice that infringing content probably existed on their site:

• YouTube Founder, Jawed Karim, prepared a March 2006 report in which he explained that several "well-known shows" could still be found on YouTube. He stated, "although YouTube is not legally required to monitor content . . . and complies with DMCA takedown requests we would benefit from preemptively removing content that is blatantly illegal and likely to attract criticism." Id. at 20-21. He added that a "more thorough analysis" was required before any content could be removed. Id. at 21.
• Another YouTube founder, Chad Hurley, concluded in 2005 that certain videos containing the titles "budlight commercials" should be rejected as potentially infringing, but another co-founder, Steve Chen, asked "can we please leave these in a bit longer? Another week or two can't hurt," after which time, Karim replied that he "added back in all 28 bud videos." Id.
  
• Finally, the court described another 2005 email exchange in the following way: [Id.]
  • First, "Hurley urged his colleagues 'to start being diligent about rejected copyrighted/inappropriate content,' noting that 'there is a cnn clip of the shuttle clip on the site today, if the boys from Turner would come to the site, they might be pissed?'"
  • Then, his colleagues responded: "but we should just keep that stuff on the site. I really don't see what will happen. what? someone from cnn sees it? he happens to be someone with power? he happens to want to take it down right away. he gets in touch with cnn legal. 2 weeks later, we get a cease & desist letter. we take the video down."
  • Finally, Karim agreed, stating "the CNN space shuttle clip, I like. we can remove it once we're bigger and better known, but for now that clip is fine."

Based on these and other similar facts, the Court found that plaintiffs had presented sufficient evidence for "a reasonable juror . . .[to] conclude that YouTube had actual knowledge of specific infringing activity, or was at least aware of facts or circumstances from which specific infringing activity was apparent." Id. at 22. As a result, the grant of summary judgment in YouTube's favor was simply "premature." Id.

Willful Blindness
The Court also analyzed the issue of whether "willful blindness" was equivalent to actual knowledge for purposes of imposing liability for direct or vicarious liability – an issue that the Court labeled as "an issue of first impression." Id. at 22-24. Relying on Tiffany (NJ) Inc. v. eBay, Inc., 600 F.3d 93, 109 (2d Cir. 2010), the Court explained that when a service provider "has reason to suspect that users of its service are infringing a protected mark, it may not shield itself from learning of the particular infringing transactions by looking the other way." Viacom, No. 10-3270 at 23 (citing cases).

The Court further clarified that "willful blindness" could not be defined as "an affirmative duty to monitor." Id. at 24.

The Court ultimately held that "the willful blindness doctrine may be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement under the DMCA." Id. The Court did not reach the conclusion of whether YouTube actually had been willfully blind to this type of infringing behavior of its users, but instead only that willful blindness could serve as a basis for liability under the right conditions, and thus remanded the case to the district court for consideration of whether the defendants "made a deliberate attempt to avoid guilty knowledge." Id. 

Right of Control

As the Court stated, the § 512(c) safe harbor provides that eligible service providers must "not receive 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." Id. at 24. The district court considered this argument only briefly, and concluded that this "right and ability to control" required item-specific knowledge. Id. (quoting 718 F. Supp. 2d at 527).

In the appeal, the Court rejected both of the competing interpretations suggested by the parties, concluding that the language neither: 1) requires the ISP to know of the particular infringing content before being able to control it (as proffered by defendants) – because such construction would render this provision (§ 512(c)(1)(B)) duplicative of § 512(c)(1)(A), a result which would be disfavored as a matter of statutory interpretation; nor 2) that this provision merely codifies the common law doctrine of vicarious copyright liability (as proffered by plaintiffs). In its analysis of the common law doctrine, the Court quipped, "Happily, the future of digital copyright law does not turn on the confused legislative history of the control provision." Id. at 26.

The Court instead concluded that "the right and ability to control infringing activity under § 512(c)(1)(B) 'requires something more than the ability to remove or block access to materials posted on a service provider's website.'" Id. at 27 (quoting Capitol Records, Inc. v. MP3tunes, LLC, __ F. Supp. 2d __, 2011 WL 5104616, at *14 (S.D.N.Y. Oct. 25, 2011), among other cases).

The Court acknowledged that the "something more" still needed to be defined, although two cases had found specific activity that courts have concluded rose to a level sufficient to find "right and ability to control." Id. at 28 (citing Perfect10, Inc. v. Cybernet Ventures, Inc., 213 F. Supp. 2d 1146 (C.D. Cal. 2002) and MGM Studios, Inc. v. Grokster, Ltd., 545 U.S. 913 (2005)). Rather than setting a specific definition in this opinion, the Court remanded this case to the district court to consider whether plaintiffs "adduced sufficient evidence to allow a reasonable jury to conclude" that YouTube met the "right and ability to control" test, and whether it received a financial benefit directly attributable to this activity. Id. at 28-29.

Summary
    
The Court held the following:

1) Knowledge or awareness of facts/circumstances that indicate specific and identifiable instances of infringement is required by § 512(c)(1)(A);

2) A reasonable jury could conclude that YouTube had knowledge or awareness with respect to a handful of specific clips; the case was remanded to determine whether YouTube had the requisite knowledge or awareness with respect to the clips actually at issue in this case;

3) The willful blindness doctrine can be applied, in appropriate circumstances, to demonstrate knowledge or awareness of specific instances of infringement; the case was remanded to determine whether the willful blindness doctrine was applicable here;

4) The district court erred by finding that the "right and ability to control" required item-specific knowledge of the infringing material; the case was remanded for further fact-finding on this issue;

And,

5) The district court was correct that three of the four software functions qualify for the safe harbor; the case was remanded for consideration of whether the fourth function so qualified.

Id. at 34-35. In connection with the remand, the Court left it to the district court's discretion whether additional discovery would be required. The Court did not award reimbursement of costs to either party.